What is contextual commerce and why does it matter?

With the emergence of new technologies like AI, AR and 5G-enabled metaverses, it’s opened up new opportunities for merchants to reach customers beyond a storefront and static website. Enter contextual commerce, a dynamic approach that empowers consumers to make purchases seamlessly based on their environment in real-time.

In this article, we uncover insights into its purpose and benefits, while providing practical tips for businesses eager to embrace its potential.

What is contextual commerce?

Contextual commerce is the act of enabling consumers to frictionlessly make purchases that are tailored to their immediate context and impulses, hence the name. Contextual commerce is all about embedding purchasing opportunities directly into a customer’s daily routine, whether they’re cooking at home, watching TV or running. Put simply, it’s a type of ecommerce that enables customers to buy products or services directly from the setting where they first encounter them, without needing to switch devices.

Creating seamless links between each of these channels is the cornerstone of contextual commerce. Merchants should make it possible for their customers to buy in the moment, removing the possibility for distractions that may disrupt the consumer journey and prevent purchases.

Consumer trends driving the rise of contextual commerce

Contextual commerce is worth paying attention to for the same reason that all shopping trends are; it caters to consumer demand. Shopping preferences are continually adapting as merchants look to provide an increasingly convenient experience for their customers. Those who don’t prioritise the customer experience risk being discarded in place of competitors who better fulfil their needs. Below we take a look at some of the key drivers underpinning the uptake of contextual commerce globally.

Mobile-first shopping

Soaring internet penetration rates across the globe have facilitated the widespread adoption of smartphones. This shift has made the process of buying goods and services even more convenient for consumers, allowing shoppers to make purchases anytime and anywhere. In fact, it’s projected that revenue from mobile commerce will hit US$2 trillion globally by 2024, accounting for a majority (57%) of all retail eCommerce sales worldwide. As more consumers transition to using their mobile as their primary device for purchases, it’s imperative for merchants to offer mobile-friendly shopping experiences that facilitate quick, on-the-go purchases.

Increased use of social commerce

When TikTok launched its eCommerce feature ‘TikTok Shop’ in 2023 it drastically moved the needle on social commerce, allowing brands and creators to frictionlessly monetise products and content. This is especially popular among younger tech-savvy consumers, Gen Z, who are utilising these channels to discover new products and brands.

In fact, the penetration rate of social shopping is expected to reach 25% in 2024 and is predicted to continue growing over the next few years. Further to this, 37% of global consumers in 2023 revealed that deals and discounts was the leading factor motivating them to utilise social commerce, with ease of purchase (33%), exclusive offers (28%) and speed (19%) following behind this. The growing desire for frictionless, integrated shopping experiences has paved the way for shoppers to browse and buy products all without leaving their preferred social media app.

Consumers are seeking personalisation

According to 2024 research by Marigold, 78% of European consumers surveyed said they’re likely to engage with a personalised offer that’s tailored to their interests. Further to this, more than half (54%) of the same group of respondents stated they like when brands send them promotions tailored their activity within two minutes of visiting their website or app. By personalising offers and deals to what consumers are searching for in real-time, brands can elevate the shopping experience and increase the chances of a visit turning into a purchase.

These factors have facilitated a more integrated, personalised and seamless shopping experience, which have been instrumental in the growth of contextual commerce.

Examples of contextual commerce

Contextual commerce has transformed the way businesses engage with customers by leveraging real-time data and contextual cues to deliver personalised shopping experiences. Here are some examples illustrating the diverse applications of contextual shopping across different industries:

Voice-activated shopping

Virtual assistants like Amazon's Alexa and Google Assistant enable users to make purchases using voice commands. For example, if a customer realises they’re missing a key ingredient while preparing a meal, they can simply make an order by talking to their virtual assistant, without disrupting their cooking experience.

Smart home integrations

Smart home devices, such as refrigerators, use advanced sensors to detect when supplies are running low and automatically reorder products. For example, if a consumer is running low on milk, their smart fridge can identify this and place an order with their preferred supermarket.

Location-based offers

Businesses can use geo-location technology to send contextual promotions to shoppers based on their proximity to a storefront. An example of this includes Starbucks Mobile App, which sends exclusive discounts to customers for their favourite drinks when they walk within a certain radius of the store. Customers can then order the item directly from the app and collect it in-store.

Benefits of contextual commerce

Contextual commerce offers a multitude of benefits for businesses seeking to enhance customer experiences, drive revenue growth and stay ahead of the curve in today's digital landscape. Here's a breakdown of the main benefits of contextual commerce:

Enhanced user experience and personalisation

Contextual commerce provides a seamless and personalised shopping experience by presenting products and services based on a user’s behaviours, preferences and context. By understanding the user's intent and current situation, contextual commerce simplifies the decision-making process and enhances customer satisfaction.

Increased conversion rates

By presenting products or services at the right moment and in the right context, contextual commerce significantly boosts conversion rates. Tailored recommendations and streamlined purchasing processes capitalise on users' immediate needs, leading to higher conversion rates compared to traditional eCommerce models.

Improved customer engagement and retention

Contextual commerce fosters deeper engagement with customers by delivering targeted and timely offers that resonate with their interests.

Through personalised interactions across various touchpoints, such as social media, email or mobile apps, businesses can nurture long-term relationships and brand loyalty.

Cross-selling and upselling opportunities

Contextual commerce enables targeted cross-selling and upselling by suggesting complementary products and upgrades based on the user's current purchase or browsing behaviour. By leveraging contextual cues, businesses can capitalise on additional revenue streams and maximise the value of each customer interaction.

How does contextual commerce differ to embedded commerce?

While the two concepts are closely related, they each differ in their scope and how they integrate eCommerce into consumers’ everyday digital experiences.

As previously mentioned,contextual commerce is a practice that utilises a consumer’s current context and browsing history to present targeted offers and products. This is often dynamic, and changes based on the user’s location and actions, whether they’re walking, cooking or browsing social media. It encompasses a broad mix of tactics from voice-activated shopping to location-based offers, all focused on personalising the shopping experience based on the shopper’s real-time context.

Embedded commerce involves directly integrating the eCommerce functionality into a non-eCommerce platform such as a mobile app, video, article or website. This allows customers to make purchases on social media from an ad or post, without being directed to a separate website. To a certain degree, it goes hand in hand with contextual commerce, facilitating a frictionless shopping experience for consumers.

How can emerchantpay help?

emerchantpay offers a diverse range of solutions, from customisable web payment forms to fully tailored payment journeys, as well as integrations with leading eCommerce platforms. Our flexibility allows businesses to create seamless and effective payment experiences that cater to their unique needs, reducing drop-offs and enhancing customer satisfaction.

Additionally, with a wide selection of alternative and local payment methods, such as Apple Pay, Google Pay™, and region-specific options, consumers can make secure, seamless payments on checkout pages anytime, anywhere. Offering local payment methods is crucial in the context of contextual commerce, as it ensures that customers can pay using the methods they know and trust. By aligning payment options with local preferences, it becomes easier for customers to complete purchases in their preferred environment. This not only improves convenience but can also boost conversion rates.