The retail industry is undergoing a massive transformation. It is empowered by tools like chatbots that delve deep into business operations through AI. These tools help businesses better understand their operations and improve how customers feel about their shopping experience. They also help prevent problems like running out of stock, which is good for both customers and retailers.

By 2025, the use of AI and automation in retail is expected to skyrocket ninefold. A survey by the National Retail Federation reveals that 58% of shoppers prioritize quick product discovery, 44% top-notch customer service, and 42% speedy checkouts. Retail chatbots such as SmatBot effectively address these needs while offering additional advantages.

If you are curious to learn more about these chatbots’ use cases and benefits, this article is a must-read. In addition, we will also disclose some essential information that you need to know about retail chatbots in this article. 

So, without further delay, let’s get started.

What is a Retail Chatbot?

A retail chatbot is a software specially designed to simulate human conversation with customers. These AI-driven chatbots use machine learning and natural language processing. They provide a personalized environment and recreate a positive in-person shopping experience.

Retail chatbots may optimize and streamline the user experience and support the buying process. These chatbots make it easier to scale the retail business without compromising consistency and quality. Furthermore, this technology may improve customer satisfaction and brand loyalty by providing a positive experience throughout the purchasing process.

In addition, these chatbots are automated assistants that may answer customer’s common questions, offer promo codes and upsell products within the business. Nowadays, they are becoming an essential tool in the retail industry to provide customer experience, boost sales and streamline workflows.

How is Chatbot Transforming The Retail Industry?

Retail chatbots have the potential to transform the retail industry in several ways. Below, are some of the methods through which these chatbots can revolutionize the industry:

  1. Predict Customers Behavior

Retail chatbots possess the capability to predict customer behaviors. Through the utilization of Artificial Intelligence and predictive analytics, companies can analyze past purchasing habits and browsing patterns to anticipate customer needs. This capability enables businesses to craft personalized offers, optimize promotional strategies, and gain insights into the sections of the store where customers spend the majority of their time.

  1. Effective Cost 

Retail chatbots can effectively reduce costs for retail businesses. By managing numerous customer inquiries simultaneously, they diminish the necessity of recruiting additional customer service representatives to handle routine queries. This not only streamlines operations but also enables customer service representatives to concentrate on more intricate tasks, thereby enhancing the overall customer experience and bolstering the company’s revenue.

As per McKinsey & Company research, using AI bots for customer service can cut costs by 20 percent.

  1. Customer Assistance

73% of customers want websites to have chatbots for seamless interactions. Chatbots can assist customers in retail businesses with a wide range of tasks, such as providing personalized product suggestions and helping in-store navigation. These chatbots help customers find the ideal products without wasting valuable time searching on the website or in stores.

In sectors like food, fashion, or clothing, retail chatbots excel at helping clients find complementary products that suit their preferences. This not only boosts sales but also enhances the overall customer experience.

  1. Personalized Experience 

Customers no longer need to visit websites or apps for repeat purchases. They can simply message the chatbots on messaging apps like WhatsApp. Retail chatbots remember each customer and their past purchases. This allows them to instantly add customer’s requirements to their carts. 

These bots also suggest additional items based on the customer’s purchase history. 22% of customers expressed that they already trust the recommendations from the chatbot for product purchases. 

This personalised approach of the bot leads to customer satisfaction and prompts them to complete the purchase using their saved card information.

  1. Customer Satisfaction 

The key strength of the retail business lies in upholding brand value through consistent customer service. Chatbots play a crucial role in enhancing customer engagement. 

According to the Comm100 report, user interactions with AI chatbots have an approximately 87.58% satisfaction rate which is higher than live chats with human agents.

Chatbots constantly strive to keep customers satisfied and engaged by promptly meeting their needs and expectations. This makes them highly effective in customer service. They provide top-notch support, quick responses and 24/7 assistance, offering solutions tailored to customer requirements. In short, retail chatbots are extremely beneficial across all aspects of the retail industry.

Benefits Of Using A Retail Chatbot

There are numerous benefits you can enjoy by using a retail chatbot in your retail business. Retail chatbots can take your business to the next level. The following are the top benefits of using a retail chatbot in your retail company.

  1. Collect Customer Feedback

One of the most helpful benefits of integrating a chatbot is the ability to collect customer feedback at the end of the chat. This can be done by sending survey questions to learn about their chatbot experience. Additionally, you can program a chatbot to inquire about product additions or suggestions for improvements. 

Besides, to encourage customers for feedback, you can program chatbots to offer special offers or incentives.

  1. Boost Conversions

Customers are more likely to buy when they’re not confused by too much info. By guiding them well throughout their shopping journey, a retail chatbot can significantly boost conversions.

Retail chatbots play a crucial role in boosting your company’s conversion rate. For example, these chatbots can automatically display product recommendations (cross-selling) or show personalised content like blogs, FAQs and more.  

Let’s understand this with an example of a chatbot on WhatsApp where a chatbot can showcase a catalogue of recommended products based on a user’s preferences and past purchase history. This makes it easier for the customer to browse, select a desired product and make a buying decision.

Another excellent example is the Instagram shopping feature. With this feature, retail businesses can integrate and showcase their products to Instagram users. It enables users to effortlessly explore and make purchases directly with the Instagram app.

According to the Forbes report, these chatbots can boost sales by 67%. Hence, chatbots are not just for answering simple queries, but they can be considered an essential part of your marketing effort. In short, by simplifying the overall shopping experience and providing personalised product recommendations on their preferred platform, chatbots can directly influence customer’s decisions and increase the chances of conversions.

  1. Omnichannel Presence

Customers use a variety of channels such as phone, social media, email and messaging apps like Messenger and WhatsApp to communicate with brands. Customers expect conversations to flow smoothly across different platforms. They want to continue chatting seamlessly, regardless of the channel or device they’re using.

However, many businesses fail to provide this integrated experience. To stand out from competitors, you can deploy omnichannel chatbots equipped with social media automation capabilities such as SmatBot and handle common inquiries received through email, websites, messaging apps and other channels. By integrating your AI chatbots with your tech stack, you can connect conversations and deliver a seamless, consistent experience. This approach ensures that customers receive prompt responses on their preferred channel.

  1. Free Up Agents

We all know that hiring a team of customer service agents can be very expensive and requires a lot of effort, but this is not the case with retail chatbots. These bots offer a more cost-effective solution and operate 24/7 without any hassle.

Chatbot technology allows retail businesses to easily scale their customer support by automating routine inquiries and freeing human agents for complex issues.

Top Use Cases of Retail Chatbots 

Chatbots are commonly used to address common queries of customers. However, retail chatbots can also handle various other tasks.

 Below are the top use cases of retail chatbots in the retail industry:

  1. General Brand Awareness

Retail chatbots boost brand awareness by engaging visitors in conversation beyond simple Q & A. By engaging visitors in natural conversation, they can introduce your company’s values and products in a way that feels genuine and informative.  

Discussing sustainable practices or ethical sourcing demonstrates transparency and builds trust with potential customers. This reassures serious customers and gets more people to order from you for the first time.

  1. Loyalty Program

You can integrate chatbots with the loyalty program to provide personalized rewards and offers to customers. These chatbots can track customer engagement and manage loyalty programs by prompting shoppers to sign up after they take a particular action on your website. This ability of retail chatbots boosts customer loyalty and grows your membership program. 

  1. Locate Offline Stores

Retail chatbots also assist customers in finding nearby physical stores. If a customer enjoys browsing products online but prefers making purchases in person at offline stores, they can easily do so with the help of retail chatbots.

Potential and existing customers can use retail chatbots to locate your physical stores, inquire about product availability and check the opening hours of your retail store. The best part? They can do all of this without needing to engage with human agents.

  1. Send Invoice Directly to WhatsApp

WhatsApp is a widely used messaging platform which is a favourite among internet users for various tasks including receiving invoices for their purchases. With retail chatbots you can seamlessly send invoices to your customers via WhatsApp after they make a purchase. Sending invoices directly over WhatsApp eliminates the use of paper, contributing towards Go Green Initiatives.

This approach can offer convenience and efficiency for both businesses and customers. Retail chatbots automate invoice delivery, ensuring accuracy and security. 

  1. Stock Wise Management

Retailers can improve their inventory management using retail chatbots. These AI-powered bots can analyze large volumes of data, make precise predictions and identify trends and patterns efficiently. This sets them apart from traditional inventory management methods that rely heavily on manual analysis and input.

Chatbots assist retailers in managing their stock by monitoring sales and predicting popular items. This helps prevent stock shortages or excess inventory, leading to cost savings and improved customer satisfaction.

  1. Product Availability

Retail chatbots are also experts in providing details about product availability. They can give real-time information about product availability, upcoming releases, and stock levels. The information can help customers make informed decisions and decrease the chance of disappointment because of sold-out products. 

  1. Receiving Payment 

Chatbots can also receive payment from your customers. They can directly accept payment through numerous payment gateways. In short, these bots streamline the purchasing process and contribute to a seamless customer journey. 

  1. Order Tracking

Retail chatbot assists customers in tracking their orders and provides updates on their order status after purchase. For example, if a customer wants to know their order status, they can ask the retail chatbot. The chatbot will then ask for the order number, check its shipping system and then reply with the shipping status and tracking number.

Retail Chatbots Examples

There are countless retail chatbot examples available in the industry for retailers around the world. Below, I am sharing the top four examples of retail chatbots:

  • H&M’s Digital Stylist: H&M’s chatbot asks a series of questions to its users to know their preferences and styles. Once the user answers all these questions, it develops a style persona for the individual. Then, it suggests personalized outfits with the total price of all items included with that outfit. This ability creates a personalized shopping experience for every single user.
  • Sephora’s Virtual Artist: Sephora, a global beauty retailer, introduced chatbots on Facebook Messenger and Kik. These bots ask a few questions to understand customer needs and recommend products, saving time. They also offer makeup tips and tutorials. Other than this, users can upload an Instagram image of the desired look and the retail chatbot will assist in recreating it using Sephora products.
  • Aveda: Aveda is a botanical hair and skin care company. The company collaborates with Master of Code to develop the Aveda Booking Chatbot to lend a helping hand in appointment booking.  
  • Walmart: Walmart’s chatbot focuses on customer service, helping customers with order tracking, product searches and FAQs.


Chatbots can be tailored for the retail industry, capable of performing various tasks like managing loyalty programs, locating stores, checking product availability and more. We hope our article has helped you understand everything about retail chatbots.

If you want to set up your retail chatbot, then look no further than SmatBot. SmatBot stands out as a top chatbot-building platform, offering a user-friendly solution for creating conversational bots without coding. With our drag-and-drop builder and templates, you can build your retail chatbot instantly. Our chatbot excels in answering customer queries, managing orders, providing personalized product recommendations, and more, making it an ideal choice for your retail business.