Contextual commerce is the game changing idea that people can transact the moment they have an urge to buy, instead of forcing them into a traditional purchasing channel. It’s the future of retail with massive opportunities to capture new audiences and incremental transactions.
I spoke with Shane Lenton, CIO at Cue Clothing, to get his thoughts on contextual commerce and advice on how to make the move. Shane is a retail leader who has transformed Cue with innovation and technology to give customers personalised and frictionless experiences across physical, online, mobile, concession and call centre channels.
At Sydney’s 2019 Online Retailer conference, you won over the audience with your assertion that contextual commerce is the next big thing in retail. What’s your definition of contextual commerce?
SL: Contextual commerce is the idea that we can seamlessly implement purchase opportunities into everyday activities and natural environments. In other words, customers can buy anything, anytime, anywhere, with the click of a button. Or even just their voice. It’s a purchase made in the moment, with no need to stop what you were already doing.
That means thinking well beyond the boundaries of the traditional physical store and our current digital channels.
It has been talked about for quite a few years now, but few retailers have capitalised on the opportunity. As the technologies that support it have become more available and the social media platforms and messaging apps have evolved, it’s becoming more relevant in the Australasian market and there'll be far greater adoption.
It’s a game changer for retail because it creates new opportunities to create a frictionless experience for the customer and foster loyalty. Retailers that are willing to move early will benefit from higher conversions in new places and increased sales. Those who don’t keep up will be left behind very quickly.
What’s an example of contextual commerce?
SL: Shopping on Instagram is one example that many people will be familiar with. It was a big moment for retail when it was introduced in early 2018. We were one of the first retailers to tag products in organic posts, which customers can then tap on to find out more information and make a purchase.
However, today customers are still required to add items to a cart and transact in the traditional way by logging onto our website to enter payment info and delivery details. With Instagram’s proposed new ‘Checkout on Instagram’ feature (currently in beta with a select group of brands in other markets), shoppers will be able to buy items without leaving the app. They will only need to enter their name, email, payment information and shipping address the first time they check out.
This ability to allow the consumer to transact in the moment, within the context of the Instagram browsing experience, really hit home with the Online Retailer audience.
What’s driving the adoption of contextual commerce?
SL: There are three things triggering its growth.
One: Consumer behaviour is constantly changing and people's attention spans are shortening. Everyone's busier and we’re being overloaded with content across every part of our lives. People now want to act on their impulses and buy at the time and place of their choice, with as little friction as possible. As the lines between shopping, buying and browsing blur, commerce is happening wherever consumers are and however they wish to interact.
Two: Contextual commerce is going to happen in retail because the social media platforms are going to ‘own’ the customer. Social networks like Facebook and WeChat know what we implicitly want and have the potential to take us from discovery to purchase in a few microseconds on their platforms. This shift to social commerce could be one of the biggest disruptions in retail, and threatens the dominance of Amazon and Google. That also means you're not going to have a direct one-to-one relationship with many of your customers, and you won’t receive insights into their needs and behaviours.
Three: The availability of new technologies that support contextual commerce. These technologies range from smart speakers and messaging apps that can be used to make a purchase by voice command, through to facial recognition such as ‘smile to pay’ and immersive VR and AR platforms with hot spots that customers can click on to purchase items.
What are the different types of contextual commerce?
SL: The first is conversational commerce – a way of shopping or purchasing products through chat interfaces that ‘speak’ to people in natural language. This includes the messaging platforms that people already use every day, such as SMS, Facebook Messenger, WhatsApp, Apple Business Chat and WeChat, along with messaging services on your brand’s website or mobile app, like live chat.
Voice commerce is still in its early stages but over 25% of US adults already own a smart speaker that they can use to make purchases by voice command. And smart speakers will soon outnumber tablets, with one study predicting that they will grow by 82 percent, from 114 million units globally in 2018 to 207.9 million in 2019.
Even though smart speaker adoption has been slow in Australasia, the opportunity is massive. An Adyen and 451 Research global study says that while more than half (53 percent) of smart speaker owners have used these devices to shop, only 13 percent of retailers currently enable purchases on them.
The second big opportunity is ‘click to buy’, which removes the shopping cart form and allows people to purchase with one click. It’s included in digital wallets with ‘buy now’ capabilities using common payment apps such as Apple Pay and Google Pay, and social media platforms where users can purchase within the app itself (and not on the retailer’s website), like shoppable Instagram.
Today, 44 percent of consumers already use social media to shop, however, only 18 percent of retailers currently enable purchases on social media (according to the Adyen and 451 Research study). And two in five consumers aged 18-24 say the ability to make purchases via social media would increase their online shopping frequency.
The third opportunity centres on the immersive VR and AR platforms that enable consumers to make a purchase from within the virtual experience. The technologies supporting this include search engines that offer reverse image capability such as Google and TinEye, image recognition technology such as Google Lens, and mobile devices with native support for AR and VR.
AR and VR also improve the online and offline shopping experience, from the pre-purchase phase where people are looking for information, through to purchasing in the store or online, and post-sales services where augmented reality can become an ‘immersive’ assistance service for the user.
Finally, there’s the Internet of Things (IoT), where consumers can shop through connected devices like smart appliances and smart TVs.
Have you introduced any other contextual commerce services at Cue?
SL: While it’s still early days for Instagram shopping, the opportunity is massive. We’ll add the new ‘checkout’ feature when it becomes available.
Instagram reports that over 130 million consumers tap on a shopping post to learn more about products each month, up from 90 million in September 2018.
We’ve led the market with digital wallets and will continue to add new options as they become available. Cue was the first brand globally to launch Afterpay in stores and one of the first online. We were also the first fashion brand to accept mobile payment platforms Alipay and WeChat Pay in stores, and now accept ApplePay online.
Style Finder is another example of how we are making commerce fast and easy. We worked with Alibaba Cloud to become the first Australasian fashion brand to give customers a visual search tool using images uploaded from their phone.
The uptake and response to all the new options has exceeded expectations. And the customers who use these new services are spending more and shopping more frequently.
What are the implementation challenges retailers can expect?
SL: Contextual commerce is all about getting your retail fundamentals right. Make sure your inventory, feeds, connections and data are all in good shape when you're connecting to these upstream platforms. Create a single source of customer data and inventory, and automate as much as possible.
You’ll need to use APIs to expose data and functions and easily plug in and deploy new services, channels and devices. That will let you implement the new payment options and capabilities as soon as they become available.
And you always have to be thinking about how to provide the best customer experience. It’ll require new processes and solutions to manage the end-to-end process, particularly in a complex, multichannel environment, with services like endless aisle, same day delivery, 30 minute click-and-collect and multiple shipping options.
What tools or technologies do you recommend?
SL: Fortunately, many of the tools retailers need to create a contextual commerce strategy already exist. The contextual commerce ecosystem ranges from payments across different platforms and new delivery service partnerships through to smart device integrations and geolocation capabilities.
For example, there are conversational commerce platforms (such as Live Person) that can speed up your deployment and ensure you can connect to a growing mesh of customer touchpoints, now and in the future.
What’s your advice for retailers wanting to know where to start?
SL: You first need to understand how and where your customers want to shop so that you can give them the tools to engage and transact anytime, anywhere.
Look for where you can seamlessly implement purchase opportunities into your customers’ everyday activities, keeping them on their existing devices and touchpoints as they go about their daily activities.
I suggest you start off by focusing on social and conversational commerce, such as live chat, messenger apps, digital wallets and social media platforms to complete the purchase.
If you start now, you’ll capture incremental customers and revenue, generate conversions in new channels and establish a competitive early mover advantage.
Cue Clothing is a leader in retail innovation. Read the Cue case study to find out how they’re unleashing seamless new services that deliver extraordinary business outcomes.
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