“I’m thrilled to be an early adopter,” said Ian Leslie, Marketing Director at Industry West.

So when Leslie heard about an artificial intelligence chatbot that could negotiate prices with his online shoppers, he was immediately interested. Automated trading technology isn’t widely used in North America, and Leslie knew it could help her small online furniture business of about 50 employees.

“It hits at a time when we’re all talking about AI and what it means for so many verticals and for so many features,” says Leslie.

In the furniture industry, margins are often healthy and prices are sometimes negotiated, Leslie says. Consumers may be accustomed to negotiating a larger furniture purchase at the store, when interacting with a salesperson. Online, however, some shoppers may be more inclined to search for discount codes. Others may try to contact customer service for a discount. As an online merchant, Industry West wants buyers to have some wiggle room on price – if that’s what it takes to convert. But he doesn’t want to continuously broadcast a sale, Leslie says.

“At the end of the day, we’re all trying to keep our brand alive, and we don’t always say you’re on sale, but with e-commerce, you have to be on sale all the time,” says Leslie.

Industry West has a pop-up on its site that offers 20% off for new customers who share an email address. It will also email buyers a 20% discount code for abandoned carts. But for all other shoppers, or for shoppers who don’t want to give out their email address, Industry West launched an AI chatbot called Nibble in February.

How the Nibble AI chatbot works at Industry West

On the detail pages of promotion-eligible products, which Leslie says make up about 70% to 80% of its SKUs, Industry West displays a “Negotiate Price – Instant Chatbot” button below the Add to Cart button.

If buyers click on it, they can start trading with the bot, named Nibble. Industry West allowed the bot to accept a certain level of discount that varies by product, Leslie explains without revealing the discount. As part of its negotiation tactics, Nibble is trained to offer “points of proof” of the value of Industry West products, such as its quality materials and warranty program, Leslie explains. If shoppers are suggesting $20 for a $500 product or even $250 for a $500 product, Nibble can be cheeky with its response. For example, he might say, “Offers as low as these won’t make me generous.”

If Nibble and a buyer reach an agreement, the bot generates a unique discount code for that buyer that expires within 48 hours. When the buyer adds the item to their cart, this discount code is displayed.

If the buyer and Nibble agree on a price, the AI ​​chatbot will create a unique discount code.

Results of using the AI ​​chatbot

Overall, Leslie is happy with buyer engagement with the AI ​​chatbot. The best news is that the average aggregate discount buyers accept on is less than the 20% contextual discount. It is also less than the maximum discount that Industry West has allowed Nibble to offer. Leslie wouldn’t reveal how much Industry West has programmed Nibble, but for some products it’s a discount rate of over 20%.

Thousands of buyers interacted with the chatbot every month. 28% of buyers who enter into a negotiation reach an agreement with the bot, says Leslie. Of these 28%, 11% make a purchase. In other words: 3% of buyers who interact with the bot make a purchase.

Industry West’s AI chatbot chats with buyers in real time to get a negotiated discount.

Leslie suspects that the more buyers use the bot, the more Industry West will activate it. For example, over Memorial Day weekend, Industry West ran a sale with a banner ad on its site. This discount was the highest the retailer was going to offer. So, to avoid confusing shoppers with possible hidden promotions, he disabled the Nibble bot.

The goal with Nibble is to save on some of its product margins. Although the first results are encouraging, Leslie hopes to go further. Eventually, he wants to reduce this discount to 10% for new customers and maybe Nibble offers the maximum discount between 15% and 20%. Then, if the buyers and Nibble reach an average agreement of 18%, the chatbot could help the merchant save even more margin, while the buyers are happy because they accepted the discount.

Benefits of the AI ​​chatbot

The advantage of having an AI chatbot is that it can react to scenarios in real time. For example, one customer told Nibble that she bought four bar stools a few years ago, was happy with them, and wanted a fifth. But she asked if she could have it at a lower price. The bot, unprogrammed on this specific scenario, replied: “Of course, we are happy to hear that you have our product.” The discount was within the allowed range and generated the code for the buyer. This scenario is exactly what Industry West would want one of its customer service representatives to handle this scenario, and Leslie was thrilled that the bot handled this scenario in this way.

Rosie Bailey, CEO and co-founder of Nibble, says the Nibble chatbot is a hybrid of generative and more traditional artificial intelligence.

“We use our own models to create Nibble’s chat and also use generative AI in specific places,” says Bailey. “As a result, Nibble is safer – and smarter – than generative AI alone.”

Work with savvy buyers

Some buyers are smart and may know that Industry West offers a 20% discount for new buyers. These buyers can try to get a higher discount on Nibble. This is great for Leslie, who wants the chatbot to generate as many sales as possible.

“This person, what they wanted was 20.6%. If that 0.6% was all I needed to win the sale, that’s amazing. I totally agree says Leslie.

Similarly, Industry West wants the AI ​​chatbot to take margin rate into account in the future, which could help generate even more sales. Currently, the AI ​​bot only considers the refresh rate. For example, Industry West may agree to give a buyer a 35% discount on a certain product if they do not exceed the margin rate they need to maintain profitability.

Consequences of the holiday season

Industry West has a live chat feature on its website where buyers can chat with its human customer support team for any questions and issues.

By having this feature for the holiday season, some shoppers may use it to get a discount instead of contacting customer service.

“It will take the pressure off the cat a bit,” says Leslie.

Typically, Industry West will begin its Thanksgiving weekend e-sales around November 15th. But this year, with Nibble, it could use different marketing language that gives shoppers quick access to its best bargain discounts. For example, Industry West could allow the chatbot to give the low Cyber ​​discount, but buyers need to be able to negotiate it.

“Using Nibble, we can display an early access sale without displaying a banner on our website on November 1st,” says Leslie.

Bailey says avoiding endless discounts is the main goal for many of her clients.

“Most customers are tired of the ‘race to the bottom’ and think discounts are a trap,” she says. “Nibble helps you escape this trap by always delivering high-value individual offers to valuable customers without getting stuck in an endless discount cycle.”

Nibble takes 2% of sales attributed to them, Bailey says. The bot is available as a Shopify app, which took just a day to integrate, Leslie says. Nibble has about 300 customers who are mostly online retailers in discretionary spending categories, Bailey says.

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