Conversational commerce is a term used to describe the intersection of messaging apps, chatbots, and e-commerce. It refers to the use of messaging platforms to facilitate commercial transactions, such as ordering products or services, making payments, and providing customer service. A new study by Juniper Research has found that global spending via conversational commerce will be near $135 billion by 2027; rising from $39 billion in 2023.

The evolution of technology, the proliferation of online shopping and the globalization of eCommerce, have created online commerce as the highest exponent. However, it has become increasingly difficult for companies to gain any significant competitive advantage over their competitors, instead, companies are looking to place emphasis on customer satisfaction.

Conversational commerce relies on natural language processing and machine learning technologies to enable automated and intelligent interactions between customers and businesses. This allows customers to have a personalized, convenient, and immediate shopping experience.

For example, a customer might use a messaging app to chat with a chatbot to place an order for a pizza, pay for it, and track the delivery. Alternatively, a customer might use a messaging app to ask questions about a product, receive personalized recommendations, and make a purchase.

Conversational commerce has become increasingly popular in recent years, as more people have started using messaging apps and businesses have recognized the potential for using these platforms to reach and engage customers.

Juniper research found that in 2027, 47% of spending will be attributable to OTT-based channels, including WhatsApp and WeChat. Specifically, as super apps increasingly provide multiple services within a single interface, including payments, commerce and messaging, greater engaging commerce interactions will be orchestrated. The research urges OTT apps to fully integrate such features in order to reduce friction or risk losing traffic.

Asia Pacific to Dominate

The new research, Conversational Commerce: Business Model Analysis, Value-added Services & Market Forecasts 2022-2027, found that Asia Pacific will account for 75% of total spending over conversational commerce channels in 2027. This will be driven by country-specific apps such as WeChat, LINE and KakaoTalk embedding in-house payment solutions. The research identified that the versatility of these apps, which combine features from WhatsApp, Twitter, PayPal and Uber, will be key to developing a strong digital marketplace; offering an improved user experience.

Research author Elisha Sudlow-Poole commented: “As the development of ‘superapps’ will create a new ecosystem for business messaging, communication service providers must ensure that they have strong, proactive partnerships with the most popular super apps to maximise their role in the conversational commerce value chain.”

Key Challenges to Conversational Commerce

Whilst the conversational nature of commerce has developed significantly, there are challenges that will influence the adoption and progression of the market in the future.

AI Implementation Risks

Despite the eagerness to develop and deploy AI capabilities, it is not without risk. If done incorrectly, it can not only increase the workload for employees but can also hinder the experience had by customers. Badly implemented AI includes incorrect product recommendations from business algorithms, as well as misinterpretations in NLU (Natural Language Understanding) and NLP (Natural Language Processing) processing, which is particularly hindering for voice commerce.
Moreover, when considering customer service, businesses must think about which use cases will be best to optimize, which ones should be left to more traditional self-service methods, such as FAQ website pages, and which ones should be left to human-agent interactions.

Siloed Data

Whilst omnichannel communication is progressing, there is the potential for multi-channel conversations to become siloed. This is where qualitative and quantitative data is collected across different channels but is not connected in one interface. This limits the platform’s ability to respond efficiently to customer queries and therefore, it is important for conversational commerce vendors to differentiate their services between omnichannel and multichannel.

Fraud & Security Concerns

Omnichannel retail provides frictionless communications between different messaging channels, and whilst this increases the number of channels to optimize for A2P communications, Juniper Research warns that communication vendors must keep these channels devoid of fraudulent traffic and spam. The receipt of spam messaging from a brand across any and all of these channels will be seen as jarring, thus limiting a consumer’s willingness to engage in business messaging in the future.

How Must the West Emulate this Success? Conversational Commerce

The research forecasts that the total number of OTT-based conversational commerce users in Europe and North America will rise by 179% to reach 33.4 million by 2027. For these regions to emulate the success of Asia Pacific, communication platform providers must ensure that they are able to support the influx of traffic from OTT messaging apps, as well as the ability to provide depth within these channels through the use of value-added services. This will ensure they remain an integral part of the ecosystem, as the capabilities of OTT messaging apps increase.

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