Conversational AI in Retail and Ecommerce - 2025 Edition

The use of conversational AI in retail and ecommerce is gaining popularity like wildfire. By enabling personalized, real-time interactions, it significantly improves customer experience and boosts sales. In this article, we’ve explored how conversational AI is transforming the retail and ecommerce industries in 2025 and highlighted the top tools businesses can use instantly to streamline operations, and increase revenue.

Key Takeaways

Here’s a quick summary of how conversational AI transforms the retail and ecommerce industry—along with top tools you can use to implement these functions instantly for your business.

1. Functions: 24*7 customer support, next-gen chatbots, AI interactive voice assistants, handling repetitive queries, multilingual support, sentimental analysis, automated CSAT, seamless handoff

           🎯Best tool: Crescendo.ai

2. Fuctions: Proactive alerts, instant social media support, personalize recommendations

           🎯Best Tool: Chatfuel

3. Functions: Reduce cart abandonment

           🎯Best Tool: Coveo, TxtCart

4. Functions: Retail inventory management with conversational AI

           🎯Best Tool: Watson Supply Chain (IBM)

5. Functions: Fraud detection while ordering, placing returns, or during payment

            🎯Best Tool: Kount (by Equifax)

1. Chatbots & AI Virtual Assistants for Better Customer Support

Conversational AI is increasingly being used in the retail and ecommerce industry to provide customer support by automating interactions, improving response times, and enhancing user experiences. Here’s how it works and its key applications:

• 24/7 Availability: AI-powered chatbots handle customer queries anytime, reducing wait times.
• Multilingual Support: AI can converse in multiple languages, expanding global reach.
• Handling Repetitive Queries: Answers FAQs such as returns, refunds, shipping info, password resets, order tracking, cancellations, confirmations, etc.
• Seamless Handoff: If AI can’t resolve an issue, it transfers the chat to a human agent with context.
• IVR (Interactive Voice Response): AI voice bots handle phone inquiries, reducing call center load.

🎯How to achieve this: Use tools like Crescendo.ai 🔥, Forethought.ai, Intercom, Haptik

Image source: Crescendo.ai

2. Conversational AI to Boost Sales in Retail

• Upselling & Cross-selling: AI recommends complementary products to increase order value.
• Personalized Recommendations: AI suggests products based on browsing history and past purchases.
• Proactive Alerts: Notifies users about order delays, payment issues, or outages before they complain.
• AI on WhatsApp, Facebook Messenger, etc.: Automates responses on platforms where customers frequently seek help.

‍

Image source:  Chatfuel

🎯How to achieve this: Use tools like Tidio, Chatfuel, WATI (for WhatsApp), Manychat

3. Conversational AI to Reduce Cart Abandonment

Conversational AI in the retail and e-commerce industry plays a critical role in reducing cart abandonment by engaging customers in real time, addressing doubts, and guiding them through the checkout process. Here’s how it works:

Real-Time Assistance at Checkout: Conversational AI chatbots proactively pop up when a user hesitates during checkout, offering help with questions about pricing, shipping, return policies, or product specs, common reasons for cart abandonment.

Personalized Reminders and Nudges: AI can detect when a customer leaves without completing a purchase and automatically sends pop-ups or follow-up messages that often include personalized product recommendations, discount codes, or urgency messaging (e.g., “Only 2 left in stock!”)

Image source: Coveo

Reducing Form Fatigue: AI simplifies the checkout experience by auto-filling fields or guiding users through complex forms with voice-based interactions, making the process faster and more user-friendly. 

🎯How to achieve this: Use tools like Coveo, Upsellit, TxtCart, Drip, CartStack

4. AI in Retail for Inventory Management

Real-Time Stock Information for Customers: Conversational AI bots can pull live inventory data from all platforms (ERP, online store, mobile app, marketplaces) and instantly inform customers about:

• Product availability
  
  
• Restock dates
  
  
• Alternative recommendations if an item is out of stock

This reduces customer frustration and lost sales and also avoides overselling or underselling. 

Customer Demand Insights: Conversational AI analyzes chat queries to spot trends in product demand—helping businesses forecast inventory needs and avoid stockouts or overstocking. 

Restocking Automation after Returns: AI bots can guide customers through returns and automatically update inventory levels, helping keep stock data current and reducing manual effort.

Automated Stock Alerts & Reorder Prompts: AI agents can monitor stock levels and automatically:

• Notify inventory managers when products are lo
  
  
• Trigger reorder workflows with suppliers
  
  
• Send internal alerts via Slack, email, or chat systems

🎯How to achieve this: Use tools like Watson Supply Chain (IBM), Lily AI, Zebra Prescriptive Analytics, C3 AI Inventory Optimization.

5. AI for Fraud Detection in Retail

Conversational AI helps detect and prevent fraud in retail and ecommerce by combining customer interaction monitoring with real-time data analysis. Here's how it contributes to fraud detection:

Analyzing Customer Behavior Patterns: Conversational AI can monitor user interactions with the help of Natural Language Understanding (NLU) to detect red flags like

• unusual inquiries, 
• mismatched location/IP data, 
• repeated failed logins
• stolen credit card inquiries
• social engineering attempts, etc.

It flags suspicious behavior before a transaction is completed.

Integrating with Fraud Detection Systems: Conversational AI integrates with fraud management platforms to:

• Automatically block suspicious users mid-interaction
• Escalate high-risk cases to human agents
• Trigger risk rules based on real-time behavior

Monitoring Return & Refund Abuse: Conversational AI can flag repetitive refund requests or abnormal return patterns—helping reduce return fraud and policy abuse.

🎯How to achieve this: Use tools like Telesign, Signifyd, Kount (by Equifax), Pindrop, Zimperium

6. AI for Feedback

CSAT Calculation: AI-Driven CSAT Scoring: AI automatically calculates CSAT scores by analyzing customer tone, word choice, keywords, resolution speed, and other conversational cues—eliminating the need for manual surveys.

Sending Surveys: AI automatically sends survey requests to gather post-purchase reviews and ratings. 

Sentimental Analysis: AI detects customer mood based on the conversation flow and changes the conversation accordingly.

🎯How to achieve this: Use tools like Crescendo.ai for this. 

7. Conversational AI to Enhance In-Store Experience for Retail Businesses

Conversational AI enhances in-store sales by bridging digital intelligence with physical retail experiences. Here's how it helps:

Interactive Kiosks & Smart Displays: AI-powered kiosks or voice assistants guide customers to products, provide recommendations, or answer questions like:

“Where can I find men’s shoes?”
“Do you have this in size M?”

“Is this available in blue?”

Sales Associate Enablement: Conversational AI tools for retail on mobile devices help sales staff quickly retrieve product info, suggest upsells, and close sales more effectively—acting like a smart assistant.

Personalized Promotions: AI chatbots can identify loyal customers and offer targeted in-store discounts or cross-sell suggestions based on past shopping behavior.

Queue Management & Self-Checkout: Conversational AI can direct customers to self-checkout lanes, answer payment-related queries, or resolve issues—reducing wait times and abandoned purchases.

Post-Sale Engagement: Conversational AI in retail and ecommerce enables customers to register warranties, request support, or reorder items via in-store kiosks or QR-based chat prompts—driving repeat purchases.

🎯How to achieve this: Use tools like Google Dialogflow, Yellow.ai, RetailNext

‍