A Brief Introduction to Contextual Commerce

Many retailers are exploring the potential of contextual commerce. It is based on a 3-A rule: customers’ ability to buy anything anytime anywhere they happen to be online. Retailers are seeking to provide customers with the opportunity to make a purchase at any brand touchpoint online conveniently. They should be able to complete a transaction “within their current online environment”, without the need to switch to an external website or app.

Karen Webster, a commerce adviser, argues that contextual commerce aims to redefine impulse purchases. She refers to the Pew Research Center’s finding that consumers spend only a small fraction of their digital day shopping: only about 2% of 5 hours and 38 minutes spent online on average per day. In many cases, brands cannot reach them with pop-up ads. According to The 2015 Ad Blocking Report by Page Fair, a provider of ad-blocking software, there are 198 million active adblock users globally. Contextual commerce addresses these 2 problems at the same time: Retailers can reach potential customers in an online environment which provides them useful information, i.e. in an informative online context. If they come across an appealing product on social media, a messaging app, specialized site or news portal, and easily get all the information they need, they are more likely to make an informed impulse purchase”, as Webster calls it, by clicking a ‘Buy Now’ button.  

Chris Ward, Deputy Editor of MyCustomer.com, presents the technological development of contextual commerce. First, there were click-and-collect services, buy buttons on social media and voice-recognition technologies on mobile devices. The next phase will include augmented reality, virtual reality, chatbots, voice intelligence and maybe eventually even delivery drones. All of these technologies aim to “shorten the cycle between engagement and purchase”, which is a necessary precondition for market leadership, to refer to the idea of tech analyst Rob Enderle. Ward tries to find out how retailers can shorten this cycle and become more ‘contextual’.

The first of his interviewees, Lubin Hoque, Sales Director at SAP Hybris, a software firm, thinks that they need to find a better way to manage real-time customer data. There is a lot of commercially valuable information available online. Despite investment in analytics technologies, many retailers are still unable to extract the data they need, he observes.

Ward’s other interviewee, Anthoula Madden, a partner at PwC, a professional services network, claims that firms interested in becoming more ‘contextual’ should focus on the relevance of the information on their websites, positive customer reviews online and, finally, on a thorough analysis of how potential customers engage with their brands. “If you look at a customer journey across several touchpoints where a customer has researched online, come into a store, gone back online, has made purchases in the past, we have a whole bunch of information around what this customer is interested in, what products they’re researching, where they’ve bought from, what they’ve bought. It’s about piecing all of that together,” she explains. In order to handle so much information and utilize it for business needs, retailers need to develop an integrated technology platform, she recommends.

Himanshu Sareen, a contributor to ClickZ, draws attention to the fact that contextual commerce should not be confused with contextual marketing. “While marketing will most definitely take cues from consumer data to deliver advertisements to them contextually, commerce resides much closer to the realm of user control,” he points out the difference. In his opinion, most of contextual commerce will have an opt-in option, and will use only the data that consumers will be willing to share via context-based tools such as automated grocery lists. Still, the convenience of contextual shopping will not eliminate the risk of privacy breaches.

References:  [1] Aol Partner Studio, Tech Crunch / [2] Jill Finger Gibson, Digital Clarity Group / [3] Karen Webster, PYMNTS.com / [4] Page Fair, The 2015 Ad Blocking Report / [5] Chris Ward, MyCustomer.com / [6] Himanshu Sareen, ClickZ