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Chatbots in Retail: Why do you need them?

Updated: Feb 6, 2023

Chatbots for retail

Retail has been an integral part of human life in fulfilling daily necessities, over time Retail has changed according to the growing needs and technological advancements.

Initially, users were accustomed to brick-and-mortar mode of operation, Soon, with the advent of e-commerce, it is now omnipresent that one can order sitting in the comfort of their home far away.

Through smart connectivity, the intensity of retail transactions that happen online and offline has increased manifold. Here comes the role of analytics utilizing humongous data to understand the changing human preferences, before the digital revolution retailers used to know customer preferences through their manual methods, but now we have AI analytics to help us monitor the purchasing patterns and habits of the customers.

The rise of e-commerce has led to a significant increase in the amount of customer data collected. This information is used to ready better target advertising and marketing campaigns and to provide personalized recommendations based on past purchases.


AI-based Chatbots

If one has to put it in layman's terms, AI Chatbot is a human assistant to do redundant and complex tasks. As everybody is aware of chatbots, we will try to elucidate the process/role of AI chatbots

Chatbots in Retail

Consider a scenario where a typical household visits a nearby store, after selecting all the items, the user will be billed for the purchases made, and the store database will save all the information about the purchases. Here comes the role of the analytical Chatbot, an AI Chatbot dives deep into the data by integrating with existing systems to Describe Predict, and Prescribe, to decide the future course of action.

But How does an AI Chatbot do all these?

It may sound strange that a Bot can perform all those functions, but to understand we need to know the processes involved.

Machine Learning algorithms are used to train the chatbots to perform analytics.

The chatbot learns through interaction with users and stores data about user preferences and behavior patterns. This information is used to improve the bot’s performance over time.

The retail industry is undergoing a major transformation due to the increasing adoption of the latest technology.

Artificial intelligence (AI) is being used across all aspects of the business, from customer service to inventory management. AI helps retailers make smarter decisions through predictive analysis, descriptive analytics, and prescriptive analytics.

Descriptive analytics

This is a type of analytics that focuses on describing the current state of your data. It is usually used to answer questions like ‘what is my customer base like right now?’ or ‘how do I compare to my competitors? Descriptive analytics can help you find out if there are any trends in your data, so you can see where you need to focus your efforts.

Predictive analytics

Predictive analytics

When you try to predict the future, you can use this to figure out things like ‘if we increase our advertising budget next month, will we get more leads?’ or ’will our sales team hit their target?’. Predictive analytics can also be used to look at the probability of a specific event happening. For example, if you want to know whether someone will buy your product, you can use predictive analytics to calculate the chances of them buying.

Prescriptive analytics

When you analyze your data to determine the best way to move forward, It helps you decide what to do next and gives you the information you need to make the best choice. For example, you might use prescriptive analytics to figure out what products to sell, or how much to charge for your services.

In short, descriptive analytics looks at the current state of your business, predictive analytics tries to predict the future, and prescriptive analytics helps you choose the best path forward.

Top 5 Uses Of AI chatbots in the Retail Sector:

Chatbot usecases

Product Recommendation

AI bots are now being applied to retail to help make shopping easier and more convenient for consumers. It is done by analyzing large amounts of data about customers’ buying habits. These algorithms can then recommend items to customers based on their past behavior.

Better Customer Service to Attract More Customers

AI helps retailers understand consumer behavior and preferences, thus helping them make informed decisions to improve customer service, increase sales, and reduce costs.

Demand Prediction

Demand forecasting is one of the most important aspects of any retailer’s operations. It helps to plan the supply chain efficiently and effectively. The process involves collecting data about customer behavior and analyzing historical sales patterns.
Artificial intelligence (AI) and machine learning (ML) techniques are applied to improve accuracy by analyzing large amounts of data and making predictions based on these insights.

Pricing Strategy

Various factors affect the final price of a product. These include demand, supply, competition, and customer preferences. Therefore, AI helps retailers to analyze these factors and determine the best price.


Artificial intelligence (AI) and machine learning (ML) technologies are used extensively in retail stores to improve the customer experience with customized suggestions based on their history. Thus helping retailers to provide a personalized experience to customers.


AI chatbots can improve the ROI by establishing

  1. Omnichannel presence

  2. Valuable Customer Service

  3. Building a friendly environment


Chatbots are not just about answering questions and providing information. They are powerful tools that can help businesses improve their customer service and increase sales.

With the right strategy, chatbots can provide a great customer experience and drive revenue growth.

chatbots are here to stay and will continue to play a major role in the future of e-commerce.

With the rise of Artificial Intelligence, chatbots will become much smarter and better able to handle complex conversations.

The future of retail will see a convergence of the physical and digital worlds. This will include the use of conversational AI technology to bridge the gap between the two worlds.

Chatbots will help retailers engage with customers on a personal level, providing a seamless customer journey across channels.

This is why brands should start investing in chatbot solutions now rather than later.

Want to know about YourbizBot and how it can be used in the retail sector?


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