Chatbot Market to Grow by $5.37 Billion by 2028

Research firm Technavio expects the global chatbot market to grow by $5.37 billion through 2028, at a compound annual rate of 35.27 percent.

The increasing use of the internet, digitalization, and mobile devices have transformed interactions between people and businesses, while APIs and artificial intelligence advancements continue to fuel innovation in this dynamic industry, the firm said.

The chatbot market is thriving, it said further, with trends focusing on enhancing online shopping experiences. Product selections, comments, and recommendations are now powered by advanced algorithms; nearby stores, opening hours, and contact information are easily accessible through chatbots; upcoming products and Instacart orders can be managed with a simple chat; and customer intent is accurately identified using supervised machine learning and natural language processinjg technology, it said.

Chatbots, Technavio said further, provide automated, 24/7 support, reducing response time and improving customer satisfaction. They can handle routine inquiries, freeing up human agents for more complex issues. Integration with CRM systems allows for personalized interactions and data analysis. Chatbots offer cost savings and increased efficiency, making them an essential tool for modern businesses, it said.

Chatbots can help with leads, in-store purchases, mobile alerts, and updates, but they must be able to understand user intent and provide instant service to enhance the customer experience, Technavio said.

Customer service activities are being automated with AI chatbots, enabling instant service and reducing the workload on customer service employees. Audio/voice bots and SMS chatbots are also gaining popularity, providing convenience to customers. Chatbot developers are leveraging consumer analytics and recommendation algorithms to offer personalized experiences and actionable insights.

At the same time, though, the chatbot market faces significant challenges, including low awareness and standardization, security concerns, and a lack of IT infrastructure in some parts of the world, Technavio found.

Another drawback, according to Technavio, is that integrating chatbots with AI, NLP, and messaging apps can be complex, Technavio observed, finding that standalone and website chatbots must offer voice recognition and seamless chatbot interfaces.

Key market players identified in Technavio's report include 247.ai, Acuvate, Aivo, Alphabet, Amazon, Artificial Solutions International, Avaamo, Botsify, Conversica, Creative Virtual, eGain, Inbenta Holdings, IBM, Kore.ai, Meta Platforms, Microsoft, OpenAI, Oracle, ServiceNow, and Zoom Video Communications. Of those, Facebook, which is owned by Meta, dominates the chatbot sector with messaging apps like Messenger and WhatsApp sending 60 billion messages daily.

Key players in bot development include PANDORABOTS, Robot.me, KiK, and Chatfuel, according to Technavio.