Conversational commerce has people talking

From social media heavy hitters like Facebook to fledgling startups like Magic, there’s a sea change coming to messaging apps. No longer confined to brief chats with friends, mobile messaging is increasingly becoming a portal for consumers to place orders, manage product delivery, and communicate with businesses. 

Mobile messaging as a commerce platform has been the norm in Asia for some time, but the concept is less familiar in other parts of the world. According to comScore, the global number of Internet users on mobile devices bypassed desktop users last year. Yet, Statista reports that smartphones account for only 14.4 per cent of eCommerce in the US and 7.5 per cent in Europe. Compare that with MasterCard’s Mobile Shopping Survey that reports 70 per cent of consumers in China have made purchases using their smartphones and 63 per cent have done so in India. 

The lag in mobile commerce 

The slow growth in mobile commerce in the US and Europe is a reminder that smartphones have been an ill-suited platform for retail browsing or purchasing. Internet technology has come a long way but the basic components of online shopping from desktops have remained fairly constant. Although mobile internet access has skyrocketed, mobile commerce has mostly replicated the desktop shopping experience in a way that isn’t convenient or satisfying.

The recent growth in ‘conversational commerce’ offers a glimpse into a more satisfying future for transactions via smartphones. Phones aren’t great for sifting through large numbers of images or detailed product descriptions but they are good at getting people talking…or texting. Smartphone voice assistants include Siri from Apple, Now from Google, and Cortana from Microsoft. According to Blogger Chris Messina, ‘These and related innovations suggest that “conversational commerce” is growing, and concierge-style services may become the primary way in which people transact on their mobile devices. No more tapping and swiping — it’s easier to just hand-off to someone with a computer that’s set up for complex information tasks like online shopping or research’.

Conversational commerce apps take a variety of approaches. Some employ voice recognition and others use SMS texting. Whether they use artificial intelligence (AI) or humans on computers who act as intermediaries, the goal is the same: make it easier to find and buy what you want while you’re on the go.

Changing the conversation

At the F8 conference this year, Mark Zuckerburg spent a big part of his keynote address describing how 600m Facebook users will be able to use Facebook Messenger to interact with local businesses, place orders, and get updates. Meanwhile, if you search for a restaurant on Google from a mobile phone, you now get a ‘Place an order link’, if the restaurant has a page on GrubHub, Eat24, or one of several other food delivery services.  

Perhaps the most striking example of the conversation commerce trend is Magic, a fast-growing start up that raised US$12m from Sequoia Capital for a service that helps users order almost anything—as long as it’s legal—just by sending a text message. Magic was spun up at Y Combinator startup Plus Labs. Their CEO Mike Chen is fond of saying they can even arrange to deliver a tiger. For some, this will conjure memories of the circa 1999 failed startup The site promised to ‘do anything a customer asks’ but quickly failed and turned into a punch line to jokes about Internet companies without sustainable business models.  

The approach was to sign deals with local businesses then rebrand the services to create the impression of a massive workforce. In contrast, Magic acts as a concierge service that researches and arranges order fulfilment, charging the actual cost of the item plus a fee for its time, set on a case-by-case basis. Whether this is a more sustainable approach remains to be seen.

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Above: Screenshot of Luka App

Additional startups offering text-based concierge services include:

  • Luka – An app that uses AI to learn your dining preferences and then searches online reviews to recommend restaurants you’d like. In an effort to simplify your decision making, it offers up only one suggestion at a time. It differs from Siri and Google Now, in that it can remember and integrate information from earlier conversations.
  • Cloe – This mobile app emphasises ease of use. You send a text of what you want and you get a response that’s a mix of AI with some human-powered help, to ensure the reply is responsive to the request.
  • Fetch – A mobile app that is more personal buying assistant than AI search engine. For a $10 monthly fee, you can summon assistance via text message to book flights, find event tickets, or get on-demand help with other purchasing tasks. 
  • Scratch – The personal shopping app is focused on helping with common items (if you need a tiger, Magic is a better bet!) and offers a best price guarantee. They also have experts that curate lists by shopping category. They get paid via commission from their hundreds of partner brands. 
  • Path Talk – This app offers a new feature called Places (available for free in the U.S. and Canada) that helps you find local businesses and contact them via text message. The requests are handled via human intermediaries, called Path Agents, who call the store on your behalf then text the response to you.

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Above: Screenshot of Fetch App

What’s old is new

There’s no doubt that mobile commerce is going to continue growing. However, it remains to be seen what form the next generation of successful mobile shopping apps will take. In a world where smartphones keep getting faster and more sophisticated, services built on text messaging seem relatively low tech, almost retro. Yet consumers have been waiting for better ways to shop while they’re on the go. Maybe the necessary technology was right in front of us all along, waiting for the right application.

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