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It is hardly a secret anymore – ecommerce in Southeast Asia is an enormous $238 billion opportunity that has been under the global radar in the recent years. It’s no longer about whether businesses should have an online presence, but instead how they can stay relevant to their audience in a quickly crowding space.

Indonesia Ecommerce Landscape

ECOMScape: Indonesia details the growing ecommerce ecosystem as of 2016. Source: eIQ

One market that has time and time again stood out is Indonesia thanks to more accessibility to mobile devices, affordable data plans and a youthful demographic propelling social channels and social commerce to the leading activity on the internet. It is a clear goldmine for brands, retailers and investors alike to unlock over 250 million unrealized online shoppers.

So how are they going to do this? Well, Indonesia is a mobile-first country and its citizens update their social networking apps twice more frequently than games and fives times more than music/video apps according to a study by Baidu.

In the next three years, Indonesia is expected to have over 92 million smartphone users, up 67% from 2015. This will push many startups to skip desktop entirely and focus on smartphone friendly ecommerce products. New apps have been the popular way to reach customers, but large spending for development, maintenance, and marketing have restricted companies from finding long-term success. And what happens when app downloads start to slow down as currently happening in the US?

wearesocial-indonesia-eiq

The rising global resistance to new apps

Almost 50% of smartphone users in the US did not install a new app last month while less than 25% of the ones who did returned to it after the first use. What’s even more shocking is a full 94% of revenue in the App Store comes from only 1% of all publishers, think Google and Facebook.  

Mobile isn’t dead but the opportunity is shrinking. So what does this mean for businesses scrambling to capture the attention of the world’s fourth largest population who prefers to use on average only 6.7 apps?

You don’t chase customers, you find them where they already are.

For the first time, messaging apps have surpassed social networks and that’s where chat commerce comes into the story.

Chatbot, chat commerce

Chat commerce isn’t the future, it is the present.

Chat commerce or conversational commerce is the intersection of messaging apps and shopping and is already a very familiar concept in the West. Businesses understand the importance of being readily available to their customers, especially as a poor customer service experience will drive 89% of them to a competitor.

According to Facebook, more than 50 million companies operate on its platform and send more than 1 billion business messages every month.

But having properly trained customer service reps to support hundreds to millions of personal conversations in parallel is difficult to scale for any business. Solution? Chatbot.

A chatbot is an AI (artificial intelligence) feature of a chat or messaging platform that simulates a human conversation with the user in order to provide them with the information or service they’re looking for.

Brands overseas like Taco Bell have partnered with Slack to allow customers to order and pay through the team communications platform.

Think about Siri who has been helping Apple users carry out tasks since 2011 or Amazon Echo, an at-home device by Amazon, which encompasses a chatbot named Alexa to read aloud weather reports, set alarms and more importantly, help customers order new products from Amazon.

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Screenshot from Amazon Echo commercial.

These are only a few of many examples. Facebook Messenger also opened its platform earlier this year for businesses to build chatbots through its Messenger Send/Receive API.

The API will support sending and receiving text and also images and interactive rich bubbles containing multiple calls-to-action.

chat-bot-benefits, southeast asia chatbot

A chatbot can clearly offer a business great benefits to get closer to customers in a medium they are already familiar with, so why has there been little activity in Southeast Asia?

Call all chatbots

Southeast Asia has largely mirrored the West and particularly China in development of its ecommerce maturity. Yet, current chatbot growth has been stuck at the ‘idea phase’ – a lot of chatter and buzz about its revolutionary importance but no product.

“The reason why companies in Southeast Asia haven’t created chatbots isn’t because they don’t think the opportunity is there, but they lack the resources and most fundamentally – AI talent to build it,” comments Lingga Madu, Sale Stock co-founder.

No company has released a true commercial-scale, transaction-enabled MVP, that is, until now.

Sale Stock case study: Facebook Messenger’s first chatbot in Southeast Asia

One lesser talked about company has already begun testing its chatbot with Facebook, Indonesia’s most popular social channel. Sale Stock, the mobile first shopping platform widely popular among Indonesia’s young females, has become SEA’s first company to launch a chatbot that can handle end-to-end transaction on Facebook’s Messenger Platform.

Meet Soraya AI, a relatable, cheery chatbot who handles 100% of queries coming to Sale Stock’s Facebook Page and the brainchild of Facebook, Google, Palantir, and NASA engineers recruited by Sale Stock around the world.
sale-stock-chat-2, southeast asia chatbot

Soraya uses machine learning to shuffle through queries and decide whether to answer it autonomously or give recommendations to an agent instead.

Frequently asked questions such as “do you offer cash on delivery?” or “do you sell high heels?” are replied to almost instantly. In development since 2015, she can already handle 22% of all queries autonomously.

The beauty of machine learning is that the more information she receives, the smarter she becomes and the more accurate her answers will be.

Soraya has already improved response time by 20 – 40 times and currently replies within 60 s. That has granted Sale Stock a response time badge on their official Facebook page.

sale-stock-fb, southeast asia chatbot

Soraya has also been fed large amounts of past Sale Stock customer queries to enhance her intelligence. This combined with recent purchasing behavior and browsing history allow her to recommend consumers personalized products.

Buying the product is even more simple. Soraya asks for confirmation of the item, correct size and color, all within Messenger, and requests address and payment method. If it is a returning shopper, all previous payment information is saved so purchase is simply a click of yes.

sale-stock-chatbot, southeast asia chatbot

“Soraya was created to meet the needs of our customers, many of whom are living outside major cities on limited social media data plans where chat is free but browsing is not. Some have never even been exposed to digital shopping carts but chatting is second nature,” – Jeffrey Yuwono, Sale Stock President.

Trust is also a major concern that holds many Indonesians back from trying ecommerce. By creating a personable chatbot on a familiar channel, brands hope customers will feel comfortable sharing their personal details.

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Chatting with Soraya on Facebook Messenger

Sale Stock chat bot, Indonesia

What’s next for Sale Stock?

The company is already working to create viable chatbots for WhatsApp, LINE, BBM and SMS as they are the most popular messaging platforms their shoppers use. Sale Stock strongly believes in the Lean Startup methodology, “getting it out there as soon as possible to collect real, user feedback”.

“We’re still in the very early stage of our product and ironing out the bugs and adding features iteratively,” comments Madu.

All inquiries going to Sale Stock are monitored, independent of the channel source, on one platform created in house to control flow and fix any arising bugs.

The team hopes to fine-tune its technology to quite possibly launch SaaS in the future.

“The success of chat commerce depends on how well the machine can distinguish the details: context, intention, the slang, mix of dialects, and even the use of emojis so the customer never feels like they are chatting with a bot. The platform has to be robust enough to handle these typos and fringe use cases,” says Madu.

The future of chatbots

There has always been a fear of AI replacing tasks typically performed by humans, but customer support is a tricky area since personalization is at the core.

“As brand loyalty and exceptional customer service become the main priority for brands, companies simply cannot afford for bots to completely handle customer service and risk creating a negative experience. With that said, the live customer service representative will always have a place with the overall customer experience,” says Mayur Anadkat, Vice President of Product Marketing at call center software provider Five9.

The moment has not yet been reached when machine learning enables 100% accurate and instant replies to customers no matter the language, mix of dialect, slang or emojis – but it is in the foreseeable future. AI is here to enhance, not replace.

Not only will the rise of chatbots improve the reputations of brands but it will be expected of businesses by the next generation of shoppers. As Uber product manager Chris Messina put it, bots present a new, unpolluted opportunity to build lasting relationships with people.

Ultimately, the lack of friction is what makes the shopping experience a pleasant one and what will drive the A players to the head of the game.

By: Cynthia Luo

Christian Dior has become the first luxury brand to sell top-end bags on WeChat, the most popular messaging and social network in China, offering its iconic Lady Dior bag on the platform, reports China Daily.

On Monday, the designer brand posted its limited edition small Lady Dior for the upcoming Qixi, or Chinese Valentine’s Day, which falls on Aug 9 this year. The bag sold out online on Tuesday. Dior offered a completely customizable shopping experience through the app.

For this limited edition, consumers can drag the online pictures of the decorations they want to the bag, tailor-making them to the needs. Buyers can directly purchase and pay through WeChat.

Since luxury brands can find their target consumers by WeChat’s big data, the largest social network in China, it’s easier for them to advertise and sell products through chat.

“Many brands are operating under pressure, and they would like to open the market through ecommerce platforms,” said Lu Zhenwang,CEO of Shanghai based Wanqing Consultancy.

“Even if sales were slow, brands could achieve results through marketing and branding,” Zhenwang adds.

Some other brands, including Cartier, International Watch Company, Montblanc and Longchamp, have already launched their online sales platforms on WeChat, and provided some special services and discounts.

According to China Luxury Forecast by global PR firm Ruder Finn Inc, 36% of respondents in China said they would like to buy luxury products online, rising 24% the previous year.

Dior needs to step up its sales and marketing outreach as it is under global pressure. In the first half of this year, the fashion house announced that its net profits fell 30.2% to $82.8 million.

A version of this appeared in China Daily on Aug 3.  Read the full version here.

With Facebook now trialing their new messenger-based payment system in Thailand, the Southeast Asian region is rapidly growing into its social commerce potential. As messaging begins to dominate social interactivity, it is no surprise that businesses are now turning to this platform to inform, understand and sell to their customers. The next stage of this technological revolution is clear: automated robots that can interact with customers to drive and facilitate sales, simulate human conversation and carry out repetitive tasks.

Need help finding shoes to match a outfit? Imagine typing in “what shoes will match this outfit?” followed by a photo of what you’re wearing, and then having the algorithm instantly analyse and respond with three different options that fit your criteria. Imagine being able to complete your purchase without leaving the messaging app. Businesses are providing their customers with a convenient, time-saving and easy to use service. Win win.

What chatbots are doing today

There are many different types of chatbots in the ecommerce sphere, made to serve different purposes such as answering customer queries, providing product recommendations, and simplifying online purchases. Here are a few examples of what is currently being done in the world wide web of chatbots:

Facebook Messenger

When Facebook announced the integration of ecommerce capabilities within its widely-popular Messenger app at the company’s F8 developer conference in April, CEO Mark Zuckerberg demonstrated how quick and easy it was to send flowers. With 1-800-Flowers, users are given suggestions for a variety of occasions (“Thank Yous”, “Birthdays”, and “Love & Romance”), and all details are obtained directly through the chat interface.

chatbot revolution in Southeast Asia

Businesses are already investing a notable portion of their marketing budgets in maintaining personable and engaging Facebook pages to complement their brands and drive traffic to their website, it is a logical transition for them to also adopt a chatbot within Facebook’s native messaging app.

Kik

Kik is another social media platform that has become increasingly popular in the US with more than 270 million users. Its chatbot service has drawn attention by many well known companies – one of them being makeup retailer Sephora. Not only has their chatbot service provided a method for users to purchase products, but also allows them to ask about anything regarding beauty, reviews, product recommendations and tips. The exchanges are sprinkled with emoji’s to make the automated reply appear like a true human brand representative at the other end.

chatbot revolution in Southeast Asia

Sephora chatbot on Kik. (source)

WeChat

With over 760 million monthly active users, WeChat has positioned itself as the dominant messaging app in China. However, its features extend way beyond chatting: without having to leave the app, users can order food, book a taxi, book doctors appointments, follow their favorite brands and pay their bills, just to name a few. Through WeChat, Nike created a chatbot that provides fans with news and updates on the company, and consistently communicates with the user.

chatbot revolution in Southeast Asia

The Nike chatbot on WeChat. (source)

Why chatbots? Why now?

Growing Internet Penetration

A primary factor currently driving ecommerce and soon the chatbot revolution in Southeast Asia is the growing number of people who are increasingly using the internet. The 199 million Internet users in 2014 is predicted to increase to 294 million users by 2017. Out of the 150 million digital consumers who search for products online, two-thirds of them proceed to make purchases there.

chatbot revolution in Southeast Asia

Internet penetration in selected Southeast Asian countries (source)

Mobile is King

chatbot revolution in Southeast Asia

Smartphone user penetration in selected Southeast Asian countries (source)

For users, traditional methods of ecommerce – opening browser, navigating through countless pages and items, and keying in details to check out – still feels tedious and unnatural on mobile thanks to small screen sizes and limited ability to multitask. Businesses need to come up with an alternative solution to ensure that the purchase process is as simple as possible on these devices. The chatbot interface takes advantage of what behavior people have adopted with mobile phones: carry out conversations, anywhere, anytime.

The App Bloodbath

Thanks to the introduction of the iPhone back in 2007, apps have played a huge role in shaping technology, contributing to the dependence on our phones. But the thing is, consumers are growing sick of trying new apps, coming to the realization that they simply don’t need so many. Not only are they costly to build setting you back anywhere from $50,000 to $1,000,000, but further efforts need to be invested into marketing the app, and getting users to download and regularly use it. With a saturation of apps in both the Apple and Android app stores, and limited app discovery tools, it’s becoming harder and harder for new players to cut through the noise.

Smartphone users spend most of their screen time on a single app, which means, as a business, that is where you have to be.

Messaging: The New Platform

Creating chatbots within existing messaging apps is attractive because someone else has already done a large chunk of the hard work for you. In Southeast Asia, there are over 73 million people on LINE. Integrated chatbots give businesses the opportunity to directly reach these large pools of users without forcing potential customers to download yet another application.

“Messaging apps are the platforms of the future, and bots will be how their users access all sorts of services.” — Peter Rojas, Entrepreneur in Residence at Betaworks

Furthermore, these companies are providing developers APIs so that it is easier for businesses to create their own bots since most don’t have the technical skills or resources needed to build a witty chatbot from scratch. And in return, the platform is loaded with customer data; a dream for any marketer. With the versatility evident through Facebook ads that allow businesses to target audiences based on anything from location to interests, imagine the degree of personalization and segmentation that could be made possible through their Messenger extension.

A Society of Social Commerce

The Southeast Asian economy already heavily engages in social commerce, a marketplace built within the walls of social media. According to a Bain & Company study released this year, more than 80% of digital consumers use social media or messaging apps to research products and connect with sellers. Moreover, social sales comprise of up to 30% of all transactions online. Thailand boasts the world’s largest C2C market, with over 50% of research respondents saying that they buy items found on social networks such as Facebook and Instagram.

chatbot revolution in Southeast Asia

A typical social transaction: users find items they are interested in, and get in touch with the seller who listed the item via chat.
Source: ecommerceIQ exclusive research

The magic of chatbots is that they are able to closely imitate the essence of conversational commerce. Set within the same interface, customers can talk with bots in a similar manner in which they would talk to human sellers through a series of questions and responses. In such a setting, algorithms may even be created to simulate the bargaining dialogue that occurs in everyday transactions.

Still some way to go

Through chatbots, businesses have the opportunity to initiate conversation directly with their target consumer that is highly personable. The brand-to-customer interaction is something that has not truly been scalable until now. While chatbots can not replace the feature-rich user interface provided by a website, they bridge the gap between functionality and convenience.

“Every brand is going to move into the mobile commerce space very quickly. In the next years, we will probably see 20-30% of the big brands having their own bots in chat apps, starting with Facebook’s messenger platform.” —  Pat Wattanavinit, Product Manager at aCommerce

The current state of chatbot functions are still quite linear and rigid, too early for companies to start replacing their customer representatives. Some users report conversations as being frustrating and slow due to the bot’s limited understanding and capabilities, think about your own interactions with Siri. Chatbots won’t truly be invaluable and gratifying until AI is able to achieve a human level of understanding but that’s another story in itself.

By Shirley Liu & Alexandre Henry

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