Barometer: Revealing the Benefits of Generative AI in E-commerce Conversations
7min read - Julia Lackey
2023 has been a pivotal year for e-commerce. The generative AI wave has revolutionized the industry, significantly improving conversational commerce performance. What lessons from this transformation can we bring into 2024, and what results can we point to since the arrival of publicly available generative AI? We’ve analyzed over 350 million messages on our platform to highlight the impact of artificial intelligence on the e-commerce customer experience and the B2C messaging trends that we expect will emerge in 2024.
- Automation of Conversations
By the end of 2023, 70% of online conversations were partially or fully automated—a 15% increase compared to December 2022.
Brands that have deployed generative AI report up to 90% automation rates.
- Sales & ROI
The average conversion rate after a generative AI-led conversation is 14%, with some brands seeing up to 33%.
- Customer Satisfaction
For brands using generative AI in e-commerce, CSAT scores have become equivalent to those of human respondents, with some reaching up to 94%.
CSAT is 2.8x higher compared to previous-generation chatbots.
Conversational commerce is proven to generate an average 80% customer satisfaction rate and increase online sales tenfold. And until now, brands have grappled with the challenge of delivering a quality user experience at scale. The result of early attempts to scale a human-led online customer experience with NLU chatbots has not been up to consumers’ expectations. According to an exclusive study conducted by iAdvize with Ipsos, only 55% of American consumers report being very satisfied with their e-commerce shopping experience.
However, 2023 saw a change in this status quo through the rapid development of generative artificial intelligence. No industries have escaped the impact of this new technology, and it's likely that your personal life has seen its effects, as well. For the digital customer experience, generative AI has enabled brands’ customer service teams to produce instant, accurate interactions in natural language with customers on their websites on a much larger scale than ever before, all while reducing costs. It gives customer support agents superpowers, placing them more than ever at the core of brands' conversational strategies. But like with any technological advancement, generative AI has its limitations and raises a number of questions, including:
- How do you avoid AI hallucinations?
- Can a generative AI solution be completely compliant with your brand’s regulations, and how do you ensure data security?
- How do you ensure your AI will produce messages that fit your brand’s tone and image?
In response to these challenges, Trusted Generative AI—the first trustworthy AI solution built specifically for e-commerce—was born. To better optimize their e-commerce customer experience, over fifty brands, including Sideshow, IKKS, Cdiscount, and Vanden Borre, have implemented our Trusted Generative AI-powered chatbot, iAdvize Copilot™, onto their websites. These advanced AI assistants are capable of assisting online shoppers 24/7 and providing them with tailored product information and recommendations. Learn what these businesses discovered about this technology throughout their deployment process with our exclusive Generative AI for E-commerce Barometer.
2023 Conversation Trends: Automation Reaches an Unprecedented Level
Large-Scale Customer Service
If we had to highlight one key trend of online conversations based on our 2023 platform summary, it would undoubtedly be the dramatic increase in the amount of conversations completely or partially automated by AI. These now represent 60% of the total conversations recorded on our platform this year. The peak occurs in December where it reaches 70%, a 15-point increase compared to 55% in 2022.
Automation allows brands to manage a larger volume of incoming requests more efficiently. This is achieved either by deploying a virtual assistant to autonomously engage with users or by using technology to qualify visitors, thereby guiding them to the most suitable human respondent.
The primary benefits of this approach are substantial time and resource savings for businesses and a significant advantage for customers, who gain access to round-the-clock assistance.
The reason for this evolution isn’t a coincidence. The rise in automated conversation rates aligns closely with the advent and implementation of generative AI. This technology is adept at processing large volumes of conversations, markedly increasing automation rates while maintaining, and even improving, the quality of customer interactions.
The number of successful deployments accelerated rapidly in the second half of 2023, with impressive results:
- Up to a 90% automation rate with Trusted Generative AI-powered chatbots
- A conversion rate equivalent to that of human respondents
- 2.8x higher CSAT compared to previous-generation chatbots (NLU)
From Vision to Reality: The Expanding Role of AI in Online Shopping
"The adoption of generative AI has proceeded at a record-setting pace. Over 180 million users were already using ChatGPT in its first 10 months since launch. [...] In this second phase, we believe businesses will lead the way. Many companies have already prioritized generative AI as a way for them to differentiate and compete.”
We anticipated the widespread adoption of artificial intelligence in brands’ digital conversational strategies as early as 2023.
A few months later, our vision became a reality—conversations managed by generative AI experienced substantial growth. This shift gained momentum during Black Friday and the holiday season, highlighting the technology's capability to excel in key commercial periods throughout the year.
Consumers are similarly ready to turn to generative AI to meet their shopping needs. In fact, 74% of US consumers feel that generative AI is a good way to obtain accurate information on products they’re interested in.
Generative AI for E-commerce Benefits All Industries
Since launching our solution, iAdvize has supported over 100 brands in making the move to generative AI in their e-commerce strategies. Our copilots are already live for 50 major e-commerce brands.
Generative AI adapts to all industries, increasingly attracting a wide range of retailers. Among them, leading brands in fashion, consumer electronics, and sports & outdoors stand out.
E-commerce leaders are pioneering the use of generative AI in a business setting, some of which include:
- Cdiscount, Europe’s leading e-commerce marketplace, achieves a 24% conversion rate from conversations handled by generative AI.
- Vanden Borre, the Belgian leader in consumer electronics, sees a 28 point boost in CSAT from the implementation of a generative AI bot on their website.
- Sideshow, the leading global specialty manufacturer of pop-culture collectibles, increases CVR 5x with generative AI chatbots.
- IKKS reaches 80% automation for its conversations managed by generative AI.
After a year of generative AI, what lessons can we learn from its use in e-commerce?
Generative Artificial Intelligence Expands Messaging Automation Capabilities
In 2023, 90% of American consumers preferred messaging as their primary method of communication on e-commerce sites. This often overwhelms customer service representatives, making it challenging for them to address every request. To tackle this issue, businesses are turning to automated conversation solutions. Here, conversational assistants powered by generative AI prove invaluable, efficiently managing this high volume of interactions.
For one of our most technologically advanced clients that implemented Trusted Generative AI, approximately 67% of conversations were managed by AI chatbots as of December 2023, mirroring our overall average of 66%. Some brands have achieved up to 90% automation rate. The emergence of generative artificial intelligence marks a revolutionary shift in adoption, increasingly becoming a standard practice in e-commerce and other industries.
The benefit for businesses is clear; It enables brands to provide an automated customer experience that closely resembles an interaction with a human advisor. From a consumer standpoint, its application is both intuitive and easily adaptable, enhancing the overall customer engagement experience.
Since its launch, Trusted Generative AI has outperformed all other automation methods.
- Two-thirds (67%) of the conversations for our retail clients who’ve implemented generative AI are now fully automated.
- The proportion of conversations handled by an NLU bot (previous-generation AI) has decreased in favor of iAdvize Copilot™ (from 3.34% to 1.22% in four months).
- The share of automation via multiple choice question (MCQ) chatbot has also declined to around 18%. This model is typically used as an initial welcome bot that then redirects users to an AI copilot.
What are the benefits of AI automation? Unlike earlier models, conversational generative AI doesn't require any training. AI Copilots can be swiftly deployed and become fully operational in just two weeks.
Once implemented, the iAdvize Copilot™ enables companies to conserve resources. It autonomously manages a high volume of conversations, drawing exclusively on its accessible information to provide accurate, secure, and compliant responses.
The Economic Impact of AI: Increased Sales & Reduced Costs
The dramatic increase in automation rates means that a larger number of conversations can be processed without incurring extra costs. This is a clear advantage, especially considering that customers engaging in generative AI-led conversations can increase the conversion rate by up to 10x.
For our clients who’ve implemented iAdvize Copilot™ for Shoppers, the average conversion rate after a conversation ranges from 14% to 33%, a stark contrast to the less than 3% average for brands that do not provide an AI-backed conversational experience on their websites (source: Adobe).
AI’s Influence on Consumer Purchasing Behavior
- 4 out of 5 US consumers find value in using chatbots to shop online. This figure jumps to 91% among 18-34 year-olds. They are particularly appreciated for their 24/7 availability and the time they save.
- Chatbots have a decisive influence on purchasing. When the bot is able to provide an answer, 65% of shoppers report making an online purchase. When the bot is unable to respond, 46% report abandoning their purchase entirely. By connecting the technology to each brand's ecosystem, new chatbots enhanced with artificial intelligence reduce situations where the conversational agent is unable to provide a sufficient response.
- They meet the fundamental consumer need of easily obtaining answers to their questions at any time, thus removing the purchasing barrier of difficulties finding product information—as cited by 50% of Americans.
Empowering Customer Service With Generative AI
While the Shopper Copilot allows for handling a maximum number of pre-sales conversations through automation, iAdvize Copilot™ for Agents enhances general and post-purchase customer service capabilities. It enhances the speed, quality, and efficiency of service provided by representatives through trusted generative AI, proving to be a valuable asset for effective cost control.
For several of our clients, nearly half of their customer conversations are supported by this AI assistant, achieving satisfaction rates as high as 100%. This innovation markedly improves the daily work of customer service employees, equipping them with tools designed to elevate their productivity, such as:
- AI Suggest: Automatically drafts responses that agents only need to fine-tune to respond twice as fast.
- Smart Compose: Summarizes, rephrases, or adjusts the agents’ responses to improve quality with a single click.
- Smart Summary: Instantly provides agents with a summary of past interactions with customers.
- Copilot Panel: Equips each agent with a personal AI assistant to search for products, reference articles, and find information that customers are asking for.
For one of our leading clients, 80% of their customer service representatives have already adopted it.
Redefining Customer Satisfaction with AI Chatbots
The effectiveness of smart copilots isn’t just about their functionality, but also the quality of the experience they provide. While previous-generation chatbots often struggle to achieve even a 50% CSAT, generative AI bots are closing in on the satisfaction levels typically associated with human advisors.
Generative artificial intelligence has made it possible to offer high-quality, large-scale conversational experiences, addressing a longstanding challenge in customer service. The achievement of high customer satisfaction levels (with some of our clients reaching up to 94% CSAT) is a testament to this technology's ability to meet consumer expectations.
In 2023, generative AI has clearly showcased its capacity to transform e-commerce, delivering significant improvements in automation, customer satisfaction, and overall business performance. These trends set the stage for more exciting developments in 2024.