Location has always mattered in business, but the concept is taking on new meaning in online retail. Contextual commerce — which enables users to seamlessly purchase at the moment of discovery, wherever they first discover the product — has gained popularity and promises to wield even more influence in retail in the coming years. This is because contextual commerce could potentially monetize consumer experiences by facilitating purchasing experiences wherever consumers choose to discover brands or products.
The ins-and-outs of the emerging ecosystem of contextual commerce was the topic of a recent discussion between Karen Webster and Azita Habibi, business development lead at Braintree, a payments services firm owned by PayPal. The talk centered around the PYMNTS and Braintree Contextual Commerce Report, which used survey findings from 2,000 U.S. consumers to paint a landscape picture of the retail trend.
A deeper dive into how contextual commerce works in the real world might be useful. Buying a dress worn by a celebrity in a picture featured on a magazine or social media site is one form. So is securing a dinner reservation on Airbnb — at a restaurant the consumer might never have found near the house they just rented on the site. A shoe recommendation made by a friend on Facebook could also lead to a contextual commerce purchase.
According to the Contextual Commerce Report, 58 percent of consumers have participated in contextual commerce experiences. Of that group, 84 percent report satisfactory experiences with contextual commerce.
“With the proliferation of these experiences, you’ll [see] these numbers increase,” Habibi said.
Merchants shouldn’t take the appeal of contextual commerce for granted. A site might aggregate enough interesting content to attract consumers eager to learn more about specific topics (summer fashion, perhaps, or a particular band, among countless other areas), but if those visitors have trouble finding products, that can lead to frustration. So can being redirected to commerce sites that seem shoddy or otherwise untrustworthy.
Security of transactions, after all, stands as one of the top priorities of online shoppers.
Many Moving Parts
Contextual commerce is achieved through partnerships that require secure data sharing.
“It has multiple moving parts,” Habibi told Webster. Not only does a secure payment experience matter greatly (that means clearly telling shoppers how their payment data is being handled and who is charging it), but merchants need to have a firm grasp on inventory and orders. Any part that fails — that displeases the consumers — can lead to abandoned shopping carts and uncompleted checkouts.
Contextual commerce, as the name implies, is about a holistic shopping experience — and that means keeping user experience as simple and frictionless as possible.
“It’s UX 101,” Habibi said. “No heavy graphics, easy navigation.”
That holds especially true as more consumers rely on their mobile devices to find the products they like and buy them. Any unneeded graphic or site flourish serves as a hurdle between that consumer and the final sale.
And those sales are significant, not minor shots of revenue.
The committed users of contextual commerce, those shoppers who make at least 15 such purchases each year, spend $60 on an average purchase, according to the findings in the PYMNTS report. In addition, the consumers who spend the most via contextual commerce tend to be happier than other shoppers. That’s because 82 percent of shoppers who spend more than $50 per purchase reported having a positive experience, compared to 24 percent of those who spent less than $25.
So where is contextual commerce headed?
Event ticketing represents a likely area of growth, Habibi said. Consumers could go to sites that aggregate concert dates — either local or for vacation destinations — and, in Habibi’s words, “go end to end” from discovery to purchase. Sure, the concert ticketing industry is dominated by a “couple of large players,” she said, but there remains enough fragmentation to make the sector an appealing target for more contextual commerce.
Still, the fact stands that 42 percent of consumers have not tried contextual commerce, according to the report. That did not worry Habibi, who chalked that up to the natural reluctance of slow adopters.
“There will always be holdouts,” she said. “That will change over time.”
Helping to drive that change will be AI and machine learning, which will make it possible for contextual commerce operators to better predict what shoppers want to buy, increasing the value of that retail experience. But even with such change looming, the basic rule of contextual commerce remains. It’s not about speed. It’s not about the buy button, not mainly, Habibi said.
“It’s about knowing your customers and serving the right product in the right context,” she said. “Yes, speed is important, but it’s not the only thing.”