Factor Blue Insights

6 reasons why AI will shape the future of conversational commerce

We explored how AI can benefit conversational commerce and the specific advantages that can be gained from using AI in this context.

What is conversational commerce?

Before talking about the use of AI in conversational commerce, let’s get an introduction to this term. The term “conversational commerce” was first coined by Chris Messina in 2015. But the concept of it has been around for quite some time.

The practice of using chat and messaging for commercial purposes goes back to the early days of the Internet. Nevertheless, back then it existed in a very limited form, with no intention to use chat rooms and forums for commercial use. However, some businesses recognized the potential. And eventually, started using them to sell products and services, or to communicate with customers and provide support and service.

With the rapid growth in the use of mobile devices and messaging apps in recent years, the usage of chat and messaging for commerce has become more prevalent. Conversational commerce now refers to the use of messaging and chat platforms to facilitate online transactions and customer service interactions. How and why can it be so meaningful to e-commerce? Most of all, it allows them to provide more convenient and personalized experiences to customers.

AI chatbots vs CSR

Implementation of conversational commerce is possible with or without the use of Artificial Intelligence (AI). For example, a business can use live chat or messaging platforms. This way, Customer Service Representatives (CSR) interact with customers in real time. A CSR is responsible for answering individuals’ questions and helping with making the purchase.

It can include the sophisticated and personalized interactions enabled by AI-driven chatbots on a website or mobile app, as well as integrating with messaging apps such as Facebook Messenger, WeChat, or WhatsApp. 

AI can be useful for creating customer segmentation, based on their purchasing history, browsing behavior, location, etc. This tool allows the use of information, such as if they have called before and why, or what is their preferred channel of communication. The use of this data can provide personalized interaction and enhanced customer satisfaction. Not only that, but it’s also useful in creating more targeted marketing campaigns. Customers who haven’t bought anything yet can be directed to a chatbot that provides information about the products. Instead of a CSR, a chatbot can answer most of the questions they might have, and provide assistance with the purchase process.

How is AI being used in conversational commerce?


The field of conversational commerce is rapidly growing and evolving, and the use of AI is increasing in popularity. Hence, expectations are that spending on chatbot technology will grow in the years to come. This growth is driven by increasing demand for automation in customer service, along with the growing adoption of messaging apps and the rising use of mobile devices.

It’s also important to mention the impact of the COVID-19 pandemic on the chatbot market. As the pandemic forced businesses to shift to digital channels, the chatbot market has seen increased adoption of chatbots in healthcare, e-commerce, and BFSI sectors to provide real-time information and support.

Additionally, many major companies have already begun implementing AI conversational commerce. The most popular ones are Amazon with Alexa, Google with Google Home, Apple with Siri, etc. This indicates that more and more businesses are recognizing the potential benefits of using AI in technology, such as automation, 24/7 availability, personalization, and data collection. All previously mentioned are driving the growth in spending on this technology. Thus, investment in this technology in the future is likely to continue.


Benefits of using AI in conversational commerce


Increased Automation. AI chatbots can handle a large volume of customer interactions. It is including answering questions, providing information, and even completing transactions. This can save businesses time and money by reducing the need for human customer service representatives.


Personalization. AI chatbots can be trained to understand natural language and respond intelligently. The aforementioned allows them to provide personalized recommendations and offers to customers.


Improved Customer Service. AI chatbots can help customers quickly and easily find the information they need, which can improve customer service and support.


Data Collection. Collecting data on customer interactions can provide businesses with valuable insights into customer needs and preferences.


24/7 availability. It means customers can get help or make purchases at any time. This can lead to increased customer satisfaction and sales.


Cost-effective. AI-powered chatbots are a cost-effective way for businesses to provide customer service and support. They can handle multiple interactions at once, which means they can serve more customers than a human representative can.

Challenges and Limitations of AI Chatbots

As there are two sides to each coin, there are some downsides to using AI in conversational commerce. We could name the complexity of natural language as one of them. AI-powered chatbots still struggle to understand the nuances of human language and may have difficulties understanding the context of a conversation. Misunderstandings can then lead to irrelevant or inappropriate responses.

Besides, AI chatbots may not be able to provide the same level of personalization as human representatives due to the lack of empathy. Some customers also may not trust the technology or prefer speaking with a human representative. Businesses, however, must ensure that their customers understand when they are interacting with an AI chatbot, and also it is important to be clear about the data collection. Not to mention that with the boosted use of AI chatbots in customer service, there is a risk of potential job loss for human customer service representatives.

Future developments and potential impact

Improved natural language processing

As AI technology continues to improve, the expectations are that the ability of chatbots to understand and respond to natural language will become more sophisticated. This will enable them to provide more accurate and personalized responses to customer queries and requests.

Advancement in personalization and self-learning.

AI chatbots will become more advanced in personalizing the customer experience, as well as in learning from customer interaction. This should lead to better predicting customer needs and preferences.

Integration with other technologies.

Anticipations are that AI in conversational commerce will integrate with other technologies such as virtual and augmented reality to create more immersive and engaging customer experiences.

Betterment in security and transparency.

With the increasing use of chatbots and messaging, businesses will need to invest in more robust security measures to protect customer data and prevent fraud. They will also need to ensure that their customers understand the type of data collection.

Upgrades in Human-AI collaboration.

AI chatbots will be designed to work hand in hand with human representatives. It means they will be providing CSR with the necessary tools and information to offer customers the best possible experience.

Impact on industries.

AI in conversational commerce will, besides customer service, have a significant impact on various industries such as retail, healthcare, and banking. More efficient customer service will help businesses to improve customer satisfaction and increase sales.


The ultimate goal of conversational commerce is to provide customers with a more natural and convenient way to shop and interact with an enterprise. A conversation with a virtual assistant or chatbot makes it easier to find the information they need and make a purchase, rather than navigating a website or app. This can lead to increased customer engagement and sales.


Equally important, it leads to improved customer service and support. Customers can quickly and easily ask questions and get help with any issues they may have. Overall, conversational commerce can help businesses to improve customer satisfaction, increase sales, and gain valuable insights, which can drive business growth and success.

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