The Asia Pacific region is predicted to contribute significantly to the growth of retail spending over chatbots led by the rise of messenger apps, e-commerce and generative AI.
According to Juniper Research, global retail spending on chatbots is forecast to reach $12 billion in 2023, growing to $72 billion by 2028. The report also estimates that consumer retail spending via chatbots is expected to reach $142 billion by 2024, an increase from $2.8 billion in 2019.
The report further forecasts that Asia Pacific will account for 85% of global retail spending on chatbots, despite only representing 53% of the global population.
Growth fueled by the rise of messenger apps
The chatbot market is being driven by the increasing use of messenger applications and the need for customer analytics. Chatbots integrated with messenger apps can provide a better user experience and a higher return on investment. Messenger apps allow chatbots to save chat history for future purposes and gain actionable insights.
The most popular messaging apps in the world in 2023 are WhatsApp with 2 billion users, WeChat with 1.2 billion users, and Facebook Messenger with 1 billion users.
Demand driven by retail and e-commerce industry in emerging economies
The Asia Pacific region is experiencing a notable rise in industrialization, which has led to a growing demand for chatbots in the market. Retail and e-commerce businesses in emerging economies like China, India, Indonesia, Vietnam, Malaysia, the Philippines, Taiwan, and Thailand are driving this surge, resulting in widespread adoption of chatbots by retailers and e-commerce players.
Popular messaging apps in the region like WeChat, LINE, and Kakao have established robust partnerships with various online retailers. As a result, there is a strong belief in chatbots as an effective retail channel.
Nevertheless, the report by Juniper Research anticipates that the introduction of open language models will spur growth beyond the Asia Pacific region. By 2028, expenditure from this region is projected to drop to 66%, as online retailers in North America and Europe increasingly adopt chatbots for their retail operations. To capitalize on this growth outside of the Asia Pacific region, the report recommends vendors to focus on targeting online retailers in these other two regions.
ChatGPT paving the way
The author behind the Juniper Research report, Frederick Savage, said: “Chatbots have historically been a low priority for omnichannel strategies owing to the high cost of training AI-based algorithms. However, ChatGPT has significantly disrupted this trend, lowering the cost of implementing chatbots for smaller retailers.”
The emergence of cost-effective open language models such as ChatGPT will be one of the key factors behind the growth of retail spending on chatbots in North America and Europe.
How can AI and chatbots be useful in retail?
Generative AI models like ChatGPT can significantly improve the way customers interact with retailers online. Here are some ways how that can be enabled:
- Conversational Product Search: Allowing customers to find the product they are looking for easily and simply through more natural language. Conversational commerce can greatly accelerate the process and lead to higher conversion rates for retailers.
- Customer Support: Chatbots powered by AI can help reduce the need to have human customer support agents. Such chatbots can also help address more complex queries and offer more accurate resolutions.
- Cross-Selling and Upselling: AI-powered bots can provide intelligent shopping recommendations based on analytics and user purchase history.
Here are some of the companies that are using ChatGPT to improve customer experience:
- Air India
For example, Salesforce has partnered with ChatGPT and introduced its own Einstein GPT, a tool based on OpenAI’s chatbot, to create the first generative AI for its customer relationship management (CRM) tools.
Meanwhile, Air India became the first aviation company in India to announce its use of ChatGPT to enhance customer experience on its website. The airline will utilize GPT4, the latest version of the open generative AI model, to improve the FAQ section of its website, pilot briefings, and other areas.
In contrast, companies like Samsung, Apple and Amazon have joined financial institutions JPMorgan Chase, Bank of America, Goldman Sachs and Deutsche Bank in restricting the use of ChatGPT to purportedly prevent the leak of confidential data.
However, these organizations seem to be outliers, as most companies are increasingly looking to leverage the use of AI to create a more meaningful connection with their customers.