Is it the holy grail for marketers? Tailor made, “shoppable” content, at the right time, at the right place, without friction. On demand, always, and on any device.
Contextual commerce means that requirement, proposition and payment come together simultaneously. It puts an end to all the hassle around managing the online funnel and the constant risk that the customer drops off at any time in this process. No more friction, no distractions and no more abandoned shopping carts.
Watching an ad on TV and making an instant purchase with your remote control is an example of contextual commerce. Another example is “voice” or “voice commerce”. In the US, 1 in 3 American consumers now own at least one smart speaker. A convenient way to record and remind your shopping list for groceries during the week. This should reduce the chance that you have forgotten an ingredient for your favorite pasta. Other examples of contextual commerce are Instagram shoppable tags and Pinterest buyables. But a chatbot is also a good example if it can provide the customers with an answer in the right context.
From traditional to contextual
With contextual commerce, commercial opportunities are created through a combination of consumer preferences and technology. From the traditional hub-spoke model where traffic is directed to a central website, contextual commerce offers a hub-hub model where the entire brand experience manifests itself where it most impacts the consumers: in the right context at the right time. Add to this the developments around augmented reality and virtual reality and the potential seems endless. In the future, consumers will choose their desired platform (comfort zone) and all their needs will be available there, instantly. From information gathering upto consumption.
End of the funnel
Customers now often go through a traditional funnel, as shown in the example of the infographic below: Orientation -> Consideration -> Choice -> Upsells -> Transaction. Each and every time all those costly retargeting efforts are required to get the retention going. This takes much less effort if the customers are already in their comfort zone, in the right context, so that some of these phases are automatically skipped. As shown in the right picture.
You could say that today’s (popular) marketplace model is a stepping stone to contextual commerce. The traditional online customer journey is no longer necessary. The consolidated offer is available for the customers in the marketplace. Less fragmented, in one place and more in the context of consumer’s needs. The next challenge is how do I get my content to the right place at the right time in the right context with those for whom it is relevant at that moment. AI (Artificial Intelligence) plays a major role here. Just like Google Search already plays a major role in which search results we see and to what extent they are indeed relevant to what we are looking for.
Three preconditions are necessary for contextual commerce: an optimal customer experience, a simple payment method and well-guaranteed privacy.
An intuitive user experience, that is familiar to the customers, is a basic requirement. For example, if the platform is not designed for mobile, it will not only cost conversion, but also the trust needed to successfully conduct contextual commerce. Because if I trust the app, website or ecosystem I use, I can store my billing details and my delivery details in it. I can pay for the item that I want to buy in a few clicks. This is of course much more convenient than having to re-enter my data on multiple websites every time. It reduces the chance of distraction to zero and provides a huge conversion advantage.
A simple payment process is therefore crucial – the transaction takes place in the background using the stored payment methods instead of manually entering card numbers and security codes. But this is not easily achieved. Online merchants who want to benefit from this new development will have to gain the trust of consumers. They will have to store their payment details and delivery details with them. With contextual commerce, both large and small players can win the hearts and minds of consumers combining the right payment methods with complete transaction security. Without this functionality: no contextual commerce.
A well-guaranteed privacy process and the application of the GDPR play a major role here. Merchants should provide an insightful process about how personal data is protected and give confidence to consumers. Avoid reputation damage or fines from the Dutch Data Protection Authority. Also ensure transparency to your customers about what data is collected.
The largest and most advanced contextual commerce provider is Tencent’s Chinese WeChat with approximately 1 billion users.
Started as a messaging app in 2011 and gradually gained more and more trust and support. WeChat is now an all-encompassing consumer ecosystem in China. Practically speaking, users don’t have to leave the app during the day to take care of all their daily needs.
The ecosystem that comes closest to WeChat in the Western world is Facebook. But are we massively giving Facebook similar trust? Is Amazon or Google Better Positioned? Privacy is an important criterion here. For example, a Chinese consumer values
I am curious how the (natural) need for contextual commerce, on a similar scale as WeChat in China, will be implemented in Europe in the coming years.
This article has been published (in Dutch) on Frankwatching. Publication date: 21st June 2019.