Companies Are Betting on a New Form of Conversational Commerce

As ecommerce continues to soar amid a pandemic boom, some companies are betting the next venue for selling products will be in your text messages or DMs. Startups are increasingly experimenting with how sales interactions and transactions can be conducted entirely within chat windows. These efforts are made possible by advances in AI natural language processing that make interactions on this scale more viable as well as a general shift in ecommerce and retail toward more personalized and convenient service. Wizard, a conversational commerce startup backed by former Walmart ecommerce chief Marc Lore, recently raised $50 million for its mission to provide brands with an end-to-end service that allows them to conduct transactions over text. Wizard co-founder and CEO Melissa Bridgeford said she sees the company as part of an evolution of retail. "Our view is that we're really entering into a new paradigm of shopping that is not web-based, but really text-based and a true mobile-first solution," Bridgeford said. Lore previously spearheaded a text message shopping service while at Walmart called Jet Black in 2018, but it was shut down in 2020 after struggling with adoption. While Jet Black was a pioneer in the space, Bridgeford said, its attempt to manage back-end logistics and delivery made it more challenging to coordinate. Wizard will instead farm these tasks out to individual retailers to focus purely on the technology. Bridgeford declined to name any clients signed on thus far but said the business will start with a focus on consumer packaged goods brands. A recent report from conversational AI company LivePerson shows people might be more willing to do things like restock paper towels without leaving text conversations. But Bridgeford said the company has already seen interest from other organizations ranging from sports leagues looking to sell tickets and merchandise, to universities searching for ways to boost donations. Payments as an obstacle Zach Weinberg, vp of ecommerce at performance marketing network Reprise Digital, said the conversational commerce trend is aided by the fact that some of the technology involved—such as live chat functions that are sometimes AI-powered—is now integrated across the customer service operations of businesses big and small in one form or another. But consumers tend to think of these tools as more for post-sale questions or information-seeking rather than a way to shop in its own right. Our view is that we're really entering into a new paradigm of shopping that is not web-based, but really text-based and a true mobile-first solution.Melissa Bridgeford, Wizard co-founder and CEO The biggest obstacle with true end-to-end conversational transactions is integrating payment providers into messaging, according to Mike Myer, CEO and founder of conversational AI startup Quiq, which supplies conversational commerce tools. Myer said of Quiq's hundreds of clients, few have found it worth the trouble to allow consumers to transact without following a separate purchase link out of the conversation. "As soon as you involve money, it's the most complicated thing," Myer said. "Reconciliation and payments and credit card processing and all those things—it's the most difficult thing for businesses to implement. So there's going to be a very long adoption cycle on that." Human vs. AI Much of the discussion around conversational commerce is still tainted by Facebook's (now called Meta) infamous 2016 rollout of branded Messenger bots. Despite CEO Mark Zuckerberg's lofty boast that automated programs would make 1-800-Flowers' phone line obsolete, they soon proved clunky and limited in what they could handle via the type of automation that existed at the time. Andy Mauro, CEO and co-founder of conversational AI interface Automat, said brands have since hashed out a better balance between automated tasks and those requiring human assistance. That process was accelerated, he said, after brick-and-mortar stores put their sales associates to work behind screens during the pandemic and quickly realized they lacked the automated tools to effectively sell to customers. "An environment that had been built to help customer-support people answer questions or deal with issues was being used to drive sales," Mauro said. "The companies that were really focused on commerce have given tools to retailers that help their salespeople [who] live behind a digital screen do their work better." Mauro said many consumers remain reluctant to converse with entirely AI-powered programs in the course of their shopping, but he said that might change as a generation that is growing up in a largely virtual world becomes a prime consumer base. "We are on a path to get to the spot where we will see more and more true automation, and it'll be interesting to see whether the kids who are 12 today shopping in Roblox care about whether they're talking to a human salesperson or an AI," Mauro said.