In this interview, Mohammed Sirajuddeen discusses the rise of Contextual Commerce in Asia
Technologies that make contextual commerce possible already exist – AI, data modelling, multi-party systems in a digital supply chain (like blockchain) and 5G-enabled metaverses – and will drive the evolution of commerce. With Contextual Commerce, retail will be more e-commerce focused, digitally enabled, personalised, sustainable, and integrated between offline and online shopping, among other imperatives.
In this interview, Mohammed Sirajuddeen, Growth & Digital Commerce Lead, Growth Markets, Accenture Song explains why and how Contextual Commerce will become a trillion-dollar market in Asia by 2030.
What is Contextual Commerce? What are its origins?
With the rapid adoption of AI, data modelling, multi-party systems in a digital supply chain such as blockchain and a 5G-enabled metaverse, it is inevitable that we are seeing increased interactions between businesses and their customers. Consumer needs are also changing fast – they expect more than just value and convenience and expect businesses to accommodate their shifting priorities and behaviours.
These trends pave the way for contextual commerce, which can be defined as the provision of a highly personalised one-stop shopping experience that is integrated into everyday living. Contextual commerce is facilitated by automation, where products often become channels for identifying needs and context and providing additional services.
This shift will reshape everything from designing and manufacturing products to marketing and selling them. In the next few years, products will still exist but they will not be the sole focus. Instead, companies will concentrate on creating contextual selling strategies to support the outcomes their consumers want to achieve – for example, technology such as digital twins will allow companies to find, recommend and create products and services tailored to an individual’s needs and preferences.
Contextual Commerce will become a trillion-dollar market in Asia by 2030. Why and how?
There are three factors driving the contextual commerce sector in Asia. Firstly, emerging technologies such as the metaverse will propel the growth of contextual commerce. According to Accenture’s Technology Vision 2022 report, 8 in 10 APAC executives believe that the metaverse will positively impact their organisations, with at least 4 in 10 believing that it will be breakthrough or transformational. Asia leads in the metaverse – millions of users, especially in China, are embracing the use of technology in areas such as gaming and retail. For example, the metaverse industry in Shanghai is on track to hit USD$52.3 billion by 2025. Thai property developer MQDC is collaborating with Accenture to develop a fully functional and sustainable metaverse economy, with the aim of reimagining commerce experience and augment daily life beyond imagination. The rise of the “virtual human” industry in Asia is also fuelling contextual commerce where brands deploy virtual influencers to influence purchasing decisions and elevate the shopping experience.
Secondly, Asia is home to a unique, young and rapidly growing population of digital natives that have leapfrogged directly to the most advanced technology frontiers. Additionally, there are socio-economic changes accelerating growth throughout the region, with more than a billion people from across Asia expected to join the global middle class by 2030. This leads to changes in demographic spending as we see increased disposable incomes across Asian markets. Not to mention, the evolving multi-generational landscape also affects the distribution of purchasing power. According to the World Economic Forum (WEF), millennials and Generation Z will make up 75% of ASEAN consumers by 2030. Digital natives armed with high purchasing power will spend more in areas such as gaming. At the same time, Asia is also home to the largest elderly populace in the world. The number of people aged 65+ will grow 95% to over 767 million by 2040. By 2030, seniors in Asia are expected to spend over $5 trillion each year, creating a large opportunity for the commerce sector.
Finally, the rise of social commerce, set to grow into a $1.2 trillion wave of change by 2025, will lead to greater adoption of contextual commerce. To capture the social commerce growth, brands are doubling down on their “direct-to-consumer” capabilities to drive social commerce conversions. Fundamentally, there is a need for brands to create more seamless experiences for customers, moving away from siloed platforms that breed disconnected consumer journeys to leveraging real data and metrics for authentic discovery, engagement and action. Going forward, we can expect integrations among platforms that will facilitate multi-device and multi-platform social experiences that will drive omni-channel commerce. For example, China’s Snow Beer designed a connected platform that transcended offline and online spaces, allowing fans to connect to “meet-up” parties, including hotpot gatherings or street dance battles, look up F&B establishments that offered Snow Beer, as well as gift and purchase beers.
Are the customers also evolving? Are there new archetypes to understand customers better? How will the new generation of customers impact Commerce in Asia?
Customers will evolve, especially as people interact more with new ways of buying and selling. We believe that contextual commerce will create three new types of customers, each of which will require a different strategy and approach.
With the rise of AI and digital twin technology to predict our next purchases, we foresee that we will each have our own “mirrored consumers”, unique profiles that aggregates our likes and dislikes and helps technology find, recommend, and create products and services tailored to our personalised needs and preferences. These unique profiles will help organisations forecast demand more accurately, and design next-generation products and services based on customer feedback and real-world use data. In return, companies will deliver greater convenience to consumers while improving their supply chains.
To accompany these digital versions of ourselves, we will also see the emergence of “curators”. They are technology agents working alone or with humans to help end-users achieve desired outcomes, and will focus on fostering a trusted customer relationship and humanising the product and services from each company. This goes beyond just understanding customers’ desired outcomes in context, but also in sourcing relevant products and services. In particular, the trend “B2Bot” will flourish, where companies will sell to bots that select and purchase goods for consumers to meet their needs and desires.
Aside from individual consumption, group buying is also gaining traction, and “collectives” are another group of consumers that will emerge. These are consumers who group buy and join collectives to use products and services in new ways. We are already seeing this begin to take off – Chinese platform Pinduoduo encourages direct-to-consumer sales, which could evolve into collectives buying together to get steeper discounts.
There will also be a rise in subscription and as-a-service models, whereby consumers join clubs to access a product or service – a trend we are calling “B2Renter”, where consumers increasingly focus on outcomes amid dwindling interest in traditional product ownership. A clear example of this is the increasing popularity of decentralised autonomous organisations (DAOs), which will allow member-controlled groups to make democratic purchasing decisions. Built with blockchain technology and formed with a common purpose, DAOs such as PleasrDAO, a group of crypto artists, entrepreneurs and investors who collect art that represent and fund important ideas, movements and causes as NFTs, are on the rise. The business benefits by unlocking a new consumer growth segment, extending the lifetime and profitability of assets and increasing its income through service subscriptions by selling to collectives.
We are already seeing shifts in the industry as more businesses introduce subscriptions that combine products and services. Not only will a subscription-based model increase the customer’s lifetime value significantly, but it also extends the life of products. The greater business predictability that comes with subscription-based business models eliminates the uncertainty about replenishing inventories. This will be crucial, especially with circularity becoming an important criterion for meeting environmental, social and governance (ESG) goals.
The emergence of these new consumer archetypes will require businesses to rethink how they sell, and each of these customer archetypes will require a different strategy and approach. Businesses need to gear up for the rise of Contextual Commerce by leveraging the drivers of growth in the region, and tailoring their strategies according to each consumer archetype, in order to capture the opportunities that await.
How can marketers prepare to tap into this emerging type of Commerce? Will they need any particular martech tools for this?
Organisations must formulate their strategies from scratch to address new customer segments and models, such as B2Bot and B2Renter, and prepare for new avenues for sales, such as in the metaverse. As businesses interact directly with customers, the boundaries between sales and marketing will dissolve.
With the changing consumer landscape, business will need to be prepared for consumer’s demand for hyper-personalisation at scale – this may mean re-tooling for mass customisation. Companies must enable digital threads that will track how products and services are used throughout the lifecycle in order to meet new demands.
With the increased in the quantity and velocity of data that companies and customers now share, trust will become the new currency. Brands need to rethink how data is being shared with a new model that facilitates trust among everyone involved – through a multiparty system. This is a shared data infrastructure between individuals and organisations to enhance collaboration, build resilience and, ultimately, create new revenue streams – when done properly, concerns around security, privacy and control can be alleviated. Powered by a combination of blockchain, distributed ledger, tokenisation and other technologies tailored to ecosystem needs, organisations can tap into multiparty systems to strengthen partnerships across organisations to create secure experiences in the metaverse.
At the end of the day, contextual commerce is one of the many trends evolving in the commerce space. Like other trends, contextual commerce is a result of the non-stop barrage of external life forces – economic, social and beyond – prompting consumers to reimagine their behaviours and values. This has a direct impact on what, how and why they buy. In order to future-proof themselves, brands must re-evaluate and rebuild relevance to these new buyer values and anticipate and meet the needs of their consumers at the moment. At the heart of it, brands must make a critical choice to either tune in and create experiences that matter or tune out and miss the opportunity to differentiate and create sustained growth.