Chatbot Market Size, Share & Trends Analysis Report By End User, By Application (Bots For Service, Bots For Marketing), By Type (Standalone, Web-based), By Product Landscape, By Vertical, And Segment Forecasts, 2021 - 2028

Report Overview

The global chatbot market size was estimated at USD 430.9 million in 2020. It is expected to expand at a compound annual growth rate (CAGR) of 24.9% from 2021 to 2028. The growth is expected to be driven by the increasing adoption of customer service activities among enterprises to reduce operating costs. A chatbot is an interactive application developed using either a set of rules or artificial intelligence technology. It is designed to interact with humans through the textual conversation process and is integrated with various messaging services, thereby assisting users in various sectors. Various innovations carried out in Artificial Intelligence (AI), and Machine Learning (ML) technologies are expected to enhance the features of chatbots, which, in turn, would drive demand.

The Over-the-Top (OTT) messaging applications, such as WhatsApp, Facebook Messenger, and WeChat, among others, are expected to witness increased demand by 2020. This can be attributed to the growing preference of individuals toward messaging applications over social networking sites. Chatbots that are developed for integration with messaging applications are also expected to witness significant demand in the future. Moreover, chatbots are gaining popularity as businesses continue to automate their sales and customer services. The use of these bots enables organizations to deliver timely services at reduced costs.

Today there is a significant rise in usage of messaging services, which is expected to surpass the social networking sites in terms of the number of users. There is also a significant development in the Natural language processing field, which made the interactions between computer and human languages more streamlined. The entire Ecosystem of the chatbot comprises various cross-linking features that help in optimum usage of the application.

The users interacting with the customer service interact with the chatbot through the chatbot interface. The chatbots interact with users via the webpage or mobile applications or through SMS etc. The Chatbots are deployed on various channels such as standalone, website, and third-party messenger platforms. In standalone, bots are integrated with the applications and other software of the enterprises. The chatbot is also usually integrated into the website of the enterprises to assist customers. The third-party messaging platform such as Facebook, Skype, and WeChat is another mode of deployment of chatbots. The users interact with the chatbots deployed to raise the requests or complaints to customer service.

A chatbot is a messaging service that was developed by using a set of rules and artificial intelligence that can be interacted via a chat interface. There are two types of Chatbots, one which is developed by a set of rules and the other which uses artificial intelligence and machine learning algorithms. Some chatbots also include voice recognition to offer an enhanced customer service experience. These chatbots are developed on various chatbot developer frameworks (e.g., wit.ai, motions.ai, Chatty People, etc.), which are included with cloud backup and various other database integrations and integrating to other applications. Currently, chatbot developers are including analytics into the software application to get better insights into customer behavior and buying patterns.

With the spread of the coronavirus pandemic, various marketing agencies, financial organizations, and grocery outlets have initialized the full fledge implementation of chatbots and conversational AI tools to enhance customer service in the crisis. Amid the pandemic, businesses face challenges in sustaining and are willing to try new technological avenues such as voice-based assistants and chatbots. Also, chatbots have assisted the medical and healthcare vertical in these difficult times. Several medical insurance companies and public health institutions worldwide have deployed chatbots to assist users/patients in providing proper COVID-19 advice.

End-user Insights

In terms of market size, the large enterprises segment dominated the market with a revenue share of 47.7% in 2020. Several large enterprises develop their chatbots with a specific set of rules; however, large enterprises are expected to optimize their chatbots in the future in a bid to achieve sophisticated operations. Most of the chatbot development tools are based on the machine learning model, which allows enterprises to build an AI applications interface to deliver actionable business data. Additionally, advancement with artificial intelligence in the market has created a major usage shift from online social networks to mobile-based messaging applications.

Approximately 45% of end users prefer chatbots as the primary mode of communication for customer service activities. The large enterprise segment accounted for the largest market share in 2020 owing to their wide usage in these enterprises. The segment is also expected to account for the largest market share over the forecast period. However, the medium enterprise segment is expected to grow at the highest CAGR.

Type Insights

In terms of market size, the standalone segment dominated the market with a revenue share of 56.9% in 2020. The segment is expected to continue holding the largest market share over the forecast period. Consumers are increasingly using visual assistant applications such as Google Assistant, Amazon’s Alexa, and Apple’s Siri to use in standalone messaging platforms. This is expected to create a great upsurge in the demand for standalone chatbots.

Many enterprises prefer chatbots for messaging platforms and customer service bots for web-based services in an attempt to increase customer interactions. Chatbots enable enterprises to directly interact with customers and provide data about customer preferences, which can later be used in digital marketing activities. Furthermore, enterprises majorly in retail, digital marketing, healthcare, and other domains are using chatbots for the improvement of consumer services.

Product Landscape Insights

The marketing segment dominated the market with a revenue share of 56.8% in 2020. The artificial intelligence segment is expected to register a CAGR of 26.0% over the forecast period. Artificial intelligence chatbots are expected to gain high traction in the market owing to the extensive investment by market players in the artificial chatbots market. These initiatives were taken to convert a greater number of customers and expand the company’s customer base.

Chatbots use artificial intelligence to process language and to interact with humans. Many of the bots are installed for messenger applications like Facebook, Skype, Slack, and other various social media networking sites. The developers can integrate the payment gateways directly with the assistant and use these messaging platforms for payment services. Nominal fees can be charged as commission, which is one of the major opportunities in the market. Chatbots offer direct customer interaction; hence they are extensively used in digital marketing to update the existing customers about the products and services. Thus, the marketing segment is expected to witness substantial growth over the forecast period.

Application Insights

In terms of market size, the bot for service segment dominated the market with a revenue share of 35.5% in 2020. The bots for the social media segment held a significant share in terms of the number of bots. However, in terms of revenue, the bots for the service segment captured the majority of the market share. The bots for marketing and bots for payments/ order processing segments are expected to account for large market shares over the forecast period.

This was a period of automation, and many businesses are opting to automate their routine and mundane tasks to save costs. Sales and customer services are the primary sectors on which businesses are concentrating to automate, which will substantially reduce costs by using chatbots. Chatbots with artificial intelligence are particularly becoming popular. The use of Chatbots in businesses will drastically cut labor costs, which will automate a portion of customer services and sales and result in considerable savings for businesses. Customers prefer to get quick responses from customer service instead of waiting days for a reply. The chance of losing a customer can be reduced drastically by replying through a chatbot. These bots can be used by E-commerce Companies for returns and exchanges. Deploying Chatbots can automate approximately 35% of the task done by an individual, which will substantially result in huge annual savings in the overall costs.

Vertical Insights

In terms of market size, the e-commerce segment dominated the market with a share of 24.3% in 2020. Chatbots find applications in a wide range of industries, such as healthcare, retail, BFSI, media and entertainment, travel and tourism, e-commerce, and others. The BFSI segment accounted for the largest market share in 2020 and generated the highest revenue. Chatbots are gaining popularity in many sectors owing to benefits such as remote connectivity and virtual presence, which substantially reduces the transportation cost. The travel & tourism vertical is expected to portray the highest growth over the forecast period.

Many banking and financial organization are increasingly benefited from implementing chatbots. Implementation of chatbot leads to increased cross-selling activity and reduced customer service costs. The chatbot developed has to be secure and offer a smooth user experience for the financial industry. Advancements in artificial intelligence, along with the drastic increase in the number of messaging applications, are driving the chatbot market in the BFSI sector. In the e-commerce sector, customers prefer to receive information about real-time price updates about the brands while they’re shopping. Chatbots are increasingly adopted by these organizations, which engage the user and helps in reducing the overall shopping time. It allows e-commerce companies to enhance ROI by keeping operating costs low.

Regional Insights

As North America is a major hub for startups in the chatbot industry, it accounted for the largest market share of 42.2% in 2020. Asia Pacific, which is a major hub for the services industry, follows next. Many large enterprises increasingly adopt chatbots in their routine customer service activities. The substantial growth prospects of chatbots in various regions can be attributed to the significant benefits that it offers to enterprises, such as reduced operating costs, improved customer satisfaction, and enhanced operating efficiency.

The substantial growth prospects for the market can be attributed to the significant benefits it offers, such as the reduction in operating costs of the enterprises, enhancing customer satisfaction, and improving the operating efficiency of the enterprises. North America region shares the maximum market as it’s the major hub of startups in the Chatbot industry, and the majority of the implementations of chatbots occurred in this region. Asia Pacific region is followed by North America, where it is the major hub of the services industry. Many large enterprises are increasingly adopting the chatbot in their routine customer service activities.

Key Companies & Market Share Insights

The various competitors present in the market are challenged to provide ground-breaking offerings, which address changing technologies, business practices, help consumers, and security needs. The current market environment is witnessing intense competition between the key players for achieving market domination via the enhancement of quality and product differentiation, thereby enabling the growing market consolidation through strategic initiatives such as mergers, alliances, and acquisitions. Industry participants have entered into a strategic partnership with suppliers and distributors to strengthen their product portfolio and geographical presence. Some of the prominent players operating in the global chatbot market are:

• [24]7.ai, Inc

• Acuvate

• Aivo

• Artificial Solutions

• Botsify Inc.

• Creative Virtual Ltd.

• eGain Corporation

• IBM Corporation

• Inbenta Technologies Inc.

• Next IT Corp.

• Nuance Communications, Inc.

Chatbot Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2017 to 2028. For this study, Grand View Research has segmented the global chatbot market report based on end user, application, type, product landscape, vertical, and region:

• End-user Outlook (Revenue, USD Million, 2017 - 2028)

  • Small Enterprises

  • Medium Enterprises

  • Large Enterprises

• Application Outlook (Revenue, USD Million, 2017 - 2028)

  • Bots for Service

  • Bots for Social Media

  • Bots for Payments/ Order processing

  • Bots for Marketing

  • Others

• Type Outlook (Revenue, USD Million, 2017 - 2028)

  • Standalone

  • Web-based

  • Messenger-based/Third party

• Product Landscape Outlook (Revenue, USD Million, 2017 - 2028)

  • Artificial intelligence

  • Marketing

  • Human intelligence

• Vertical Outlook (Revenue, USD Million, 2017 - 2028)

  • Healthcare

  • Retail

  • Banking, Financial Services, and Insurance (BFSI)

  • Media and entertainment

  • Travel & Tourism

  • E-commerce

  • Others

• Regional Outlook (Revenue, USD Million, 2017 - 2028)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • U.K.

  • Asia Pacific

    • China

    • Japan

    • South Korea

  • South America

    • Brazil

  • MEA