As Australians shift to messaging and chat interfaces, so will the way they buy. Australian businesses aren’t ready for the wave of conversational commerce heading their way: we need to learn from China, says Andrew de Bruijn.

The term conversational commerce – referring to IM or voice-driven shopping – was coined in the US in 2015, but has taken its time getting to Australia as a concept let alone a reality. It’s a shift driven by three main forces:

  1. The ubiquity of smartphone adoption (what isn’t these days)
  2. The preference for interacting via social media and messaging rather than face to face, particularly among the younger generation
  3. The ‘on-demand’ economy, which has made it easy for anyone to get what they want pretty instantly at the touch of a button.

As a result, messaging interfaces, chatbots, and other AI assistants have proliferated – whether it’s Amazon’s Alexa, Slackbot or any number of customer service bots. It’s only a matter of time before these shift from passive assistants to expert sales agents, making uncanny recommendations based on all the customer data they’ve gathered.

AI-driven conversations also support the increasingly ad-hoc time frames of millennials in the gig economy – wanting to solve a problem at 10pm shouldn’t be an issue; the technology is there.

 

Mobile messaging and payments in Asia

For a glimpse of Australia’s future, let’s look to Asia, a massive mobile payments market. In China, WeChat and AliPay are slugging it out for market share and combined accounted for 9 out of every 10 RMB spent on mobile purchases in 2016. 31% of WeChat users bought something through the app in 2016, twice the 2015 figures.

The app accounts for 35% of all time spent on mobile in the country, and in January 2017 parent company Tencent added a suite of built-in apps and extensions to the existing social features. These may be one reason that AliPay, a standalone QR code payments app without the chat interface, could eventually fall behind its competitor.

WeChat and mobile payments are so much a part of daily Chinese life, says the New York Times, that one user who left their bank card in an ATM didn’t notice for three weeks. Recent hires and other activity make it likely that Facebook – the most popular messaging service in Australia – is likely to adopt the WeChat model. When they do, it will set the standard for customer engagement outside of Asia. Australian businesses need to get on board.

 

Why standalone apps don’t work

First of all, Australians prefer browsers to apps for shopping on their phones. But there’s a wider issue of competing for limited attention, particularly when so much time is spent on Facebook Messenger, What’s App or Viber.

Many people use six to ten apps in any given month, at most. In the unlikely event, your app is one of those ten, there’s a good chance constantly distracted users will have turned off push notifications. That perfectly crafted upsell or time-sensitive offer? Unread. Unlike a WhatsApp notification: people want to see who’s chatting in case they’re missing out.

One of the main reasons brands will be successful within messaging apps is that the stream of historical conversation provides ample reference points and context. This makes getting the timing and the product right much easier, allowing them to deliver an individualised relationship with the customer. For example, “we’ve just made a fresh batch of those donuts you ordered last time, want some delivered?” Or, “There are only two pairs of those shoes you asked about left in your size”.

 

Risks and rewards in the Australian market

Australians now spend more time on messaging apps than they do on social media. Facebook Messenger has an estimated 18,000 chatbots standing by. Branded chat extensions have seen an estimated 57% increase in use which is likely to rise as popular brand integrations like Uber and payments become available outside of the US. Messaging app Viber bought e-commerce keyboard ShopChat in July. WhatsApp is testing payments in India and gradually letting businesses talk to customers in the app. Most recently, Amazon – whose Australian launch is imminent – announced the development of a standalone messaging app.

 

What Australian businesses can do to get ready

Australian companies have to keep track of the Asian ecosystem and experiment within it to ensure success back home. There’s also the matter of changing national demographics – as more Chinese and Japanese migrate to Australia, they’ll expect to shop the way they do at home.

The good news is that, unless you’re Amazon, you can plug into the Facebook ecosystem. It’s a low barrier to entry with a potentially massive payoff. There’s no need to worry about the Android vs IOS app headaches or payment integration, or matching Facebook’s user experience norms.

There’s a risk, though, that we’ll see the market flooded by superficial offerings that don’t really meet consumer expectations of how AI should perform. How useful or smart are Messenger’s 18,000 bots, really? Cloud-based software might well make it possible to build a conversation bot in five minutes, but it’s unlikely to build a lasting relationship with your customer.

I&Co’s approach to venturing combines data-driven intelligence, engineering excellence and a thorough understanding of the business environment. We’d love to help you navigate this exciting next phase of AI-powered commerce – drop us a line today.