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Contextual commerce: Converting more shoppers into buyers

Global research and advisory firm 451 Research weighs in on a leading-edge payments topic: contextual commerce.

Sheryl Kingstone  ·  Vice President - 451 Research
February 7, 2019
 ·  3 minutes
Contextual commerce: Converting more shoppers into buyers

Editor's note: Special contributor Sheryl Kingstone leads 451 Research coverage of Customer Experience & Commerce, which explores customer experience as a catalyst for digital transformation.

Consumers want to be able to act on impulses and buy at the time and place of their choosing with as little friction as possible. This demand, fueled by the growing mesh of digital touchpoints surrounding us as consumers, has shifted expectations, blurring the lines between shopping, buying, and browsing. The marketplace is becoming wherever consumers are and however they wish to interact.

This shift is unlocking new sales opportunities for retailers, but not without obstacles. Well-defined paths to online and physical storefronts have transformed into a maze of digital approaches to commerce, including social media, connected devices and third-party apps. While these emerging touchpoints are primed for commerce, they hold multiple points for abandonment. This often includes the need for shoppers to enter a separate website to transact, fill out lengthy checkout forms, or travel to physical stores. Each of these layers of friction results in missed opportunities and dollars left on the table.

The promise of contextual commerce

Put simply,contextual commercecan be defined as frictionless shopping experiences tailored to shoppers’ immediate impulses and environments. Leveraging innovations such as social and conversational commerce, contextual commerce enables merchants to meet shoppers at their desired medium and usher them through the purchase process in a single, tightly-knit interaction. This greatly reduces the potential for abandonment while allowing the sale to be captured when the demand is strongest.

While contextual commerce remains early on, the opportunity is glaring, and the underlying technologies are primed. Those merchants best able to navigate new sales channels will best be able to turn shoppers into buyers, attract new customers, and deliver a differentiated retail experience.

Near-term contextual commerce scenarios include:

The forgotten ingredient and the smart speaker

  • Every evening, countless home cooks stand in their kitchens, realizing they forgot one important ingredient. With roughly 1 in 4 US consumers (23%) owning at least one smart speaker at home, these conversational devices serve as a logical platform to support last-minute, on-demand shopping needs.

Near-term contextual commerce scenarios include smart speakers.

The fashion brand and the social post

  • For fashion brands and retailers targeting millennial-aged consumers and younger, chances are that the first impression they make is through a social media platform. To capitalize on the impression and impulse they’ve created, social media posts can be transformed into "shoppable" advertisements, offering an ideal way to instantaneously enable a sale and convert a browser into a buyer. Today, two in five consumers aged 18-24 say the ability to make purchases via social media would increase their online shopping frequency.

The business traveler and the lifestyle application

  • While a conversation with the concierge and a walk to a nearby restaurant is often the norm for business travelers, many would prefer to stay in, especially after a late-night arrival. To address this preference, restaurants can partner with familiar consumer apps, such as ride-sharing services, to enable local recommendations, delivery upon drop-off, and one-touch purchase as travelers make their way from the airport to a hotel. US consumers have an appetite for this type experience, with one in four stating a desire for local offers based on their immediate location.

Consumers are clearly demonstrating that retailers who provide convenience and speed are winning their loyalty. A contextual approach to commerce, removing friction and allowing shoppers to act on impulses, serve as an ideal response to these demands. Fortunately, many of the tools necessary to curate an effective contextual commerce strategy have already arrived. From intelligent social media targeting and delivery service partnerships to smart device integrations and geolocation capabilities, a contextual ecosystem is developing through which retailers can reach new and existing customers. Further, through network tokenization, payments across mediums and partners can be streamlined and secured by converting sensitive payment data into unique digital identifiers.

For contextual commerce, the table is set, and consumers are hungry. Those retailers best able to meet consumers at this developing set of widespread, but critical junctures, and serve up relevant and streamlined shopping experiences are best positioned to capitalize.  

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