Contextual Commerce: Will A Bot Be Your Next New Facebook Friend?
A few years ago, when Facebook had a mere 500 million active users, it was betting on those users’ desire for breeding virtual pigs and building imaginary cities would evolve into a major revenue stream. However, revenues via FarmVille, CityVille and other online games did not pan out as expected (not helped by the precipitous rise and fall of gaming company partner Zynga). Fortunately, Facebook made some other smart strategic moves like Facebook for Mobile, allowing it to capture the increased ad revenue that is shifting to that platform. Yet the company is still chasing that aspiration of keeping transactions between buyers and sellers within its digital walls. Facebook is now looking to its Messenger platform, which is being built with the aim of enabling contextual commerce, to provide the basis for that strategy.
Here come the bots
At its F8 developer conference in April, Facebook announced the beta version of Messenger. Developers can now build chat bots for the platform, which Facebook envisions can be used for a variety of applications: automated subscription content like weather and traffic updates, customized communications like receipts, live automated messages, and online transactions.
The latter application is becoming known in the industry as contextual commerce: the ability for a customer to make a purchase within their current online environment, rather than having to go to an external website, search for the item, place it in the shopping cart, and fill out payment information. Other terms that have been used to describe this type of “in the situation” transaction include conversational commerce and in the publishing and media world, shoppable content.
The reason for this move? Facebook says it wants to help companies to reach “anyone on mobile,” and to make it possible to be “more personal, more proactive, and more streamlined in the way that you interact with people.” It also “removes the friction” of the customer having to download an app, “given that Messenger is used by 900 million people every month.” And in a sign that it is at least aware (if not overly concerned) of the privacy issues that such an initiative might raise, Facebook also stressed that people will be able to mute and block messages they don’t want to receive, and that the developers building on the platform will need to follow strict policies.
In other words, Facebook’s goal is to use artificial intelligence to power bots that can support communications, content sharing, and transactions between businesses and their customers, all on the Messenger platform. What the company potentially gets in return is threefold:
1) it can charge advertisers higher rates for these potentially higher value customer interactions;
2) it earns revenue from payment services reversing a trend of decline for that category; and
3) it amasses and owns data on how nearly a billion people interact with brands, including when, where, and how much they spend online.
Inspiration courtesy of WeChat
The success in China of WeChat, the social media app owned by Chinese company Tencent, in enabling its platform with transaction capabilities has undoubtedly influenced Facebook’s roadmap for Messenger. WeChat now has nearly 900 million monthly average users in China, and also offers services such as taxi hire and peer-to-peer payments; both applications that Facebook has also launched on Messenger in the last year.
However, the Chinese e-commerce market is driven by its own unique dynamics. For one, e-commerce growth in that country has coincided with smart mobile device growth, and most e-commerce transactions there are now on mobile devices. This means Chinese consumers do not have the historical habit of buying on desktops on web-based stores as those in the U.S. and other countries with a longer e-commerce history.
More importantly, China’s electronic payment industry grew out of the same parent companies that dominate its e-commerce market: WeChat has WeChat Wallet, for example, while marketplace behemoth Alibaba provides Alipay. In the U.S., however, the payment industry is fragmented, with consumers preferring a wide variety of payment options like credit cards and PayPal. While mobile payment platforms such as Apple Pay are becoming more common, they have not hit mass market adoption to the same degree as their Chinese peers. Providing seamless payments will be key to Facebook’s ability to offer a commerce experience that people will not just try out once, but return to regularly.
Is contextual commerce a solution that creates a set of new problems?
Here’s a hypothetical example of how contextual commerce on Messenger might work. You’re chatting with your friend making plans to meet at her place in honor of her birthday and realize you forgot to get the bottle of wine you said you’d bring. Without leaving the chat, you request a bot to suggest a bottle of red wine to be delivered to her address later that evening. Through a series of follow-up questions, the bot helps you narrow down your selection to a French burgundy in the $20 range, You select one bottle, confirm payment, and arrange for delivery to her house later that day.
It sounds cool, and several popular consumer brands like 1-800-Flowers.com have signed on to offer the service so far. But based on Facebook’s own engineering-y description of the service and on how eagerly it seemed to have copied the WeChat model, I can’t help but wonder if this is yet another case of a tech company developing solutions that actually solve their own problems – in Facebook’s case, increasing average revenue per user – rather than truly looking through the lens of the customer to provide services they value.
I know it’s still early days for Messenger and that it is, after all, in beta. But I’ve also read a few accounts of users who have tried out the new Messenger and found it cumbersome and frustrating. One person described trying to buy a pair of trousers on shopping app Spring and when he couldn’t get the size he needed, ended up being transferred to a human who also didn’t understand his size requests: customer experience fail times two. Another person described some two hours of frustration trying to buy a pair of shoes at a specific price point. This Buzzfeed reporter wrote:
You know how when you go to a store, and you’re dreading the salesperson will say, “Can I help you find something?” It’s like that, but 10 times worse. Instead of creating a faster and better experience, it was like going into a fancy store and instead of being allowed to browse the racks, a rude and pushy salesperson brought out items one by one to see if you liked them.
Clearly, Facebook Messenger and the brands that pioneered contextual commerce on the platform still have a ways to go to make it an experience that customers will value.
In the meantime, Facebook and other vendors investing in contextual commerce would focus less on the WeChats of the world and instead conduct more extensive user research in order to identify what is important to existing Facebook users in the U.S. and other key markets. For example, someone buying clothes will be concerned about getting something in the right size. The ability of the bots and human customer support reps to help that customer with sizing will be essential. As they get more sophisticated, bots may indeed become a great complement to a brand’s customer service capabilities. But putting so much of the burden of customer experience on bots could backfire if, as in the examples cited above, they end up creating frustration rather than alleviating it.