Retail Insight

Online sales changed brick-and-mortar retail not just in terms of the bottom line, but also in the way store owners and customers interact. A 2017 Hubspot survey showed that 48% of consumers would rather connect with a company via live chat than through any other means. The same survey found that 40% of consumers don’t even care whether the help they’re receiving is human or automated, as long as they’re being helped. As clients demand 24/7 customer service, retailers struggle to find ways to accommodate them. One possible solution is chatbots.
   “A chatbot is a computer program that is used to simulate a realistic and natural human conversation over the internet,” says Mike Kim, director and head of the Center of Data Excellence at AArete, a global consultancy specializing in data-informed performance improvement. “The typical use of a chatbot is to answer questions or provide context on specific questions the user may want to know.”
   Fortunately for jewelers, the earliest stages of a consumer’s diamond-buying journey involve research and education.
   “Explanation of things like cut, clarity, color, imperfections, ratings can all be done through a chatbot,” says Sam Cinquegrani, CEO and founder of Chicago-based ObjectWave Corp., which provides digital-commerce solutions. “Chatbots can be a way to educate consumers about a diamond.”
   Then there’s the millennial factor.
   “People in the diamond industry are having a bad time,” says Arik Marmorstein, cofounder of BlingChat. Marmorstein’s Facebook Messenger-based chatbot is designed to help consumers source wedding-related items, including engagement rings. “Everyone is trying to see what millennials are going to do. Well, millennials are going to keep getting married, but they spend a lot of time researching and chatting. So we created BlingChat to cater to millennials.”
   He says his average user spends more than eight minutes using the chatbot.
   The technology is particularly good in the early stages of a purchasing journey, or during very busy times of the year.
   “Chatbots can provide speed and scale to answer consumer demand on grievances, typical questions or specific questions on context related to jewelry,” says Kim. “From an operations perspective, this can help for peak demand periods during the holidays.”
   There are still challenges, though. Chatbots’ rote answers can be problematic, according to Cinquegrani. “A response from a chatbot is typical, ubiquitous and not personalized,” he says. “In other words, it’s a generic response. To succeed, it needs to react personally to the individual. Otherwise, the technology can be annoying and not well-received.”
   Kim agrees: “New chatbot technology for a niche industry like jewelry may not capture nuance or subtext related to specific consumer demands. These models may take time to learn from consumer data to craft natural language for future use.”
   Even so, these automated sales reps could change the retail game, for better or worse.
   “The same thing that happened in 2008 with mobile apps is happening now with chatbots,” says Marmorstein. “And having a chatbot shows your clients who you cater to. It shows millennials that you’re one of them.”

A bot named Rocky

Rare Carat is unlike any other diamond website. Founded in 2016, it doesn’t sell diamonds; rather, it helps consumers find what they’re looking for at partner stores and brands such as Costco, Macy’s, Blue Nile, Solomon Brothers and others. Moving forward, it is looking to begin working with independent local jewelers.
   But what’s really making waves is its chatbot, Rocky, which is based on IBM’s Watson system.
   “Rocky allows us to be always on,” says Ajay Anand, Rare Carat’s CEO. “We have 10,000 users a day, and someone always responds.”
   Anand believes chatbots are perfect for jewelers because of the specific challenges involved in the buying process.
   “Most of the people buying diamonds have never really shopped for a diamond before, and so there’s a lot of education involved,” he says. “It’s also a fraught purchase. You know that the jeweler knows more than you, and the sheer size of the purchase means it’s the largest purchase most people make. That makes people wary of the person selling them something.”
   But the chatbot allows customers to deal with an unbiased intermediary, notes Anand. “The machine isn’t trying to sell anything. It’s trying to answer your questions 100% objectively. We’ll even show customers diamonds that are not available on Rare Carat.”
   Since launching, Rocky has had hundreds of thousands of conversations, although the company doesn’t currently keep data on sales figures and won’t speculate on those numbers. Additionally, the chatbot is constantly getting better at communicating.
   “Initially, Rocky was just a robot talking to people,” says Anand. “Then we added a character, and auto-response buttons like ‘yes’ and ‘no.’ You can’t just build a chatbot and leave it there. Every day, Rocky gets things wrong, so our gemologist Erica teaches him new things. It’s a living, breathing animal, and we might never be done building it.”

Article from the Rapaport Magazine - February 2018. To subscribe click here.