The state of bots: 11 examples of conversational commerce in 2016

Two trends — the exploding popularity of mobile messaging apps and advances in artificial intelligence — are coinciding to enable a new generation of tools that enable brands to communicate with customers in powerful new ways at reduced cost. Retailers and technology firms are experimenting with chatbots, powered by a combination of machine learning, natural language processing, and live operators, to provide customer service, sales support, and other commerce-related functions.

Chris Messina of Uber recently coined the term “conversational commerce” to describe this movement, which he defines as:

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…utilizing chat, messaging, or other natural language interfaces (i.e. voice) to interact with people, brands, or services and bots that heretofore have had no real place in the bidirectional, asynchronous messaging context. The net result is that you and I will be talking to brands and companies over Facebook Messenger, WhatsApp, Telegram, Slack, and elsewhere before year’s end, and will find it normal.

While messaging and voice interfaces are central components, they fit into a larger picture of increasing infusion of technology into our daily lives, which in turn is unlocking new potential for brand-to-consumer interaction. The fact is, technology overall is becoming more deeply woven into our lives, and the entire ecosystem is enjoying tighter cohesion through the increasing availability and sophistication of APIs. Smart companies are finding new and innovative touch points with consumers that are contextual, relevant, highly personal, and, yes, conversational. Commerce is becoming not only more conversational but more ubiquitous and seamlessly integrated into our lives, and the way we interact with brands will be forever changed as a result.

The key trends driving this movement include:

• The growing usage of mobile messaging applications and an entire generation of mobile-native consumers who are comfortable and fluent with messaging as an interaction paradigm.
• Inflection points being reached in artificial intelligence and natural language processing that enable 90%+ accuracy in machine parsing and understanding spoken or typed requests.
• The rise of sensors, wearables, the quantified-self movement, and advances in data science and analytics are bringing never-before imagined levels of personalization and predictive assistance capabilities (as well as rising concerns over privacy).
• The integration of seamless payment technology into devices, increasingly accessible to third parties via APIs.
• Increased sophistication of notifications that are context-aware and available across devices to provide an always-on, intelligent interface layer with consumers.

At my company, ZipfWorks, we build and scale intelligent shopping platforms and applications, so I pay close attention to emerging trends impacting digital commerce such as chatbots and mobile commerce. Here is a look at the major initiatives and forces shaping this trend:

1. WeChat

“If you can get ahold of Facebook’s product roadmap, it’s a giant WeChat clone.” — William Bao Bean, SOS Ventures and Chinaccelerator

WeChat was created by Chinese holding company Tencent three years ago. The product was created by a special projects team within Tencent (which also owns the dominant desktop messaging software in China, QQ) under the mandate of creating a completely new mobile-first messaging experience for the Chinese market. In three short years, WeChat has exploded in popularity and has become the dominant mobile messaging platform in China, with approximately 700 million monthly active users (MAUs).

How stores interact with customers on WeChat.

While in the US, the trend for apps has been to “unbundle” themselves into separate, use-case specific apps, in China the trend is quite the opposite. WeChat is reminiscent of what Yahoo might be if you crammed it all into a single mobile app. Yes, on WeChat you can chat, but you can also conduct a myriad of shopping-related activities:

• Hail a taxi
• Order food delivery
• Buy movie tickets
• Customize and order a pair of Nikes
• Send an order to the nearest Starbucks
• Track your daily fitness progress
• Shop Burberry’s latest collection
• Book doctor appointments
• Host a business conference call
• Pay your water bill

You get the point.

“They’re doing things we’re simply not doing in the U.S. Imagine if you were going to start a city from scratch. Rather than having to deal with all the infrastructure created 200 years ago, you could hit the ground running on the latest technology. That’s what China’s doing — they’re accessing markets for the first time through mobile apps and payments.” — Brian Buchwald, CEO of consumer intelligence firm Bomoda

Nike’s social media presence on WeChat.

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WeChat combines a chat-based interface with a vast library of add-on features such as a mobile wallet, chat-based transactions, and chat-based media and interactive widgets, and exposes it all to businesses through a powerful API that enables businesses from mom and pop noodle shops to powerhouses such as Nike and Burberry to “friend” their customers and market to them in never before imaginable ways. Over 10 million businesses in China have WeChat accounts, and it is becoming increasingly popular for small businesses to only have a WeChat account, forgoing developing their own website or mobile app completely. US technology firms, in particular Facebook, are taking note.

2. Facebook Messenger

“I don’t know anyone who likes calling a business. And no one wants to have to install a new app for every business or service that they interact with. We think you should be able to message a business, in the same way you would message a friend.” — Mark Zuckerberg at F8 in 2016.

Facebook has jumped fully on the conversational commerce bandwagon and is betting big that it can turn its popular Messenger app into a business messaging powerhouse. The company first integrated peer-to-peer payments into Messenger in 2015 and then launched a full chatbot API so businesses can create interactions for customers to occur within the Facebook Messenger app. You can order flowers from 1–800-Flowers, browse and buy the latest fashions from Spring, and order an Uber, all from within a Messenger chat.

“We’re just getting people used to the idea that you can message more than just people on Messenger.” — Facebook Messenger product manager Seth Rosenberg.

You can now order an Uber by selecting the “Request a Ride” option within Facebook Messenger.

Shopping for fashion with Spring’s bot on Facebook Messenger.

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The Facebook Messenger API enables rich interactive UI elements to be included as a part of chats, which I think points to a future of conversational UIs that are not limited to text chats or voice commands but that weave together maps, product photos, comparison tools, and other interactive elements (cards?) into the conversation stream.

3. Amazon Echo

“Alexa, order me a pizza.”

Amazon’s Echo device has been a surprise hit, reaching over 3 million units sold in less than 18 months. Although part of this success can be attributed to the massive awareness-building power of the Amazon.com homepage, the device receives positive reviews from customers and experts alike and has even prompted Google to develop its own version of the same device, Google Home.

What does the Echo have to do with conversational commerce? While the most common uses of the device include playing music, making informational queries, and controlling home devices, Alexa (the device’s default addressable name) can also tap into Amazon’s full product catalog as well as your order history and intelligently carry out commands to buy stuff. You can reorder commonly ordered items or even have Alexa walk you through some options in purchasing something you’ve never ordered before.

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Through Amazon’s developer platform for the Echo (called Alexa Skills), developers can develop “skills” for Alexa that enable her to carry out new types of tasks. Examples of skills include playing music from your Spotify library, adding events to your Google Calendar, or querying your credit card balance with Capital One . You can even ask Alexa to “open Dominoes and place my Easy Order” and have pizza delivered without picking up your smartphone. Now that’s conversational commerce in action.

4. Operator

Operator calls itself a “request network” aiming to “unlock the 90% of commerce that’s not on the Internet.” The Operator app, developed by Uber cofounder Garrett Camp, connects you with a network of “operators” who act like concierges and can execute any shopping-related request. You can order concert tickets, get gift ideas, or even get interior design recommendations for new furniture. Operator seems to be positioning itself for “high consideration” purchases, bigger ticket purchases requiring more research and expertise, where its operators can add significant value to a transaction.

Examples of commerce interactions on Operator.

Operator’s agents are a mix of Operator employees, in-store reps, and brand reps. The company is also developing artificial intelligence to help route requests. No doubt the service will become smarter over time, combining machine learning for efficiency and human expertise for quality recommendations.

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5. Slack

Slack has its own internal help bot (@slackbot) which sends you occasional helpful messages that you can then interact with using text chat commands. The company has expanded on this concept and launched an external API enabling developers to build bots for Slack, accessible via Slack’s app directory.

Ordering with TacoBot on Slack.

One of the more talked about integrations has been Taco Bell‘s announcement that it is working on a Slackbot (appropriately named Tacobot) that will not only take your Gordita Supreme order but will do it with the same “witty personality you’d expect from Taco Bell.” Consumer demand for such a service remains to be seen, but it hints at the potential for brands to leverage Slack’s platform and growing audience.

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6. Allo from Google

At this year’s I/O, Google announced its own Facebook Messenger competitor called Allo. Apart from some neat features around privacy and self-expression, the really interesting part of Allo is @google, the app’s AI digital assistant. Google’s assistant is interesting because the company has about a decade-long head start in machine learning applied to search, so it’s likely that Allo’s chatbot will be very useful. In fact, you could see Allo becoming the primary interface for interacting with Google search over time. This interaction model would more closely resemble Larry Page’s long-term vision for search, which goes far beyond the clumsy search query + results page model of today:

“In many ways, we’re a million miles away from creating the search engine of my dreams, one that gets you just the right information at the exact moment you need it with almost no effort — Larry Page

Allo from Google.

Through Knowledge Graph, Google search has already become amazingly good at understanding the context and meaning of your queries, and it is getting better at natural language queries. With its massive scale in data and years of working at the very hard problems of natural language processing, the company has a clear path to making Allo’s conversational commerce capabilities second to none.

7. Snapchat Discover + Snapcash

Brands are falling over themselves to plug into Snapchat, and the ultra-popular messaging app among teens and Millennials has recently been offering some tantalizing signals that it will become an even more compelling e-commerce platform in the near future.

In 2015, Snapchat launched Snapcash, a virtual wallet that allows users to store their debit card on Snapchat and send money to friends with a simple message.

With competitor Venmo already established, peer-to-peer payments is not in and of itself a compelling feature for Snapchat. However, adding wallet functionality and payment methods to the app does lay the groundwork for Snapchat to delve into commerce. The messaging app’s commerce strategy became more clear in April 2016 with its launch of shoppable stories with select partners in its Discover section. For the first time, while viewing video stories from Target and Lancome, users were able to “swipe up” to visit an e-commerce page embedded within the Snapchat app where they could purchase products from those partners.

While this was a limited test, it shows that Snapchat sees potential in enabling direct commerce (likely fulfilled through Snapcash payments) within the Snapchat app, opening the door to many interesting new ways brands can interact with and sell products to Snapchatters.

Lancome on Snapchat Discover.

While snaps and stories are a bit different from traditional voice or chat conversations, Snapchat nonetheless represents a new form of messaging that enables entirely new ways to embed commerce into conversations. And with 10 billion views per day, innovation on Snapchat will no doubt be exciting and will have a profound impact on commerce.

8. AppleTV and Siri

With last year’s refresh of AppleTV, Apple brought its Siri voice assistant to the center of the UI. You can now ask Siri to play your favorite TV shows, check the weather, search for and buy specific types of movies, and a variety of other specific tasks. Although far behind Amazon’s Echo in terms of breadth of functionality, Apple will no doubt expand Siri’s integration into AppleTV, and it’s likely that the company will introduce a new version of AppleTV that more directly competes with the Echo, perhaps with a voice remote control that is always listening for commands.

While AppleTV’s commerce capabilities are currently limited to purchasing media from iTunes, it seems likely that Siri’s capabilities would be extended to tvOS apps so app developers will be able to support voice commands from AppleTV directly within their apps. Imagine using voice commands to navigate through Netflix, browse your Fancy shopping feed, or plan a trip using Tripadvisor on AppleTV . The potential for app developers will be significant if Apple extends its developer platform further into the home through AppleTV and Siri.

9. Magic

Magic, launched in early 2015, was one of the first all-in-one intelligent virtual assistants as a service. Unique in that the service does not even have an app (you access it purely via SMS), Magic promises to be able to handle virtually any task you send it — almost like a human executive assistant. Based on user and press accounts, Magic seems to be able to successfully carry out a variety of odd tasks–everything from setting up flight reservations to ordering hard-to-find food items.

Examples of things Magic can do.

However, since Magic simply connects you with human operators who carry out your requests, the service does not leverage AI to automate its processes. Thus the service is expensive and may lack mainstream potential. The company recently launched a premium service called Magic+ that gets you higher level service for $100 per hour, indicating that it sees its market among business executives and other wealthy customers.

10. Kik Bots

In Kik CEO Ted Livingston’s vision of the future, you may sit down at a baseball game, open your Kik app, and scan a QR-type code on the seat in front of you to connect with the stadium concierge, and order a beer via Kik chat to be delivered to your seat.

In Livingston’s words:

“Chat is going to be the next great operating system. Apps will come to be thought of as the new browsers; bots will be the new websites. This is the beginning of a new Internet.”

Shopping H&M via its Kik bot

Kik is one of the most popular chat apps among teens, with 275 million monthly active users. And 40% of those are in the 13 to 24-year-old demographic. In April, Kik launched its own bot store with 16 launch partners, including Sephora, H&M, Vine, the Weather Channel, and Funny or Die. Using Kik’s bots currently feel like using the Internet in 1994, very rough around the edges and limited functionality/usefulness. However, we’ll see how the API and bots progress over time. Kik’s popularity with an attractive demographic might convince some brands to invest in the platform.

11. Telegram

Founded by Pavel Durov, creator of Russia’s equivalent to Facebook, Telegram launched in 2013 as a lightweight messaging app to combine the speed of WhatsApp with the ephemerality of Snapchat along with claimed enhanced privacy and security through its use of the MTProto protocol (Telegram has offered a $200,000 prize to any developer who can crack MTProto’s security). Telegram has 100 million monthly active users, putting it in the second tier of messaging apps in terms of popularity.

Example of a Telegram Messenger bot in action.

Telegram launched its bot API in 2015, and launched version 2.0 of its platform in April 2016, adding support for bots to send rich media and access geolocation services. As with Kik, Telegram’s bots feel spartan and lack compelling features at this point, but that could change in time. Telegram has also yet to add payment features, so there are not yet any shopping-related bots on the platform.

The big picture

As these platforms and technologies evolve, we’ll see new forms of brand-to-consumer communication and interaction emerge — some will work and some will fail, but there’s no doubt both consumers and brands will benefit from more intelligent touch points enabled by these technologies.

[A version of this post was originally published on the ZipfWorks blog.]

Michael Quoc is founder and CEO of Zipfworks, which creates new ways to shop. He was previously a director of product management at Yahoo.