Do retailers need an Alexa Skill now? Or better a chatbot?

Chatbots and voice assistants are often mentioned in the same breath. Yet they are completely different systems. The difference lies not only in the respective input and output method - text versus speech - but also in the ecosystems in which both are embedded and the associated dependencies: Here, your own website, store, or social media channel; there, other ecosystems such as Amazon's Alexa, Apple's Siri, or Google's Assistant.

The most important question, however, is not about the differences, but rather: In which areas and for which retail companies do these technologies make sense?

Chatbots for product searches and orders

Chatbots are ideally suited for product searches. In the fashion sector, bots are already in use today that ask: Do you want to take a look at an outfit? They then show photos of pants, shirts and shoes and refine the selection depending on what they like. So the customer doesn't have to search categories themselves, as they would on a website. If this is designed in an amusing and structured way, it can definitely have added value for him.
Users themselves see the greatest benefit of chatbots in product ordering. This is shown by a recent study by Elaboratum Suisse.

At what point is it worthwhile for retailers?

A single-store website will usually attract too few visitors to justify the investment in a chatbot. For larger retailers, it is worthwhile if the bot can easily and quickly answer questions about orders, invoices and wish lists on the website or on social media channels, for example via Facebook Messenger. Companies that use an external call center, for example, can quickly calculate the savings that result when 30 percent fewer customers call as a result of chatbot use. 

What are the limitations of chatbots?

In principle, customers are open to chatbots. The Elaboratum study found that over 60 percent of Swiss users could imagine using a chatbot. The electronic helpers save waiting in telephone queues and for written answers to mail inquiries.

However, the range of services offered by chatbots is still quite limited today. In their simple form, they respond to keywords or word combinations with specific answers, providing information on days of the week and times for the keyword "opening hours," for example. This is quick and saves customers from having to search through long FAQ menus, among other things. Provided that it works and the bot understands the query correctly. This is exactly where the problem lies: the machine only knows what it has been trained to know. However, language is so varied that misunderstandings often arise, especially with complicated text entries. However, a chatbot that doesn't know what to say or gives "stupid" answers annoys customers. Therefore, if communication with the bot falters, a human should seamlessly take over.

There are software solutions for this purpose in which bots are already integrated. Implementing and training such systems requires effort and budget. But retailers should not be deterred by this. Because one thing is already becoming apparent: Chatbots will become a matter of course in the next few years.

Will it still be possible without Alexa Skill in the future?

At present, shopping by voice is still considered a niche topic. But voice control is changing e-commerce at breakneck speed. On the one hand, retailers must respond to changes in user behavior - soon the majority of search queries will be made by voice. On the other hand, the competitive situation is becoming even more acute. This is because Amazon dominates the market for smart speakers and directs customer inquiries via this channel almost without competition.

In the future, it will therefore be important for retailers to act in an Amazon-optimized way. Because it will certainly not be possible for individual retailers to set up similar eco-systems for voice control. So far, Alexa can only be used to shop at Amazon. It remains to be seen whether Amazon will allow others to integrate their stores into the Alexa environment. If they do, then their own skills would be a good way to offer their own product range via the Amazon voice channel.

For example, if the user explicitly asks about the current offers from "Jumbo," the retailer could sell its products via its own skill. So far, the customer receives information about the offers in response to this question, but cannot buy them directly via the system.

Prerequisite: brand loyalty and marketing of the skill

A prerequisite for the success of a store integrated into Alexa is that the retailer has already built up a strong brand of its own. This means that shoppers must not only be interested in the products, but also in brand loyalty and the shopping experience at a specific retailer.
This could be achieved, for example, by means of additional services such as automated digital shopping lists. And the skill must be extensively marketed. After all, the customer first has to find out that this function exists at all. In addition, skills require a great deal of explanation. So far, only very few people know about the Skill Store. The marketing effort is therefore considerable. 

In the future: multimodal interaction

The future is likely to belong to multimodal interaction. With Echo Show, for example, Amazon offers a touch display in addition to its Alexa voice interface. The user can start an interaction, for example, by asking: "Alexa, show me blue sneakers from Adidas and Nike in size 43. He then sees the result on the display; there he can also complete the purchase process.

This is a great efficiency gain for the customer, as he does not have to go to the relevant websites, initiate the search there and then compare several hits with each other. One thing is clear: Whoever owns the search algorithm controls the market - currently that is Amazon.

Let's hope that the access channels to the customer are regulated in such a way that retailers are not at the mercy of the conditions of the big players if they want to offer products via voice assistants. 

More useful at the moment: chatbots

At the moment, chatbots are the more obvious technology for retailers to get in touch with customers. It has the advantage that you can place them on the website as well as in Messenger.

Chatbots make it possible to individualize the interaction style more strongly and to make greater use of stimuli or stylistic elements of non-verbal communication (for example, emoticons). In addition, a more concise identity that fits the brand can be used (for example, through gender or visual elements, such as a brand-typical image of the bot). When creating an Amazon skill, on the other hand, fewer customizations are currently possible. 

Especially in combination with voice control, chatbots could offer maximum convenience for the customer. This is because speech is used to communicate about things that are simple in terms of content. Chatbots, on the other hand, can depict more complex situations because the user has the opportunity to read answers and take his or her time.