Thanks to the growing popularity of artificial intelligence (AI) chatbots and AI agents, conversational commerce has been gaining attention in the Japanese ecommerce industry. It’s especially well-suited to speaking with shoppers through LINE and direct messages (DMs), and there is a growing trend of using chat for both purchase assistance and customer service.

You might want to learn more about conversational commerce—how it differs from chatbots, how it works, and whether it’s really worth adopting.

In this article, we will provide a clear explanation of what conversational commerce is, explore its market size, benefits, and considerations, and use a real-world example.

Key takeaways

• Conversational commerce is a method of recommending products and services through interaction with users. It includes AI assistants, as well as live chat support with humans.
  
• A key feature of conversational commerce is the shift from a model where customers search for products themselves to one where they get product recommendations through dialogue.
  
• In Japan, interest in conversational commerce is growing because customers often prefer to avoid phone calls, platforms such as LINE and DMs have become widely adopted, and AI chatbots and AI agents continue to gain popularity.
  
• By adopting conversational commerce, you can improve support, increase conversion rates, and offer personalization of customer service around the clock.
  
• Human verification and support are important for the meticulous customer service demands unique to Japan, and for dealing with shoppers purchasing high-end products. It’s also necessary to be aware that AI can sometimes generate incorrect answers.
  
• Major companies are increasingly adopting conversational commerce, using AI to suggest things such as travel destinations and accommodations.
  

What is conversational commerce?

Conversational commerce is a form of ecommerce that helps customers select and purchase products through messaging-based interactions.

A key feature is the use of chat functionality, encompassing AI, scenario-driven messaging, and human support.

Differences from chatbots

How do chatbots and conversational commerce differ?

There are several kinds of chatbots—including AI, scenario-based, and FAQ assistants—which can make it difficult to distinguish them from conversational commerce.

Conversational commerce is a broader concept than chatbots—put another way, you can think of chatbots as a subset. Conversational commerce also includes chat support from human staff, sales via DM, messaging assistance during live commerce events, and AI agents.

Why the conversational commerce market is attracting attention

More and more businesses have been adopting conversational commerce. Let’s take a look at the reasons why:

The transition from phone calls to chats

In the past, when purchasing products on ecommerce sites, making requests by phone or email was the norm. Human-based chat support has since become widespread, but AI-powered messaging is now rapidly building traction.

While many people still make inquiries by phone, long wait times and the pressure of speaking directly with an operator discourage others from doing so. For these reasons, there has long been a tendency to prefer email or messaging over phone calls.

However, email replies can take time to arrive, and human agents might not respond to live chat inquiries right away during busy periods. Communication via messaging—such as LINE, Instagram DMs, and Facebook Messenger—has become commonplace as a result. The rise of AI chatbots, which enable round-the-clock assistance and rapid responses, is another reason conversational commerce is gaining attention.

Automation of customer service and purchase support

On traditional ecommerce sites, the typical process has involved shoppers searching for, comparing, and purchasing products on their own. While existing methods do allow for a certain degree of personalization—such as recommending products based on one’s purchase and browsing history—in Japan’s ecommerce market, where service and the quality of customer experience are highly valued, this alone makes it difficult to stand out from competitors.

It is against this backdrop that AI-powered conversational commerce is drawing interest. By using AI assistants, it is now possible to answer questions in real time and make product recommendations using the chat session. The ability to respond to requests 24 hours a day has also raised expectations that this will also improve customer satisfaction and simplify operations.

The market size of conversational commerce

The conversational commerce space is expanding both in Japan and internationally, driven by the widespread adoption of AI chatbots and messaging apps.

Japan

According to the Yano Research Institute’s “2018 Survey of the Conversational AI Systems Market,” published by Nikkei, the market for these systems in Japan was projected to grow more than tenfold over the next five years. The nation’s ecommerce sector has also continued to expand. As more organizations adopt AI chatbots and AI agents, chat-based support and purchase guidance are likely to see stronger demand.

Global

According to a report by The Business Research Company, published by GII (Global Information), the global conversational commerce market could reach approximately $12.94 billion by 2025 and grow to about $28.39 billion by 2030. The rising use of AI chatbots and intelligent virtual assistants, alongside stronger demand for personalized shopping journeys, is fueling that growth.

The advantages and disadvantages of adopting conversational commerce

By adopting conversational commerce, businesses can expect a range of benefits, including more efficient customer service and higher conversion rates. On the other hand, there are situations where Japan’s unique service culture and special care to customer needs are required, so it’s important to proceed with caution.

Advantages

Conversational commerce offers the following benefits:

• Improved customer service
  
• Available 24/7, all year round
  
• Easier to make product recommendations and assist with purchases
  
• Leads to higher satisfaction and customer retention
  
• Personalized customer service
  
• Stand out more effectively on ecommerce malls
  
• Higher conversion rates can be expected
  
• Help reduce costs
  

Disadvantages

On the other hand, there are some drawbacks to keep in mind:

• It can be difficult to adapt to the meticulous customer service level Japan expects.
  
• Complex inquiries require human support.
  
• Incorrect answers lead to decreased customer satisfaction.
  
• High-end products need to be handled carefully.
  
• Once customers lose trust, they will stop supporting your business.
  

Prime example of conversational commerce

Let’s take a look at a specific example of conversational commerce:

Rakuten Travel

Rakuten Travel is introducing an AI-powered travel recommendation feature that uses customer conversations to suggest destinations and accommodations.

On a standard trip-planning website, customers enter details such as the destination, trip dates, and price range themselves, then search for lodging by comparing the search results. But Rakuten Travel’s AI-powered chat tool can organize the criteria travelers specify—such as hotels suitable for family trips, hotels with hot springs, and places where families with children can enjoy their stays with peace of mind—and recommend options that meet those criteria. The tool can also analyze booking history and usage patterns to suggest repeat bookings at hotels the customer has stayed at before or accommodations that match past preferences.

This approach—which goes beyond simple searches to deliver products and services through customer interaction—is one of the most common forms of chat commerce.

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