There are set to be 2.6 billion successful retail chatbot interactions this year – and more than 22 billion by 2023 – and they are going to make retailers more efficient, more money and more attractive to users, new data from Juniper Research suggests.
According to the research, AI in Retail: Segment Analysis, Vendor Positioning & Market Forecasts 2019-2023, chatbot use by retailers will enable effective automated customer interactions and deliver higher quality user experiences in a low-resource way. In turn, this will boost customer retention and satisfaction, while also reducing operating costs – and potentially leading to more sales, says the study.
A crucial enabler of this will be improvements in Natural Language Processing (NLP), which will dramatically reduce the failure rate of chatbot interactions, by making them more natural and valuable for customers.
As a result, Juniper anticipates that retailers who do not adopt chatbots will face strong challenges from more technologically-adept disruptors, who will use chatbots as an extension to the crucial omnichannel retail experience.
The research also found that chatbots leveraged for customer service have a strong potential to reduce costs; with deployments realising annual savings for retailers of $439 million globally by 2023, up from just $7 million in 2019.
These potential savings will act as a key ‘pull’ factor, given the margin pressure that many retailers are presently feeling.
Research author Nick Maynard explains: “By embracing automated customer service with chatbots, retailers can act in a more flexible and efficient way. The wider retail market means that chatbots are no longer a luxury, they are essential”.
Meanwhile, retail sales resulting from chatbot-based interactions will reach $112 billion by 2023, up from $7.3 billion in 2019; representing an annual growth rate of 98%.
However, the research found these sales will largely be a result of migration from other channels, rather than a new revenue stream. Accordingly, the research emphasised that while retailers must adopt chatbots for ease of use – and to reduce consumer churn – their return on investment will come from efficiencies, rather than new income.
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