Dash.jpgOkay Google, I’m hungry! Hello Siri, I need a new pair of jeans! Hey Cortana, where can I buy myself a new watch?

The giants of the tech industry have managed to incorporate the most natural means of communication – speaking – into the everyday use of smartphones. Right now, 50% of Google search requests are from smartphones and, of those, 20% come from speech input. The potential that this type of communication offers e-commerce is getting clearer by the day. Online stores like Outfittery or Zalon by Zalando are experimenting with WhatsApp to  offer style advice and sell their products. Facebook has integrated Uber into its Messenger app while Amazon has brought Echo and Dash the customers’ homes, bringing the retailer closer than ever to its customer base. A simple “Echo, add washing-up liquid to the shopping list”, and it’s ordered.

The name of this trend? `Conversational commerce’ – and it’s only really taking off now. That customers will soon only be communicating with chatbots or other forms of artificial intelligence is irrelevant. Soon enough these will be so advanced that you’ll hardly be able to tell the difference between human and artificial intelligence.

In China, the trend is even more established. Wjth ‘WeChat’ (China’s alternative to WhatsApp) friends can chat in groups, plan trips, book train or plane tickets and split the costs directly. All this without ever leaving the chat. You can call a taxi, order from Starbucks, buy a pair of Nikes, pay the water bill or make an appointment with your doctor.

But even the USA or Europe are bringing more and more services that work through messaging onto the market. The automated saving assistant, Digit, continually analyses in- and outputs and decides how much money you can set aside. The user is then notified via messenger. If you’re not happy with the settings or your savings, you can just send a message.

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Another example is Facebook M, the virtual assistant that acts as a type of concierge. It can order breakfast, make appointments or carry out requests using Amazon service lines. While at the moment M operates partially with the help of real people, the artificial intelligence behind it is improving daily and will soon be able to work completely autonomously. Magic or Operator are more examples that work in a similar fashion. There are virtual trip assistants or even virtual partners and the interaction always works over one of the many messengers.

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Cost Savings and Service in One

This doesn’t only affect low-interest products and classic e-commerce. Who would have thought that music-lovers wouldn’t know what music they’re listening to?

Even strongly emotional products, where the shopping experience plays an important role, are affected. A great example of this is Spotify. Years ago it would have been inconceivable for music-lovers to leave out the experience of going to a music store and searching through records to find something new and exciting. Today, few Spotify users actually know what they’re listening to. They rely completely on algorithms and listen to what is suggested to them –  and this is in an area where the products are seen as a means of identification. The convenience is just much higher –  moving from the buying process to the choosing process all the way up to availability.

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Who would have thought that music-lovers wouldn’t know what music they’re listening to?

This doesn’t only affect low-interest products and classic e-commerce. Even strongly emotional products, where the shopping experience plays an important role, are affected. A great example of this is Spotify. Years ago it would have been inconceivable for music-lovers to leave out the experience of going to a music store and searching through records to find something new and exciting. Today, few Spotify users actually know what they’re listening to. They rely completely on algorithms and listen to what is suggested to them –  and this is in an area where the products are seen as a means of identification. The convenience is just much higher –  moving from the buying process to the choosing process all the way up to availability.

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Selling the solution always beats selling the product

This strikes fear into the hearts of FMCG providers in particular. Whether it’s it washing-up liquid, toilet paper, milk or even food, if your smartphone knows what your preferences are, there’s no reason to keep going to the supermarket. Especially not when, like today, everything can be delivered for free directly to your home. Supermarkets’ reactions to this have been simply to put their product range online. While this has led to a growth in online shopping for foods, the shopping experience is not ideal. Anyone who tries to to buy everyday products online experiences a product-chaos, which is hard to see past. The selection process is extremely lengthy if you don’t know exactly what you’re looking for. In this situation you could go to the supermarket and be just as fast. What the customer is looking for is a solution to their problem, not another option.

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Modomoto, Zalon and Outfittery prove exactly this with their current success. Curated shopping is already superior to stationary trade with its USP of personal consultation and product suggestions. Online shops have more data about their customers which means they can offer the customer products that will suit their preferences. All this happens through conversations over  social media such as Facebook, Instagram or WhatsApp with unbeatable convenience and simple transactions. By simply touching the screen or saying a word, you’ve bought the product.

Those Who don’t Reinvent Themselves will be Replaced

Online trade, FMCGs and stationary trade have to think about how they can generate additional profit for the customers. Conversational commerce is only one promising possibility. Here, we’ll shortly present other possibilities and technologies.

There’s no question that trade and FMCG will change fundamentally. Established players will need to reinvent themselves to stay relevant in the future. It’s not about gimmicks but much more about using new technology in a precise, focused way and shaping new business models sufficiently. More about this in our article „The Digitization Trap”.

How will your market change? Which business models and technologies will shape this change? And how will you use this change as a chance? We would like to hear your opinion.

FMCG & Retail

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