With the recent launch of in-app shopping for 20 fashion brands on Instagram, ‘contextual commerce’ has cemented its position as a top trend that everyone is talking about.
But what is contextual commerce exactly?
In Contextual Commerce (May 2018), a report from PYMNTS.com and Braintree, they defined contextual commerce in this way:
At its very core, contextual commerce is simply giving consumers the opportunity to purchase where and when they first find inspiration, or discover new products on websites, mobile apps or online ecosystems like Pinterest, Instagram or other platforms. A consumer’s ability to discover a product or service and buy without redirection is what makes the experience contextual.
Contextual commerce could also mean watching a show on Netflix and buying a featured product, purchasing tickets to a concert while listening to an artist’s songs on Spotify or getting the same pair of shoes Kaia Gerber wore in a photo on Instagram — and all without ever leaving the page or app that provided the context.
The report (which surveyed over 2000 US shoppers) reviews the current state of contextual content, looks at the personalities engaged in the trend and looks at future use cases.
A few interesting takeaways:
More than 50% of consumers have purchased contextually
84% of those who have tried it would do so again
The more frequently a person shops contextually, the more they spend – on average $50 or more per purchase
People were also interested in the following use cases:
Taking a picture of a product and using apps to find and purchase online
Getting an offer sent to a smartphone when near a retailer
Making a restaurant reservation with an app then use the app to pay for it
Seeing an ad on TV and make a purchase using the remote control
Why are customers embracing it?
The biggest benefits to the customer are speed and convenience.
If I trust the app or ecosystem I’m on, I can store my billing information as well as my delivery details and preferences within it. Then, when I see an item I’d like to purchase, it can all happen in a few clicks.
That’s much more convenient than clicking off to multiple websites where I have to re-enter my details each time.
If the app or ecosystem is designed properly, customers also benefit from a user experience that is familiar and intuitive.
Moving from an app that’s easy to use to a clunky website that hasn’t been designed for mobile, for example, can be jarring enough that customers will walk away from the purchase.
For brands, the benefit is getting in front of a broader audience and the additional revenue from in-the-moment purchases they might otherwise have missed.
And if their website does have a poor user experience, they may have higher conversions by staying within the discovery platform.
Who are the big players?
There is no doubt that China is leading the way with the wide-spread adoption of mobile payments through apps like Alibaba’s Alipay and Tencent’s WeChat, with its monthly user base of 1 billion people.
Shoppers can browse physical stores or markets stalls and scan product QR codes to place an order through the app for home delivery, or they can find products through the app for delivery to a nearby store.
For a country where 97.5% of internet users are on mobile, it makes sense that speed and convenience are driving innovation in the retail experience.
While WeChat has traditionally been used for small ticket day-to-day items, there are recent trends for key opinion leaders (KOLs) – ‘influencers’ in the UK vernacular – to drive significant revenue for brands they’re partnering with.
Tao Liang, aka Mr. Bags, has over 850,000 followers on WeChat. He set up Baoshop, where he collaborates with luxury fashion houses to sell handbags, and he’s been selling record numbers:
1.2 million RMB worth (over £137,000) of Givenchy handbags in 12 minutes in 2017
3.24 million RMB worth (over £371,000) of Tod handbags in 6 minutes in 2018
At approximately £1,200 a handbag, that’s proof that people are willing to purchase high-end, luxury products through an app if the trust in the influencer or affinity for the brand is there.
Women’s fashion is certainly the leading industry for this trend, as can be seen with the launch of contextual shopping on Instagram, as well as other ecosystems in the US and the UK like Depop, Poshmark and Shopbob.
As the west is catching up to China with its acceptance of mobile payments, either through e-wallets containing Apple Pay or apps like Uber, contextual commerce opportunities will only increase.
It’s not all plain sailing, however…
Both brands and ecosystems need to put trust and transparency first to win over customers, especially those people who are uncertain if buying in this way is secure.
Customers need to know who takes the payment, who fulfils the order and who they should communicate with when it comes to customer service and complaints.
In addition, brands need to understand how the process will work and where ownership lies, especially around customer data. Beyond fulfilling the orders, brands will want to store and use the data to provide a more relevant service and hopefully win the customer’s loyalty.
The technology is there, but the process and structure around it still needs to be defined.
A move toward brand permeation
As the digital landscape has matured, brands have moved from a hub-and-spoke model ¬– with satellite channels all driving traffic to a central website – to a hub-and-hub model – with the entire brand experience and message encapsulated in the individual channels.
But this latest evolution is a further move away from brand-owned channels and dictates that your brand experience must permeate the web wherever your customers are.
So how can Home and Garden brands catch up, keep up and stay ahead in a world of contextual commerce?
If your products are fairly straightforward to purchase, you should be able to get started with contextual commerce quickly. However, if what you offer is more complex or requires a third-party to install it, you’ll have to get creative about what you can sell – services, exclusive upgrades and supplemental products.
You may not sell a new boiler through Instagram, but you could sell an annual service plan to customers searching for cosy winter interiors.
If you’re a fencing company, you may be offering a consultation with an expert to ensure you get exactly the right product.
If you’re a flooring company, your customers may want to order samples of the different types of finishes you offer.
First, take a look at your existing ecosystems and identify the opportunities you’ve been missing.
Social commerce is considered the gateway of contextual commerce, with the majority of people who try this trend doing so on social channels.
You can already sell through Pinterest, Facebook and Instagram. While it’s not fully contextual yet as customers will still need to switch to your website to complete the order, it’s the easiest way to get in front of your customers in the moment of discovery and inspiration.
To make the most of this opportunity, develop high quality, visual content with your product ‘in situ’ – this is about selling a lifestyle, not about flat-pack product shots.
Where possible, include content created by your customers as well as reviews and ratings to highlight that other people are buying and loving your product.
Once you have the basics in place, it’s time to go beyond social channels.
Start working with apps (Houzz, Havenly), magazines (Better Homes and Garden, Ideal Home) and influencers in your industry so that when your products or services are featured in their content, their readers can make a purchase.
Now is the time to do some deep-dive research into where your customers are going for their inspiration and make sure you’re there.
While Instagram in-app shopping is only available to a few brands in the US at the moment, it will be rolling out to more brands and markets. And as contextual commerce becomes more familiar to customers, there will be more opportunities for brands to show up.
Make sure you’re staying up to date with the latest innovations and platforms and set aside a portion of your budget for testing and learning.
But in the meantime, take the lead and develop new partnerships and collaborations that create unique offers that will be valuable to your customers that they won’t find anywhere else.
If you’d like to make a start with contextual commerce or improve your e-commerce experience, we’d be happy to start the conversation. Contact us on 0208 070 7820 or email firstname.lastname@example.org
This blog was originally published via Sagittarius on 23rd April 2019.