Brands use chatbots to find a direct channel to consumers

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Coronavirus is inducing changes in consumer behaviour and business models that may well persist after the crisis abates. One of these is the way we order food and other goods from brands.

A large FMCG brand in India, which did not want to be named, has just signed a deal with Bengaluru startup Yellow Messenger to use its AI chatbots to sell products directly to consumers on WhatsApp. This would reduce dependence on ecommerce platforms whose deliveries are down to bare essentials during the lockdown.

Yellow Messenger announced a $20 million series B round led by the US fund of Lightspeed Venture Partners on Friday. This makes it one of the best-funded startups in the space in the APAC region. Its conversational AI platform is used by over 100 enterprises for customer and employee engagement. Thus it has proven capability to interact with consumers and close transactions.

Indians are used to messaging on WhatsApp for a variety of purposes. So it’s not much of an ask to get consumers to choose products, quantities and delivery slots in a WhatsApp chat with an AI bot instead of an ecommerce portal.

Retail chain Spencer’s has also signed a deal with Yellow Messenger to use chatbots to sell to consumers because footfalls have dwindled in retail outlets.

“We created a consumer ordering experience on WhatsApp within three days. It’s a change in business model with direct-to-consumer delivery instead of depending on aggregators,” says Raghu Ravinutala, co-founder and CEO of Yellow Messenger.

STRAIGHT TO CUSTOMERS

“We’re seeing a surge in demand to enable D2C (direct-to-consumer) commerce from retailers, FMCG, food and beverage companies,” says Vartika Verma, marketing director, Yellow Messenger.

Even before the covid-19 crisis, there was a global trend of D2C brands coming up, points out Dev Khare of Lightspeed India Partners, who were early investors in Yellow Messenger. “The rise of Shopify in the last five years is a direct consequence of this trend.” Shopify enables small B2C (business-to-consumer) companies to set up shop on the internet for consumers to buy directly.

Yellow Messenger takes that a step further by enabling merchants to sell directly to consumers via a conversational AI interface on WhatsApp or a website.

“One of the largest FMCG brands for cooking ingredients saw orders falling even though demand was high. They launched a WhatsApp-based ordering assistant and are using their own delivery network to fulfill orders,” says Ravinutala. “Consumers who are concerned about the hygiene of cooking ingredients are also happy to receive them directly from a brand they trust instead of having retailers in between.”

The bot can enable everything from payments and tracking shipping to showing recommendations—all the conveniences we’ve got used to on ecommerce sites. This is happening in other markets too where Yellow Messenger has a presence. For example, Indonesian farm-to-table fruits-and-vegetables provider Sayurbox has switched to using Yellow Messenger chatbots as a D2C channel.

“What differentiates Yellow Messenger from others in the market—specifically companies that want to use purely open source software to try and build conversational AI interfaces—is that it’s transactional,” says Khare.

“It integrates with the backend of D2C companies so you can transact and buy products using a bot. A lot of other conversational AI systems we’ve seen in India and elsewhere are non-transactional. They give answers to things like, ‘What’s the interest rate on fixed deposits?’, which is an FAQ-type use case,” he says.

EXPANSION MODE

Changes in behaviour are happening on multiple fronts, and “enterprise software startups that are adapting best are the ones addressing requirements emerging from covid,” says Khare.

It’s hard to run call centres because they require people to go into large offices with dedicated telephony and computer equipment that can track and analyze calls. The way to keep these running is to automate them, and that’s where Yellow Messenger comes in. “The demand for business continuity has spiked in this environment; so the startup has a timely offering,” says Khare.

“One of our largest general insurance customers closed down its call centre and diverted all its customer support to a WhatsApp-based digital assistant,” says Ravinutala. Yellow Messenger is on an expansion spree outside India too. “We’re seeing a lot of demand in Latin America where WhatsApp adoption is significant,” says Ravinutala. “These are greenfield markets because WhatsApp automation wasn’t available earlier.”

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