Empirical study on the effect of AI chat-bot on consumer purchase behavior

Abstract

Nowadays, artificial intelligence plays an important role in almost every industry including IoT, Fintech and even in the retail industry. One of the main features of AI is computer mediated communications (CMCs). A Chatbot is an example of CMCs, and is a machine conversation system interacting with humans via a natural conversation language. In this paper, the effect of AI chatbots is examined in a retail context as a purchasing channel. Empirical studies suggest that orders made via a chatbot generate larger sales amount than those via traditional mobile channels such as web and app. Three empirical studies show that the findings can be explained with a chatbot’s distinctive characteristic, anthropomorphism (e.g., imbuing social presence in digital conversations where social presence is usually absent). We provide empirical evidence that consumers feel less responsibility when purchasing products via a chatbot versus a traditional mobile channel, since the chatbot makes consumers feel the existence of a social agent. We provide important managerial insights for retailers on when and how they can increase their sales volume and revenue in the emerging AI enabled commerce.