Contextual commerce involves the use of messenger bots driven by artificial intelligence to interact with consumers, either on a website or through a voice-activated device. While consumers are not buying in large numbers through these bots, they are getting questions answered and giving high marks to this way of obtaining information.

Casey Bullock, general manager, global ecommerce, North America, Worldpay

Casey Bullock, general manager, global ecommerce, North America, Worldpay

Americans spend almost two hours a day on social media, and studies show we glance at our phones over 150 times daily. As we’ve grown more accustomed to putting our lives on display for the Internet, merchants and brands have incorporated new strategies to display their latest products—placing them among updates we receive from friends and family in our social feeds.

Online Shopping is Evolving

Just as consumers adjust to product ads interspersed among the latest posts, technology has found the next new way to engage with them. Some retailers are up-leveling their customer interaction online with the use of messenger-based bots, AI systems designed to simulate conversation online between a human and a bot. This is also often referred to as “contextual commerce.” Even social media apps like Instagram have enabled in-app purchases.

By engaging with consumers on social media via messaging apps, the level of convenience in online shopping is drastically enhanced, enabling merchants to meet their customer where he or she spends most of their time—on mobile and online.

Contextual commerce allows brands to pair intimacy with automation, so merchants can deliver increased and improved customer service.

At Worldpay, we are continually evolving our offerings to ensure we enable transactions where consumers want them. Seeing the rise of this new transaction method piqued our interest, so we conducted a consumer survey to gauge consumers’ interest in and experience with contextual commerce.

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Convenience Underutilized

What we learned is technology advancements provide more opportunities to make consumers’ lives easier. Survey respondents who have made purchases enhanced by contextual commerce most appreciated the frictionless experience that it provided. They also find chatbots beneficial in customer support scenarios, such as shipping-related updates, researching products and finding the best deals.

Perhaps most striking is the disparity between usage of chatbots for making purchases (very low) and positive consumer experience in doing so (very high).

More than half of those surveyed (55 percent) have interacted with a business or retailer via a messaging application. However, only 15 percent of people have actually completed a purchase this way. Those consumers rate their experiences as highly positive, with 81 percent saying they would make another contextual-commerce-enabled purchase, indicating that contextual commerce is significantly underutilized. But it also demonstrates why bigger names like Instagram are now taking this new technology more seriously.

As younger generations continue to gain more spending power, it’s key for merchants to meet their needs and priorities. Survey results show that Millennials and Gen Z are more likely to make a purchase via contextual commerce than their predecessors.

From tracking shipping updates to making purchases, messenger-based AI is without question changing the retail game. Merchants who capitalize on the technology are poised to reap the rewards of giving their customers what they want: a convenient purchasing experience.

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Consumers will prioritize convenience in most cases—just look at Amazon Prime. Those with Prime (and that free two-day shipping) are almost unwilling to wait for an item to take longer than two days to arrive. It’s incumbent upon merchants to build convenience into their business model, understanding that AI tools are sure to make big improvements in convenience over the coming months and years.

AI Influences the Bottom Line

While each new technology brings new opportunity to grow sales, this may be especially true for contextual commerce because of the supreme convenience and personalization it offers.

From personalized quizzes to gift/product recommendations to scheduling assistance, merchants can leverage contextual commerce tech to engage more personally with their customers. It’s allowing brands to pair intimacy with automation, so merchants can deliver increased and improved customer service. The key to successfully implementing new technology is knowing how to deploy it. With AI-based commerce, whether it’s used to answer a simple question, direct a customer to a specific page on the site or offering a recommendation, merchants should be cognizant of what will most benefit their customers.

It’s also important to know the limits of computer-based interactions. When a customer wants to speak to a person or has a complex issue, a human customer service representative is the way to go.

And always looming in the background is the need for security. As more shopping goes online, the risk of security breaches remains a concern. Survey respondents reaffirmed that they are eager to try new tech as long as their data is safe and secure.

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From checking the status of your Domino’s pizza order to navigating Macy’s online store to getting personalized recommendations from H&M, contextual commerce and AI tools are changing the way society engages with commerce. It’s time for merchants to get on board.

Worldpay is an global payments processor.

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