Why AI is key to the e-commerce boom in Southeast Asia

Driven by consumer demands for convenience, more options, and competitive prices, e-commerce was already growing at a rapid clip before one had ever heard of a “coronavirus”.

But where previously online selling giants dominated the space, providing variety under one virtual roof — such as Alibaba or JD.com) — COVID-19 restrictions have accelerated a trend that was already underway, but many firms had been delaying rolling out standalone e-commerce functionalities for various reasons prior to the pandemic.

A 2019 study organized by Facebook and Bain & Company estimated that spending on e-commerce platforms will be three times more in the next five years, with digital consumers in Southeast Asia expected to spend an average of US$390 in 2025, up from the US$125 average online spend right now.

While online purchasing is taking off in the region, so is the take-up rate of artificial intelligence (AI) solutions to complement the business. The IDC reports in its study the Asia/Pacific Enterprise Cognitive/AI Survey that not only have 14% of Southeast Asian organizations adopted artificial intelligence strategies to a certain degree but that another 37% will be introducing AI-tied initiatives over the next five years

While most organizations in the study (52%) are leveraging on the business intelligence gains that AI can offer, more than half of Southeast Asia respondents (51%) are also enamored with enhanced process automation, which can supply significant advantages in the e-commerce sphere in the form of chatbots.

A chatbot is a conversational interface powered by AI and machine learning (ML) to automate certain parts of customer interaction, freeing up human resources and providing e-retailers with an alternative to more efficiently process customer requests.

AI-powered chatbots also harness natural language processing (NLP) capabilities to work in tandem with ML to create multiple responses and conversation threads, enabling the chatbot to actively learn from its customer interactions. NLP is also key to creating AI-driven responses in other languages– a key consideration in Southeast Asia, where English is only one of a literal thousand dialects.

Chatbots will also provide e-commerce sites with the ability to operate 24 hours a day, including weekends. Even if the AI is not capable of addressing all customer queries, it can create a conversation thread and keep it warm, while submitting a ticket to the system to get a customer sales representative to respond at earliest availability.

In this manner, chatbots can assist sales to funnel efficiency while also reducing the manual labor costs of a full-fledged customer service team. HubSpot’s ‘Consumer customer support survey’ found that 90% of respondents think an ‘immediate’ response is vital when they have a customer service question, and an automated chatbot can help drive this efficiency while giving the best possible chance to retain the customer.

Gene Alvarez, managing vice president at research firm Gartner, believes that as much as a quarter of customer service and support operations will sport chatbot tech by this year. According to Alvarez, a properly optimized chatbot should “enrich the customer experience, help the customer throughout the interaction, and process transactions on behalf of the customer”, and this sort of end-to-end AI solution for e-commerce could very be incoming in the very near future.

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