Contextual commerce is a new trend in e-commerce

Today we will tell about the so-called contextual commerce in PayOnline's blog , which many observers consider to be among the main and promising trends in online commerce this year.

The smooth introduction of sales tools in environments that buyers usually do not consider as a possible place to make a purchase can not only lead to innovative changes in these environments, but also help all participants in this process to grow. The name “contextual commerce” implies that the useful interaction between the seller and the buyer occurs due to a combination of natural and convenient conditions (context) for making a purchase and the buyer’s interest in the proposed product.

Adding "selling pins" to Pinterest is one of the relevant examples, which I nonetheless called "contextual commerce 1.0." This name is due to the fact that adding buttons to buy inside the market - in this case the market of ideas and inspiration - is an interesting idea, however, the depth and scale of innovations in the case of selling pins is not enough to the level that we see in other successful examples of contextual commerce, we are talking about which will go below.

Of course, it cannot be denied that Pinterest, as the advertising platform it has recently turned into, attracts to the websites of sellers a lot of interested buyers, who are thus able to find out more information about this or that product even if they are all have not lost interest in him, even to purchase it directly on the site. However, the simple addition of purchase buttons wherever there are goods and for any reason does not reveal the full potential of contextual commerce.

The potential that is already being realized by such companies and services as Uber, Facebook Messenger, Amazon, Braintree / PayPal and even Spotify.

Each of these platforms squeezes the maximum out of the concept of contextual commerce, and soon, I am sure, they will even be able to go beyond it. Each of these players uses all the capabilities of their own strong ecosystems, which, thanks to the introduction of payments in them, create the conditions for the emergence of commerce where it is primarily interesting to consumers.


_{The Local scene feature is a special guide in the Uber app that informs Hilton guests about nearby restaurants and other most interesting places.}

Uber: from ridesharing to contextual commerce 2.0

In 2009, Uber realized an innovative idea at the time - to make sure that drivers of cars with free time and customers who needed taxi services, and who are unsure that they would be able to get them at the right moment, would find each other. Six years later, the market capitalization of the Uber platform is estimated at $ 70 billion, and under its command more than 1 million drivers work in 400 cities around the world, serving a total of more than 1 billion calls. But the main achievement of the company is that it also presented to us the first of its kind example of the implementation of the idea of ​​“invisible payments” in the real world, when the user makes a payment at the right time, making it easy and easy.

The magic of Uber is not only in the combination of the interests of the driver and the passenger, but also in how the process of payment for services proceeds. Those who are in full use of the service and are already addicted to it know that paying for a trip or a tip to a driver does not require any action from the client. As soon as the passenger arrives at the destination and gets out of the car, the funds are automatically deducted from his card, which is previously attached to the account in the application.

Similar magic happens when working with third-party services that see the platform as a source for creating new business opportunities.

Launched in March 2016 UberEats, a food delivery service, was Uber's first attempt at contextual commerce. The service, now available in major US cities, as well as Melbourne and Paris, began its existence as an option inside the Uber application. Some time later, it was restarted as a standalone application, which, no doubt, was done in order to replenish the Uber customer base with new users and make them more accessible to the offers of their partners.

For current users of the platform, the process of creating an account UberEats is as simple and discreet as the payment of travel in Uber.

When a user installs the UberEats application, they are asked to either indicate the existing Uber profile or create a new one. The vast majority of Uber users choose the first option and their account in UberEats is associated with the profile and credentials of their main account.

And recently, Uber, apparently, has taken another step forward in the direction of the development of contextual commerce.

Service users heading to any Hilton hotel can reserve a room directly in the car. For members of the Hilton Honors program who travel with the help of Uber, this process becomes even simpler: they choose a number and get a digital key that allows them to go past the check-in counter to their room on arrival.

Also, thanks to the partnership with Zomato, Uber's customers can learn about the nearest restaurants and make a reservation in a pleasant establishment during the trip.

I believe that the emergence of similar offers from UberEats or booking a reserve in a restaurant during the journey from the airport or home office is only a matter of time.

It is important to note here that Uber always knows where the passenger is at one time or another, where he wants to go, what time of day the trip takes place, and what is the approximate time before arrival from point A to point B.

Using this information, the service can do offers to the client, allowing to improve the quality of the trip, organizing the process with the maximum benefit for all parties.

Today, all these interactions occur outside Uber in third-party applications that have access to the data of its main platform. Nevertheless, I believe that the implementation of their own similar solutions based on this platform in order to automate and improve the quality of the process of interaction with the client, in fact, is also only a matter of time.

From a simple ridesharing service, Uber is transformed into a commercial platform that connects the company's customers with third-party services, which, in its opinion, can be useful to the consumer during the provision of their basic services.

However, despite the fact that Uber has a good context service, the main task that it will have to solve in the near future will be to increase the client base of the main application. The company does not publish statistics on the number of users, but in some material I came across data for July 2014, which included a figure of 8 million accounts, without specifying a specific geographic coverage (only the United States or other regions). The cooperation with corporate clients or hotel partners described above is one of the ways to expand the platform’s commercial opportunities, which is highly questionable from the point of view of increasing the client base, since these clients are actually already included in the bulk of the old users of the company.

To realize its commercial potential, Uber will need to work more closely with third-party service providers, focusing primarily on the exchange of new customers and the joint creation of new unique offers for them.

Spotify: another bottle of whiskey, and I will call this tune

Music and alcohol are united by a long and controversial history.

In the early 2000s, a study was conducted in the United Kingdom, the results of which showed that loud music in clubs increases the consumption of alcohol by its visitors. This explains why, while in most nightclubs, you can't even hear the thoughts in your own head. The louder the sound, the more people are drawn to alcohol, and as a result, the more money the owners of the establishment earn.

Another study by a professor at Boston University suggeststhat music itself is a marketing platform for alcohol. He noted that the names of four major alcohol brands, one way or another, appear in different songs, in which there is a mention of alcohol. And the connection between dozens or even hundreds of millions of dollars that rap and hip-hop performers receive as part of profitable advertising contracts concluded with the producers of these brands no longer looks so random ...

Apparently, the contextual commerce opportunities bring out an old pair of “music and alcohol” to a new level. Streaming music platforms already have ads in their playlist that allow you to make an instant purchase with delivery.

My colleague recently spoke about his experience with this acquisition.

The case went to the evening and he just listened to Spotify. 7 seconds before the end of the song, an advertisement started to play, offering to order a bottle of Jameson and then it will be delivered in less than an hour. The order had to be made through an application that was already installed on his smartphone.

And so their desire materialized in the form of his order.

An hour later, his Jameson arrived, once again demonstrating the potential of embedding commerce in an environment that consumers usually do not see as a possible place to make a purchase.

That day my colleague had no plans to buy a bottle of whiskey. But Jameson is his favorite brand and in the context of listening to cool songs, he made a decision based on momentary impulse. Not every product in such a situation would have caused a response, but the offer to buy whiskey turned out to be a kind of link between listening to music and continuing the evening, when at the very thought of a favorite drink, my colleague imagined how very soon he could get comfortable in a chair, slowly and gladly sipping your favorite drink.

And all this, of course, was made possible thanks to the bundle of the application and the payment card, which helped to turn the purchase into a simple and unconstrained action.

Amazon: Adding Context to an Integrated Sales Channel

When Amazon first introduced several of its Dash buttons , everyone thought it was just an April Fool's joke. After some time, the number of buttons has grown to hundreds, a whole system of product replenishment based on them has appeared, it became clear that if someone in Amazon was joking, it was only on those who are not aware of the full potential of the new approach combining commerce and context.

Now, according to the company, these buttons add to it more than 10 thousand orders a week, coming in addition from its best customers: members of the Prime program.


_{Dide button example for Tide powder}

The essence of Dash buttons is that Amazon offers to hang plastic buttons all over the house, suggesting that it’s time for the owner to order certain household items such as laundry detergent, diapers, toilet paper, snacks to the table, batteries, paper napkins and cold medicine. Of course, it is best to place the button exactly where the owner can see that they end. The consumer liked the idea and as a result received an active development, turning into software embedded in the product, which automatically sends a new order when its algorithms, based on the data received, understand that the time for an order has come.

Now buying a wide variety of product categories, from printer cartridges to dog food, becomes part of the Amazon ecosystem. For the consumer, this means a significant simplification of the purchase and payment process. For manufacturers and Amazon, this opens up new opportunities to meet customer needs in a particular product at the most appropriate time.

However, this is only a small piece of cake called contextual commerce, which Amazon probably decided to try out as it should.

Alexa EcosystemUses voice control to expand business opportunities in a wide variety of situations. And all this, again, is context sensitive. Using a bunch of Echo and Alexa, the user can create a shopping list and place an order on it while at home. Alexa will help you order pizza from Domino's or call the Uber driver. For Ford car owners, Alexa will be able to unlock the car’s doors at the first request.

No need to be a genius to understand the general direction of the company.

“Alexa ... Something I don't want to cook, what restaurants are there nearby? I need a table for four people at 7 in the evening. ”

Or:

“Alexa ... I don't want to cook something. Order me kung paun chicken with rice and green beans in Gourmet Garden. ”

Or on the way to work:

"Alexa ... I want a big cup of coffee with two cubes of sweetener, whole milk and a dozen munchkins from Dunkin 'on Washington Street at 8 am."

All this activity will be tied to an Amazon account and its payment card, becoming part of an ecosystem that has long gone beyond the usual web service and got right to where the consumer is here and now.

In fact, we have an example of a new, unique platform offering innovative features to its users.

Braintree: Creating context and new business opportunities at the expense of scale

In March, Braintree announced the launch of its Auth platform , which also aims to further contextualize Internet commerce. Among other innovations, it should be noted that the sellers who work with Braintree can easily and seamlessly integrate commercial elements into third-party partner systems. It was this innovation that helped Uber integrate its services into Facebook and provided hundreds of thousands of vendors using solutions to create online storefronts from Bigcommerce and WooCommerce, the opportunity to liven up their virtual stores with a variety of payment and commercial elements.

Auth will allow merchants to create accounts on Braintree on behalf of their partners, as well as provide them with the ability to process payments, including PayPal, PayPal One Touch and alternative payment methods - Apple Pay, Venmo, Android Pay, and others. Sellers will also be able to create so-called Shared Vault - customer data stores and connect their partners to them, which will allow using tokenized customer data from one seller in the store of another platform participant for a quick payment in one click.

This feature frees customers from having to re-enter their credentials when visiting each new store participating platform, which greatly simplifies the process of placing an order and as a result, improves conversion.

Innovations Auth almost no effect on consumers. They aim to give sellers the right tools to interact with customers and create an appropriate context for this. Therefore, the main value of Auth is a bundle of vendors working with the platform, technical capabilities of Braintree and 250 million active tokens. All together, this should create an appropriate scale that will help platform users to grow and expand easily, without having to independently establish the payment process and understand all the intricacies of the payment systems.

Messenger: from communication to commercial elements

It's no secret that Facebook Messenger has an ambitious goal: to replicate the success of WeChat and to include in its ecosystem a number of opportunities that go beyond the usual chat.

It is not difficult to understand where this desire comes from.

4 years after the launch of WeChat, the client base of the application is 600 million active users. Each of them regularly uses not only chat with the coolest emoji in the world, but also a whole bunch of other services available with it. One of the built-in areas is online games, and judging by the $ 420 million profit from them in 2014, WeChat users play a lot. In addition, they buy tickets through the service, as well as book and pay for taxi services. It should also be noted that the stage of accumulating a critical mass of users leading their friends and acquaintances for WeChat has already passed.

This example, coupled with the immense attractiveness of instant messengers around the world, inspired the developers of many instant messengers to think about what other services, besides the obvious means of communication, they could offer to their clients.

According to PewDespite the fact that 50% of smartphone owners using messengers are between 18 and 29 years old, about 40 percent of adults aged 30 to 49 years old and a quarter of people over 50 also use similar applications. Of course, many of them are parents and grandparents who just want to keep in touch with their children and grandchildren. Nonetheless, their online launch has allowed the emergence of a whole international market, the number of consumers of which is estimated at more than 2 billion people. And messengers are very interested in building relationships with these customers.

And besides this, they, of course, are interested in the monetization of these relations.

Today, Facebook owns two giants: WhatsApp, with a user base of 900 million active customers and Messenger, a similar figure of 800 million people. Income WhatsApp frankly small: in 2014, the company reported about $ 10 million. With such an indicator, it is difficult to even imagine when Facebook can recapture its 22 billion investment. Messenger has a similar situation: according to David Markus, the head of the company, the application now does not exist to make money.

But not only to perform the function of a simple chat.

In March 2015, Messenger announced the release of a major update for its platform.

It brought with it the ability to send and request money to other Messenger account holders, as well as receive notifications from retailers using the built-in function Business with Messenger and even book a trip to Uber.

The same Messenger head, David Marcus, states that in early 2016, his team set itself the ambitious task of “making Messenger the best place to communicate with people and companies around the world.”

In other words, the application ecosystem will be able to embed commercial elements, displaying them in accordance with the context and features of communication with certain users.

In March, Messenger also announced a partnership with KLM Airlines, within which the application now allows users to receive up-to-date information and solve customer service problems right inside the application, including re-booking flights - an obvious step towards commerce.


_{In the screenshot, the Messenger chat window shows KLM flight check-in information and a reminder to get a boarding pass.}

This partnership is based on the assumption that the emergence of new commercial services in the ecosystem will contribute to the growth of the customer base and retain new users due to the emergence of new valuable services that are not available in competitive applications or text-based platforms. And if the Messenger team succeeds in this, then the commerce launch inside the application can be considered successful.

Perhaps users - this is the resource, which Messenger in abundance. But if you raise the question of the presence of a critical mass of active clients of one social circle, then the situation with the Facebook product is not as good as we would like. In my opinion, this is one of the main challenges the company will face, regardless of its success in introducing elements of commerce.

The company's success in solving this problem very much depends on its ability to create the right context for consumers, which, in turn, will be determined by three factors: (a) the ability to reach a critical mass of partner retailers who provide unique solutions; (b) the ability to improve the quality of Messenger services to a level that exceeds the applications of competitors, including retailers and partners; (c) the number of retailer partners using the application as the main channel of communication with their customers.

And the application will become the main channel of communication with customers only after the majority of customers start using it as the main communication platform.

It will be interesting to follow the results and development of cooperation with KLM. Messenger may face a natural obstacle when most airline customers already use their proprietary application. In this case, the Facebook product will need to offer something more and go beyond the functionality that is in the offer of the partner, otherwise, potential customers simply will not have good reasons to choose Messenger.

Material for publication prepared by PayOnline, an international system for receiving electronic payments on the site and in mobile applications. We closely and with interest follow the news and trends of the e-commerce sphere and are ready at any time to provide you with modern and efficient payment solutions for your business .