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Important Role Of Chatbots In Retail 2022


Retailers have to provide the best customer service they can.  In a world where customers are constantly looking for new and better ways to connect with brands, many retailers are turning to chatbots as an effective way to meet this demand.

By 2024, retail consumers will spend over $142 billion via chatbots — up from $2.8 billion in 2019

(Insider Intelligence)

As the proliferation of chatbots in the retail industry continues to gain traction, it behooves retailers to contemplate the multifarious ways in which this cutting-edge technology can ameliorate their business operations. The ensuing report furnishes a comprehensive exposition on the intricacies of chatbots and proffers insights into the myriad ways in which they can be deployed in the retail sector to bolster customer service and satisfaction.

What Are Chatbots?

As a quasi-artificial intelligence apparatus, chatbots are designed to simulate the nuances of human conversation. Their extensive application in the customer service sphere often sees them tasked with duties such as offering up product recommendations or keeping patrons abreast of their order’s whereabouts. By comprehending natural language, chatbots can perform a wide range of duties and exhibit a prodigious ability to learn and grow over time.

Chatbots In Retail Industry

chatbots in retail

The upsurge of chatbot implementation in retail outlets is palpable, and for good reason. These AI-driven marvels boast an expansive repertoire of services, from providing shrewd product recommendations to keeping tabs on the whereabouts of orders. Furthermore, chatbots offer an economical and efficient means of delivering customer service. As the ubiquity of chatbots in the retail realm continues to surge, it is incumbent upon retailers to cogitate on how best to leverage this technology to bolster their business operations.

The different types of chatbots and their applications

The chatbot landscape is replete with a myriad of chatbot types, each with its own set of applicative properties. Among the three most common chatbot variations, we have chatbots, virtual assistants, and chatbot hybrids.

Chatbots, being the elementary form of chatbots, are chiefly deployed to dispense rudimentary customer service. They are proficient at fielding uncomplicated product queries, monitoring orders, and even furnishing basic recommendations.

On the other hand, virtual assistants, the more sophisticated category of chatbots, are equipped with a multifarious array of capabilities. These AI-driven marvels evince an uncanny ability to comprehend natural language, thus enabling them to hold engaging and convivial conversations with customers, and tackle more elaborate tasks.

The pinnacle of chatbot innovation is exemplified by chatbot hybrids, which amalgamate the quintessential attributes of both chatbots and virtual assistants. These hybrid chatbots showcase a remarkable dexterity in catering to complex customer queries and furnishing insightful product recommendations, thereby affirming their status as the ultimate embodiment of chatbot technology.

General Chatbot Applications

As the adoption of chatbots in the retail landscape continues to gain momentum, retailers are left to grapple with the plethora of ways in which they can leverage this technology to augment customer service.

Herein lies a veritable panoply of ten chatbot applications that retailers can harness to revolutionize their business operations:

  1. With the capability to leverage the customer’s purchase history and preferences, chatbots have the ability to provide product recommendations with ease.
  2. The tracking of orders can be effortlessly facilitated by chatbots, furnishing customers with timely and up-to-date notifications concerning their shipment status.
  3. When it comes to customer service and support, chatbots can provide invaluable assistance by handling inquiries and resolving complex issues with unparalleled proficiency.
  4. The intricacies of returns and exchanges can be made a breeze with the help of chatbots, who offer guidance and progress updates at each step of the process.
  5. Appointment scheduling for personalized services, such as fittings or consultations, is an area in which chatbots excel, as they can manage and organize calendars with effortless ease.
  6. From product availability to replenishment timelines, chatbots can provide updates with an outstanding level of detail and accuracy.
  7. In the world of commerce, the value of promotional codes and coupons cannot be overstated, and chatbots are able to disseminate them with ease, helping customers save money on their purchases.
  8. Shipping-related inquiries, such as delivery times and tracking numbers, can be managed seamlessly by chatbots, who excel at providing timely updates and responding to questions.
  9. With their omniscient capabilities, chatbots can assist customers in locating the nearest store location, providing detailed information about each branch with remarkable accuracy.
  10. The arduous task of gift wrapping can be delegated to chatbots, who provide a high level of service and timely updates on the status of orders.

Common Applications Of Chatbot In Retail

At the vanguard of chatbot applicability in the retail sphere lie customer service, product recommendations, and order tracking. Chatbots, with their versatile capabilities, can deliver unassailable customer service by fielding both rudimentary and complex customer queries.

Additionally, they exhibit an astute ability to furnish customers with recommendations that cater to their specific needs and preferences. Chatbots are also equipped with the wherewithal to track orders and offer up-to-date status updates to customers, thus affording them a sense of transparency and ease.

How can chatbots help in the retail industry?

As the retail industry sets its sights on harnessing the power of chatbots to revolutionize the customer experience, it is readily apparent that the allure of this technology lies in its multifarious capabilities. From product recommendations to order tracking, chatbots prove to be a cost-effective and highly efficient customer service solution.

Moreover, retailers can leverage chatbots to assist customers in finding products, furnishing recommendations that are tailored to their needs, and providing a stellar customer support experience. Chatbots can also help facilitate order tracking and returns, thereby endowing customers with a sense of ease and retailers with a sense of cost-saving. In sum, chatbots possess the potential to furnish customers with a top-tier experience while simultaneously augmenting retailer revenue streams.

When contemplating the integration of chatbots into their retail operations, astute retailers should take into account a multitude of factors, including but not limited to:

  1. The primary purpose of the chatbot: Will it serve solely as a means of customer support or be equipped with the functionality to make recommendations as well?
  2. The chatbot’s expansive repertoire of features: How will the chatbot’s various features benefit customers and, in turn, the retailer itself?
  3. The chatbot’s seamless implementation: What steps will be taken to ensure the integration of the chatbot into the existing customer service infrastructure?

In the world of retail, chatbots can prove to be a game-changer, furnishing a plethora of benefits to both retailers and customers alike. To ascertain whether or not chatbots can aid in the improvement of customer service, retailers must scrutinize their unique needs and requirements.

For a comprehensive guide to chatbots in the retail industry, continue perusing our chatbot in retail industry guide, replete with in-depth analyses and expert insights. Additionally, be sure to delve into our case study exploring the various ways in which chatbots are being used in the retail industry.

Challenges faced by chatbots in retail industry

As is often the case with nascent technologies, chatbots in the retail industry have their fair share of challenges to contend with. Among these challenges are:

  1. Linguistic limitations: While chatbots are still in the process of comprehending human language and formulating helpful, meaningful responses, they may inadvertently misunderstand customer queries or respond in a manner that is less than satisfactory.
  2. Natural language processing difficulties: Given the complexities of human language and its nuances, chatbots often grapple with understanding the intricacies of human speech, leading to errors in their responses.
  3. Delayed response times: In comparison to their human counterparts, chatbots may take a comparatively longer time to respond to customer queries, a point of concern for customers seeking prompt answers to their inquiries.
  4. Erroneous information: Occasionally, chatbots may provide inaccurate information in their responses, causing customer frustration and dissatisfaction.

Though chatbots present unique challenges, they remain a promising innovation in the retail industry, with the potential to transform customer experiences and streamline business operations.

Limitations of chatbots in retail business

One major limitation is that chatbots struggle with complex customer service inquiries. Although they excel at providing basic information and performing simple tasks, they falter when faced with more intricate issues. And as result, sometimes when the chatbot fails to solve the customer problems, the human operators need to take charge and resolve the issue. Though, this is not entirely a problem, given that we are hugely reducing man force and are only limiting to “when required” or “when requested”, it is still a seep hole.

On the other hand, while chatbots can undoubtedly provide swift and cost-effective customer service, they also have their other limitations. This may be a cause of chatbot not only failing to answer the question effectively but also may repeat queries or crash and cause technical issues when under pressure or heavy traffic. Such issues can frustrate customers and, in some cases, cause them to take their business elsewhere.

Another limitation of chatbots in retail is their proclivity towards monotony. When customers pose the same question multiple times, chatbots will often provide the same response each time. This lack of variation can be particularly irksome for customers, and they may be less inclined to use the chatbot in the future as a result. Ultimately, this may translate to decreased customer satisfaction rates and hinder business growth.

In light of these limitations, it’s important to recognize the potential downsides of chatbots in retail. While they undoubtedly offer many benefits, it’s crucial to implement them strategically and ensure that they are integrated seamlessly into your customer service operations. By recognizing these limitations and taking steps to address them, retailers can ensure that their chatbots deliver superior customer service that meets the expectations of their customers.

Guide to designing a chatbot in retail business

In the sphere of chatbots and their application in the retail sector, a multitude of considerations must be taken into account. The first of which pertains to the diverse range of tasks that can be performed by chatbots, ranging from offering recommendations regarding products to efficiently tracking orders. Not to mention, chatbots are an economically efficient avenue for providing customer service.

Moreover, a crucial element to contemplate is the customization of chatbots to meet the unique requirements of a retail business. This task can be approached in a variety of ways, with the optimal methodology contingent upon the chatbot platform utilized.

Last but not least, measuring the efficacy of a chatbot is of paramount importance. This evaluation can be performed via several metrics, but a commonly employed indicator is the frequency of conversations the chatbot engages in with customers.

Keeping all of these factors in mind, let us now delve deeper into the process of designing a chatbot for a retail business.

There are a few key steps to designing a chatbot for a retail business:

1. Define the chatbot’s purpose

To commence, it is essential to define the chatbot’s purpose meticulously, including, features, platform, elements, and more, to ensure chatbot success.

2. Choose the right chatbot platform

With the plethora of platforms available, each with unique features and capabilities, selecting the appropriate one can be bewildering. But worry not! Our team of experts at 12 channels can provide guidance and resources to help you choose the most suitable platform for your business.

So, if you’re uncertain about which platform to select, or you need more information about chatbots, we are available to assist you. Reach out to us today via our 12 channels for a comprehensive consultation.

3. Customize the chatbot for your business

Once you have completed looking for the platform, you will need to tailor fit the chatbot to your business and make it work as you wish to by adding features liking product recommendations or order tracking or any other feature you intend for it to perform.

4. Train the chatbot

And once the chatbot is customized as you see fit, train it on your retail business products, services, and process for it to perform accurately and provide the best information to its knowledge on your products and your business to your customers without the requirement of manual data.

5. Measure the chatbot’s success

Finally, once you have trained, tested, and deployed, now you need to know whether this bot is providing results as you want it to. Well, in the testing phase itself you will know whether your bot is performing as you intended for it to perform, but if you want to know if its converting it to results, the you need to give your bot time in the market and measure its success using metrics like number of successful conversation, leads, ROI, etc.

Popular brands using chatbots in retail industry

The burgeoning popularity of chatbots in the retail industry cannot be denied, as they offer an extensive range of benefits to both retailers and customers alike. Some of the most prominent brands that have implemented chatbots in their retail operations include Amazon, Walmart, and Target.

Amazon, renowned for being at the vanguard of this technology, was one of the first to introduce chatbots for customer service purposes, and has since devoted itself to further enhancing its chatbot technology. Amazon chatbots boast a multitude of capabilities, from proffering product recommendations to efficiently tracking orders, and are a cost-effective modality for rendering customer service.

Walmart, also an avid proponent of this technology, provides its customers with an AI-powered chatbot that has the capacity to assist them in an array of tasks, such as locating products within the store, checking prices, and even placing orders.

Target has also implemented its own chatbot, powered by the highly respected IBM Watson artificial intelligence platform, to aid customers with an assortment of duties, including finding products and coupons, as well as checking store hours.

As exemplified by these instances, chatbots are radically transforming the retail landscape.

Future of chatbots in retail industry

Undoubtedly, the future of customer service in the retail industry belongs to chatbots. It is not a question of if, but rather, a question of when they will inevitably dominate this sector. Their innate ability to furnish swift and precise responses renders them ideal for addressing customer inquiries, as well as assisting with tasks such as product recommendations and order tracking.

In addition to elevating the quality of customer service, chatbots are also a more financially sound alternative to human employees. They can operate around the clock without any need for respite, making them a perfect fit for businesses that operate on a global scale.

As the popularity of chatbots continues to soar, it is imperative that retailers ponder over how this burgeoning technology can yield benefits for their business.


The advent of chatbots has brought about a paradigm shift in the customer service landscape, with a multitude of retailers embracing this transformative technology to enhance their service offerings. Leveraging the power of artificial intelligence, chatbots have proven their mettle in catering to a diverse range of customer needs, spanning from personalized product recommendations to efficient order tracking, all while minimizing costs, rendering them an economically viable solution for businesses.

The burgeoning prevalence of chatbots has prompted retailers to contemplate the various ways this cutting-edge technology can accelerate their business growth. By facilitating prompt and convenient access to information, aiding in product recommendations, and streamlining order tracking, chatbots hold the potential to fundamentally transform the retail industry. Due to their cost-effective nature, they have the capacity to effectively alleviate customer service costs, which in turn translates to higher profits and customer satisfaction rates.

All things considered, the integration of chatbots into retail businesses can yield considerable benefits, ranging from boosting customer engagement to optimizing operational efficiency. If you’re considering implementing chatbots in your business, it is essential to consider the multitude of advantages they offer. At 12 Channels, we provide comprehensive services, manned by subject matter experts, to help businesses navigate the complex chatbot landscape. So why not give us a call today and book your consultation to commence your journey towards achieving unparalleled success?

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