Contextual commerce describes the situation in which a customer completes a purchase within his or her current online environment, rather than having to go to an external website, search for the item, place it in the shopping cart, and fill out payment information. Other terms that have been used to describe this type of transaction include “conversational commerce” and in the publishing and media world, “shoppable” content.
Two types of companies are currently driving contextual commerce. Social media platforms are looking for ways to monetize their massive userbases. For example, Pinterest has a service in which users can purchase products without having to leave the platform. “Buyable pins” make items in more than 60 million pins available. Snapchat and Hearst recently announced plans to offer shopping opportunities on Sweet, their joint Snapchat channel.
The biggest, and most advanced, contextual commerce provider is WeChat. This social media app operates in China and is owned by the Chinese company Tencent, Inc. WeChat now has about 900 million monthly average users in China, and in addition to ecommerce transactions, offers services such as taxi hire and peer-to-peer (P2P) payments. It also serves as an online channel for Western brands to sell to Chinese consumers; the Swedish retailer H&M, for example, has a “little shop” within WeChat.
Facebook appears to be following WeChat’s model in the latest advancements on its Messenger platform. Developers can now build chat bots for the platform, and Facebook envisions that they can be used for a variety of applications: automated subscription content such as weather and traffic updates, customized communications such as receipts, live automated messages, and online transactions. With its 900 million monthly users, Facebook is banking on retailers and brands using Messenger as an additional channel to buyers.
Publishers and media companies are looking for new revenue streams for growth as print advertising and subscriptions continue their downward slide. In addition to Hearst’s venture with Snapchat, its fashion title Marie Claire has partnered with online delivery provider Ocado in the U.K. to launch an online and physical store called Fabled. Another publisher, Condé Nast, planned a U.K. launch of a “shopping experience” called Style.com in September, which allows readers to buy products directly within digital magazines.
The challenge for contextual commerce is that it is largely being driven by the content platform and owners’ perspective, focusing on one part of the customer journey: from product discovery to transaction. However, a great ecommerce experience encompasses a whole range of processes from the transaction onward. Payments, logistics and fulfillment, returns, and customer service are all vital pieces that have to be in place.
Online buyers need to be confident that their payments and personal data are being handled safely and securely. Target’s data breach in 2013 is just one example of an incident that is still in the minds of many consumers. Proponents of contextual commerce tout the ability to make “in context” payments as a benefit to consumers, saying that it provides a more “frictionless” experience. However, given how wary many consumers are about payment security, it may end up having the reverse effect. They may feel uneasy about not going through the sequence they are familiar with.
Logistics and fulfillment and customer service are two additional keys to a great ecommerce experience. Indeed, mastering the former has been one of the ways that Amazon has been able to dominate online retail, with its next-day delivery, ability to track items, and broad selection (thanks to having expanded its platform for third-party sellers). Furthermore, there needs to be a clear contact for help if a purchase is late, damaged, or incorrect. Here’s an example: You buy a sweater via a bot on Facebook’s Messenger. When it arrives, you try it on and discover you need a larger size. Where do you turn? Do you go back to the Messenger-based bot—and will that bot be able to walk you through the steps for a return? Brands and retailers selling in contextual commerce scenarios will need to make sure these processes are clear to their customers.
Technology advances—such as artificial intelligence—that are making contextual commerce possible offer great potential for companies to engage with and sell to consumers in new ways. However, content platforms and publishers interested in exploring contextual commerce need to ensure that their initiatives take into account the entire customer journey through the myriad processes that make up great ecommerce experiences, from initial discovery all the way to delivery and customer service.