Why Retail Needs To Better Tap The Power Of Chat

In-Chat Gift Card Purchases

Given its reach into literally every corner of the globe, it is not much of an exaggeration to say that we are living in the era of chat.  Some 5.8 billion people use chat apps of one kind or other — roughly 76 percent of the human population. Communicating with friends and colleagues, gaming, transacting — the reasons people are digitally chatting vary, but increasingly, the fact that they are digitally chatting does not.

Living in the golden era of the chat app, SendBird CEO John Kim explained to PYMNTS in a recent interview, it’s easy to feel like something very new is going on here. But the fact is that chat, digitally, is more like a little bit of history repeating.

“People have been finding ways to advance chat since the beginning of time. You can view the Pony Express as a very slow form of chat.  But if you look at the advent of conference calling on phones, or ICQ chat rooms or AoL messenger, the evolution of chatting is always part of the evolution of technology forward.”

Chat isn’t new, but the consumer relationship with it in the mobile era is something rather unique in human history; almost everyone everywhere has access to real-time messaging.  That’s a big change — and a potentially powerful channel for business looking for a new way to reach out to their customers — but it’s a potentially powerful tool that is mostly underutilized in the business community.

Millennials and Gen Z consumers show a clear preference for it, Kim noted, but widespread global adoption of user-to-user messaging in business applications has been slow to the gate — most of the messaging app market is divided between a handful of massive global technology players.

Founded in 2016, SendBird hopes to help retailers, platforms and financial institutions level that chat playing field with a white label API that allows their partners to offer up real-time, user-to-user messaging within their own platform.

“The more traditional Fortune 500 companies we work with around the world weren’t wired into chat and didn’t have an immediate need to add messaging. But startups are really driving consumer behavior — and they are seeing they have to change.”

The Personalized Experience

For all the very good things adding direct messaging to one website or mobile app can bring, Kim noted, there is a very logical reason that most businesses haven’t invested in really adding it to their digital offerings.  Said simply, a good chat application is hard to build, and consumers are used to using very good, very advanced chat applications built by firms that specialize in nothing but messaging. The average financial institution, retailer or online gaming portal, he noted, didn’t go into business to design and manage a chat platform full time, and trying to do so simply outstrips their technical ability.

SendBird is at base an API-based way to outsource the problem.  SendBird builds and maintains the chat interface, but behind the scenes and in an entirely invisible way, so that all the consumer ever sees in the partner firm’s site and branding.  The integration, he noted, isn’t exactly light-switch-flip easy — for a firm with a well-established tech department, integration with SendBird might take a few weeks or even a month or two, and for firms with less-developed internal IT, integration can take as long as six months.

But once that is done and the technical heavy lifting is off their plate, Kim noted, SendBird’s partners can then use chat to its fullest capacity to improve engagement, retention, and conversion.  And those use cases can be varied, he noted. It might mean making it easier for buyers on a retail marketplace to directly message a seller to ask questions about a product. It might mean making it easier for service providers on a platform to directly connect with customers to offer up more detailed quotes.

And those use cases, he noted, can get more exotic as technology progresses.  One client, he noted, is offering a home-shopping stream — similar in concept to the recently announced Amazon Live — and has decided to layer in a chat interface to make the stream a bi-directional communication channel.

“Just simply by adding chat, they were able to drive up engagement and conversion rates quite a bit. Instead of having to call customer service or do their own online search, because of this bi-directional experience they can ask questions and have the host answer them and even do specialty demonstrations in real time.”

The reality, Kim noted, especially as smaller players are trying to compete against mega-players like Amazon, is that being able to differentiate an experience and in some ways shrink it down to single-person scale could be a very powerful offering, both when it comes to drawing new customers in, and retaining them once they’ve come.

What’s Next

The ride for SendBird has been very fast — from a Y-Combinator-backed startup two years ago, the firm has raised around $70 million since its 2016 founding.  Most recently, it picked up $52 million in a Series B round of fundraising led by ICONIQ Capital and joined by existing investors, Shasta Ventures, August Capital, Y Combinator, and Funders Club.

And SendBird hasn’t just snatched up a lot of money in a short time — it’s also signed some rather recognizable names, including the NBA, Yahoo! Sports, GO-­JEK, Carousell, Virgin Mobile UAE, SEGA, Healthline, TriNet and Kookmin Bank.

The goal now moving forward with new funding in hand, Kim said, is scale — and building more of it.

“Our goal now is getting our name out there, so that when companies are thinking about adding chat — and really looking at it — they are finding our name first.”

And, he noted, they are, as always, focused on building out for the future — because chat has never been static in its long history, and shows no signs of becoming so at this juncture. Everyday users are seeing updated experiences and capabilities in the mainstream chat apps they frequent, which means SendBird needs to be building those capabilities so they exist in any chat interface they build for a partner.

“We are making sure that our features are always up to date, so our customers who are not Facebook or WhatsApp can use the coolest feature for part of their applications. And we have to do this while remaining scalable, secure and reliable so we can do that for a million applications, or for 10 million applications.”

Laying the groundwork for the next evolution of technology, fueled by chat.




About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.