Every weekday, 135 million Americans get behind the wheel and drive 51 minutes, round trip, to and from work. Those 51 minutes haven’t exactly been considered the most productive time of those commuters’ days.
However, as the latest PYMNTS Digital Drive Report — in collaboration with P97 Networks — noted, that thinking is becoming past tense. Rather than being trapped alone behind the wheel, consumers are using connected devices to connect to a whole new world of opportunities. About 73 percent of those commuters we studied said they connect to the internet while driving, up from roughly two-thirds during the same period last year. That puts the number of digital drivers out there at 99 million.
Those 99 million connected consumers are quickly transforming the car itself — from an innovation solely about transporting a consumer from point A to point B into a contextual commerce channel worth $230 billion a year in commuter-inspired purchases. It’s a connected commuter experience that has increased more than 8 percent since last year.
“It is a huge change” and “a very unique market opportunity,” P97’s CEO Don Frieden told Karen Webster in this week’s edition of the Monday Conversation. “Merchants have a chance to influence the consumer during their, now, very literal purchase journey. There is no other comparable way to do that.”
Tapping into that huge opportunity, he noted, means leveraging those connections to build new relationships with consumers, embracing the exploding power of voice navigation in this segment and “realizing that the race going forward is about perfecting mobile as the last mile of that digital drive.”
The Convenience Store And The Connected Consumers
While there are many retail touchpoints that can, and likely will, benefit from the connected car revolution currently underway, Frieden said, convenience stores (C-Stores), particularly those with an attached gas station, are standing on the forefront of that opportunity. The reason for that is rather simple: These stores are selling what connected consumers are already buying.
According to the Digital Drive Report, commuters spent $62.3 billion on gas in 2018, $16.7 billion on coffee and $47.2 billion on food. Those are also all the areas in which C-Stores have a real opportunity to shine, he noted, if they can find a way to tap into the connected consumer profile and overcome the major commerce hurdles they face with their customers: getting them physically into their stores.
“The challenge these retailers have today is that only 30 percent of customers come into the store after purchasing fuel,” he explained.
Merchants want those higher-margin, in-store sales, so they are exploring a number of ways to incentivize connected commuters to do that. Frieden mentioned that sending digital offers directly to consumers or offering them rewards for loyalty are two simple, but effective, strategies for creating new digital commerce habits. Digital consumers respond to digital offers and, when served, are more likely to go into the stores and make a purchase, he noted. When they do, average basket size increases from 17 percent to 44 percent.
Top retailers in the space, mostly leveraging the power of a coffee club program, have been able to take once-a-week customers for gas and turn them into three-to-five-times-a-week customers.
“The right combination of app, reward and loyalty incentives all have the potential power to motivate the customer to set their habits around the retailer that offers them a friction-free way to make their morning drive that much easier,” Frieden said.
Forming those relationships, he noted, will become even more mission-critical, as it seems increasingly likely that, one day, every car will have a voice-enabled artificial intelligence (AI) assistant riding shotgun, and facilitating many of those commerce connections.
The Voice-Enabled Digital Drive
Frieden had just returned from the Consumer Electronics Show when he spoke with Webster. He noted that while he was there, he had a chance to experience the demo of the Echo Auto (aka Amazon’s Alexa behind the wheel). He couldn’t help but think back about 15 years to when the Garmin GPS system rolled out for consumer cars.
“Within a very short time, 100 million people purchased Garmin devices because they were such a massive improvement to what was available in the car,” Frieden explained. It wasn’t long after this that Garmin navigation became part of the in-dash experience. He added, “I think we are going to see something similar this year, especially with the new Alexa device that Amazon says [its] had more pre-orders of than any other device.”
In other words, it won’t be long until Alexa becomes baked into the car.
The appeal, particularly of Alexa for the car, Frieden said, is obvious. It’s something that many consumers already use in their homes. According to the Digital Drive Report, nearly 58.7 percent of commuters are already Prime members, and Amazon has their payments data on file to make for an easy authentication and purchase experience.
Moreover, since voice is such a natural and safe way to navigate while driving, the integration of Alexa (or voice, in general) in vehicles will have a lot of power to pull the 27 percent of consumers who aren’t currently connecting on their drive to do so, he noted. This puts pressure on the original equipment manufacturers (OEMs) to get with the voice program, or risk being left in the dust by the players already seeing the future and building to it.
“The beauty of the accessories [like the new Echo Auto] is that [they] can get consumers moving into connected cars sooner rather than later,” Frieden remarked. “We are seeing many manufacturers understand that this is the path forward, though getting there will take some time, depending on what point in their journey they are on. But the motivation is now for the OEMs to get this happening sooner rather than later.”
The Last Mobile Mile
Today, Frieden noted, the first digitally native group of adults are coming into their full-spending potential — the group PYMNTS has dubbed Bridge Millennials. As a group, this demographic is between 30 and 40 years old, likely has a college degree, is employed and is the first generation of connected consumers with discretionary spending power.
Bridge Millennials spend approximately $2,225 per year on retail purchases, roughly $830 more than baby boomers and nearly $300 more than younger millennials.
“This is the critical generation to capture, especially since ‘muscle memory’ is hard to lose and the goal is to establish the habits with them early on in their evolution with connected cars,” Frieden said.
Frieden added that the connected experience in the car will also influence the types of cars they buy — and the kinds of innovation they will expect when behind the wheel. When it comes to crowdsourcing rides in the future, he noted that more than 20 percent of consumers said they would be interested in giving this type of commuting option a shot. Instead of finding an Uber, these modern-day digital hitchhikers would be willing to use mobile devices to catch a ride with someone they didn't know to get to their destination.
In addition, Frieden said the commuting commerce ecosystem is just starting to understand commuters’ digital drive, and their likes and dislikes — and using technology to reach them with specials and offers that never could have been possible before.
“That’s a major game change, and an opportunity that’s growing into a bigger one by the day,” he said.