It can happen at the office. It can happen on Facebook and Pinterest. It can happen on a well-crafted blog designed to appeal to particular hobbyists, or an event and ticketing website, or an online platform devoted to travel. It can happen pretty much anywhere, given the right tools.
And the people who try it seem to really, really like it — which signals good news for merchants and payments providers in the coming years.
Contextual commerce is an emerging force in online retail, and a topic recently discussed in-depth during a PYMNTS webinar featuring Karen Webster and Azita Habibi, business development lead at Braintree. The payments provider and news and research firm collaborated on the new Contextual Commerce Report, with findings based on a survey of more than 2,000 consumers throughout the United States.
The webinar takes a deep dive into those findings.
Contextual Commerce Landscape
First, here’s a quick definition of contextual commerce.
It’s a process that revolves around “discovery,” according to Habibi. A potential consumer might visit a social media site, or a site devoted to, say, home cooking, with the main goal of reading content, learning something or digitally hanging out with like-minded people. That person may have only a vague intention of buying something — or no intention at all — but follows an impulse and buys an item tied to the content and the original desire for discovery.
According to research from the Contextual Commerce Report, 48 percent of consumers have tried that shopping experience at least once. And those who have tried contextual commerce generally are seeking efficiency, as 59 percent of consumers who have tried it report using the online retail method for a faster buying experience. “Who doesn’t like an expedited experience?” Habibi asked.
Other figures from the webinar helped to detail contextual commerce. The average age of a contextual commerce shopper stands at 39 years old — which came as somewhat of a surprise to Habibi. “I thought it was late 20s, early 30s, more focused on the millennials, who are open to different types of technology, and who adopt quickly,” she said. “I’m happily surprised.”
Positive and Negative Experiences
The breakdown of positive and negative experiences with contextual commerce also helped to define what’s attractive about the retail method, and how merchants need to approach it.
Overall, 68.9 percent of contextual commerce users reported a positive experience, with 1.7 percent reporting negative experiences. A further 29.4 percent reported “mixed” experiences.
For those reporting negative experiences, one reason could be what Habibi called a shopping process that “is not super clear.” Contextual commerce involves many moving parts — a discovery platform, payment provider and participating merchants — meaning there are ample opportunities for mistakes or less-than-stellar service. And any such slippage can scare off consumers who bring their worries about payment security, along with other concerns, into the contextual context environment.
The Importance of Payments
Discovery platforms certainly need to give consumers clear, easy-to-understand information about products, shipping and payments. Those platforms also need to keep the process as simple as possible, lest consumers have second thoughts about what usually amounts to an impulse buy.
One way to achieve that idea is to offer an online payment wallet, so that consumers can rest easy that their most sensitive data is not going to the discovery platform or participating merchant, but is staying with the payments provider. Such wallets can also auto-populate shipping information and offer relatively quick checkout experiences, promoting the speed appeal of contextual commerce.
Contextual Commerce Personas
The webinar also dives into the “personas” of contextual commerce users and non-users, a group that ranges from “observers,” who make up 42 percent, to the “committed,” who are about 12 percent. Observers are not yet ready to make contextual commerce purchases. The committed, by contrast, make 10 to 12 contextual commerce purchases annually.
Those committed consumers also tend to spend significant amounts via contextual commerce — about 74 percent of such purchases from those shoppers are for $50 or more. That stands as a strong sign of the potential of contextual commerce as more consumers get used to the method, and more merchants embrace and master it.
There exist some potential hurdles for contextual commerce. Since many of the purchases are impulse buys, merchants could end up with higher rates of returns than for purchases that undergo more consideration. So far, though, Habibi has spotted no correlation between contextual commerce and higher rates of returns.
Merchants, too, might end up focusing too much on novelty and unique products instead of understanding that consumers can be persuaded — given the right context, of course — to buy, say, expensive shoes from a social media site that has content and photos about fashion and the celebrities who wear it.
The near future of contextual commerce promises significant change. One of them involves an inverse relationship, at least according to the findings of the report: The more experienced a consumer is with contextual commerce, the less likely he or she is to make such purchases from the relatively passive social media offered via Facebook. Those consumers seem more willing to seek out specific forms of content that matches their interests and desires for discovery.
“There are going to be other platforms that people go to with more intention to purchase,” said Habibi, who has an optimistic view that contextual commerce will catch on with more consumers. As both the report and the webinar demonstrate, there is solid reason for such a positive outlook — all the more reason for payments providers and merchants to pay more attention to contextual commerce.