Beyond eCommerce: Why Bike Shops Need Conversational Commerce for Sustainable Growth
As an independent bike dealer (IBD), what does great customer service mean to you? If a customer interacts with your business, what does their experience look like?
You probably started thinking about the great experience you and your staff provide customers walking into your store, and how over the years you have perfected your processes to make sure every customer that walks out of your store is happy.
But, what about how you show up for your customers online?
Now, cue the fascinating world of conversational commerce.
It's a topic that deserves attention, because although having an eCommerce storefront may create the illusion that you are extending the in-store experience, if you are not considering conversational commerce… It's like letting customers walk into an empty store with no staff.
Do you want customers to be greeted by silence and a lack of guidance when they visit your website?
Replicating the same level of assistance on your websites and online platforms can seem daunting but it’s actually more simple than you think.
So, let's explore the world of conversational commerce and how it can effectively bridge the gap between customers and IBDs – after all, spending on conversational commerce channels was about 41 U.S. billion dollars in 2021 and is expected to grow almost sevenfold by 2025.
What Is Conversational Commerce?
TL;DR: Using and being available on conversational platforms to facilitate transactions, more specifically web chat, text messaging, and social media platforms.
Conversational commerce refers to merging messaging apps with shopping. A key factor that is often missing in the world of eCommerce among all the product descriptions and images, is supporting customers in their decision making.
Conversational commerce is essentially the solution to that missing piece, it provides decision support to customers that would otherwise make a poor decision without that guidance.
Back to our example earlier, imagine a customer walks into your store without anyone to help them, grabs an unassembled bike, and walks out of your store – yikes, you know they will likely struggle with the assembly process, and there's a high probability they will end up returning it because they picked the wrong one for their needs.
5 Key Areas of Your Business Transformed by Conversational Commerce
#1 Lower refunds
Companies like Amazon have changed consumer behavior on a scale that not only impacts large retailers, but makes it very difficult for independent businesses to keep up with the expectations around returns and shipping.
This is especially true within the bike industry, with so many variables at play, customers are likely to order the wrong thing, and then expect to be able to return it. Even if you have a clear return policy, you end up with an angry customer on your hands.
These situations are not easy to deal with and the essential element to mitigate these situations is all about adding a human touch to the interaction and guiding customers through their purchase.
In customer’s minds, companies like Amazon are faceless, their main goal is to get customers coming back at all cost and then use any means necessary to clean up the mess on the back-end. They can do this because they control such a large part of the market.
On the other hand independent businesses need to take some extra steps on the front-end to create a human connection and provide a barrier between those that want to take advantage of the system and customers that genuinely need help and still want to take advantage of the conveniences of eCommerce.
Let’s take a look at how conversational commerce can remedy the different ways refunds happen.
Handling serial returners
What are serial returners you may ask? Serial returner is an umbrella term for customers that are constantly returning products for a multitude of reasons.
In the clothing and accessories industry, serial returners will buy every item that peaks their interest in multiple sizes and then return the ones they don’t like. Similar to grabbing everything you want to try on before heading to the changing rooms. But it turns out that this behavior is so damaging that a company as large as Zara now charges for shipping in hopes to discourage customers from doing this exact thing.
Unfortunately, serial returners also exist in the bike industry, Josh from Silca describes the impact of this very well:
“Let’s say you buy five different seat packs and you return four. A box comes into our offices, a human has to open it, figure out what it is and who it came from, look up that order, and determine why it was sent back. Those return items are then given to the customer service team for inspection, items and packaging are carefully inspected and possibly tested. If the packaging is damaged, we have to send it to the factory floor for new packaging, then the production supervisor has to remove that packaging from Inventory, then upcycle the inventory count, and then send the item back to the warehouse for placement so that it can be picked again. Best case scenario you have five-six people each spending five minutes or so touching the return and determining how to proceed.”
Inventory mistakes from your POS and eCommerce platforms
Inventory mistakes between your point-of-sale and an e-commerce platform can happen for various reasons, especially when they are not connected, partially integrated, or integrated through a third-party.
From manual data entry, timing differences in updating inventory levels and miscommunication between the two, errors can lead to unhappy customers where you might need to return the transaction as a whole or take the time to reset customer expectations and begin a special ordering process.
The resource cost
The cost of returns manifest in both time, resource, and emotional fatigue.
The sum of the different touch points a return has to go through can add up, from customer service to sorting, inspecting, testing and overall loss of product value – the money lost here could have been spent growing another area of the business.
On the other hand, for online returns, the cost of shipping and processing is also added onto that. In both cases, the environmental impact of returns is also a hard pill to swallow, not only in terms of carbon footprint but the mere fact that most returns end up in landfills.
The average rate of return for 2022 hovers at around 16.5% and additionally, for every $100 in returned merchandise accepted, retailers lose $10.40 to return fraud. Not only do returns have a dollar cost, it can lead to emotional fatigue for your team that is trying to provide great customer service and start every interaction assuming positive intent.
#2 Shipping and processing fees
Shipping fees and credit card processing fees – all the fees.
Returns have a significant impact on IBDs both from the perspective of the expectation of offering free and fast shipping in the first place, and also offering no questions asked free returns.
If you tackle the credit card processing fee, IBDs are often looking at a complete loss for that transaction.
Taking a real life example of a $100 transaction, some retailers can expect to pay up to $18-22 in shipping (to ship within the same state), then 3% in credit card fees.
Not accounting for the human labor involved in sending out this order, retailers are looking at ≈$28-32 in gross profit, which would come close to $0 if they were to also absorb the cost of returns.
This means that every retailer needs to be vigilant and strategize to remedy this issue.
#3 Liability protection
The bike industry faces another realm that most retailers don’t always have to think about – safety.
Allowing riders to purchase bikes on your website without proper guidance can potentially expose your business to liability issues.
When it comes down to assembling their new possibly partially pre-assembled bike, even if they don’t tighten a bolt properly, you can have a lawsuit on your hands.
On the other hand, if customers blindly place an order online and you assemble the bike on their behalf, there is a chance it might not be what they wanted, now it’s taking up more space in your store and you need to inspect and resell an open box bike.
Personalized assistance, answering their questions, and guiding them through the purchasing process is the secret sauce to avoiding all of this.
#4 As close as it gets to the in-store experience
Conversational commerce is the next best thing to being in-store, it allows you to provide the convenience of making transactions online, and give riders the personalization they get in-store.
The advantages of the in-store experience boil down to 3 areas:
Product education
Service education
Relationship building
What IBDs do well is education and relationship building, store owners know the competitive landscape within the industry all too well and with a simple online store front, you lose all ability to make those recommendations and build that rapport with your riders.
Conversational commerce is the key to solving those road blocks because it allows you to freely ask questions and lead riders to the right decision, the same way you are able to if they were standing in front of you.
Whether the conversation starts on web chat, text message or social media, you have now locked in a way to personalize their experience and follow it up with future service and product recommendations.
#5 A brand new way to make sales
With conversational commerce, not only are you reducing how long it takes for riders to make their decision, you will also be able to answer all their questions and make the sale without them ever needing to go through the check-out process on your website.
With the ability to bring over conversations to text messaging, you are able to stay in touch with customers throughout the whole process, even if they take multiple days to think of their purchase. You are in a way, a friend that is providing them with advice then you become the sales associate that helps them check-out.
What Are the Different Conversational Commerce Channels?
Web chat
Go beyond product descriptions and give website visitors the opportunity to ask you questions. Web chat is one of the best ways to interact with riders that might be in the research phase of their purchase.
You might think instant web chat, but Ikeono does things differently
Web chat to text message means that the conversation starts on your website and continues on text.
It’s human – as much as AI is the new hot thing, people buy from people.
It gives you time to respond back to customers unlike a live chat tool.
Text messaging
Text messaging is not only one of the most effective ways to communicate with customers, but it gives you the ability to chat with riders through the one communication app that they check daily, hourly, and even every minute.
The best part is that you can aggregate all the different conversational platforms your business shows up on and handle everything in one-single inbox. This means that conversation from your website or any messages coming in from Facebook and Instagram are handled in one place.
Social media platforms
Social selling is a whole world of its own but it also plays a huge role in conversational commerce. Social media gives you the benefit of having one-to-many and one-to-one relationships at the same time, the content you post gives you that exposure and the messaging tool helps you get one step closer to turning a follower into a customer.
Taking it even further, Facebook and Instagram messages can be turned into texts and open a whole new communication channel with those that engage with your content. It gives you the chance to combine your social media efforts with the benefits of text messaging.
