In January of this year, I wrote a piece in which I said there were
that would shape the direction of payments and commerce in 2016.
Third on that list was
I argued that making buying seamless inside of environments that
consumers used regularly for other reasons would drive innovation
for those environments - and for the third parties that enabled
those new commerce experiences. As its name implies, commerce then
happens because there's an interest and an intent to buy, along
with a context that makes doing so very natural and easy.
Making Pins buyable inside of Pinterest (PINIT) is something
that I called Contextual Commerce 1.0. Inserting buy buttons inside
of a marketplace - in this instance a marketplace of ideas and
inspiration - is interesting. But it's not the game changer that
contextual commerce could really be.
Pinterest, as the advertising platform it has become, is
certainly driving lots of interested consumers to merchant websites
to explore what they see pinned on Pinterest, and then even buying
from that site if they remain enamored with what they see once
there. But simply sticking buy buttons everywhere there are
occasions and things to buy is undervaluing contextual commerce's
Potential that we see now being tapped by Uber (UBER),
) Messenger, Amazon (
), Braintree/PayPal (
) and even Spotify (MUSIC).
Each of these platforms is taking the concept of contextual
commerce to the edge - and soon, I believe, well beyond it. Each of
these players is leveraging their powerful closed ecosystems that,
with payments embedded inside of them, extends commerce into the
places where consumers want to take it - rather than the other way
Uber: The Road From Ridesharing To Contextual Commerce
In 2009, Uber's innovation was to
black car drivers with downtime and consumers fed up with the
uncertainty of not being able to reliably get a ride when they
needed one. Six years and an expanding inventory of cars and price
has a market cap of $70 billion, more than 1 million drivers across
400 cities worldwide who've delivered a 1 billion rides - and the
first instance of what we now call "invisible" payments in the
is how payment at the end of the ride happens, as much as it about
how rides are procured. An app with a card on file, Uber, as all of
us who are addicted to it know, requires no intervention on the
part of the consumer to pay and tip the driver. Cards on file are
charged once the rider's destination has been reached and the
consumer left the vehicle.
That magic is being extended to third parties who see its
platform as a way to create new commerce opportunities.
, which launched last month (March 2016) as a stand-alone app, was
Uber's first shot across the contextual commerce bow. This
stand-alone food ordering and delivery app - now live in Atlanta,
Austin, Chicago, Dallas, Houston, Los Angeles, Melbourne, New York,
Paris, San Francisco, Seattle and Washington, D.C. - started life
as an option inside of the Uber app. It was relaunched as a
separate app, no doubt to expand its pool of potential users and
cross-pollinate its Uber platform.
For existing Uber users, creating an UberEats account is as easy
and invisible as paying for a ride.
When someone installs the UberEats app, they're prompted to
either select their existing Uber profile or create a new one. The
99.999 percent of existing Uber users who opt for the former now
have an UberEats account connected to their existing Uber user
profile and account credentials stored there.
Last week, Uber appeared to
take contextual commerce a step further
Uber users on their way to a Hilton hotel can now check into their
room from the car. Hilton Honors' members traveling via Uber can
make a room selection, and then receive a digital key that will
allow them to bypass the front desk upon arrival and go directly to
On the way there, Uber's partnership with Zomato will also allow
that passenger to check restaurants nearby and make a reservation
at one that might have caught their eye and appetite.
It's only a matter of time, I conjecture, that on the ride from
the airport to home or from the office to home, similar prompts
might be made for an UberEats delivery or booking a reservation at
a nearby restaurant.
Uber has several pieces of information that will make those
prompts, well, contextual. They know where the passenger is, the
time of day they are taking the ride, their destination and how
long it will take to get from point A to point B.
Using that data, they can serve prompts that add value to that
ride, in context, driving commerce along the way, so to speak.
Today, all of this happens outside of Uber in the third party
apps connected to its core platform. But it's likely only a matter
of time before those capabilities are brought inside of the Uber
platform to make the experience totally seamless, contextual and
automatic for the user.
And all linked to the Uber account credentials on file.
Uber is morphing from just a ride-sharing platform into a
commerce platform, matching third party apps to what Uber customers
would regard as a value add in the context of their use of the Uber
Uber may have context, but its challenge will be to grow its
core user base. Uber does not publish user stats, but I saw a story
quoted 8 million user accounts
(as of July 2014), without being specific as to whether that was
only U.S. or U.S. plus other geographies. Working with corporate
travelers and hotel partners is one way to expand the commerce
possibilities on the Uber platform, but not necessarily the core
user base who probably uses Uber pretty frequently already.
For Uber to reach its full contextual commerce potential will
mean giving third parties access to new users who can also create
incremental revenue opportunities for them - and vice versa.
Messenger: From Conversation To Commerce
Facebook's Messenger has made no secret of its ambition to take
a page out of WeChat's book and enable a variety of activities
beyond chat inside of its ecosystem.
It's not hard to see why.
In the four years since its launch, Tencent's (
) WeChat reports 600 million active monthly users who can do a
variety of things beyond messaging with some of the coolest emojis
you've ever seen. WeChat users can play games (and they apparently
play a lot of them - accounting for $420 million in revenue in
2014), buy tickets and book and pay for taxi rides. WeChat overcame
a critical platform ignition point too that drives these numbers -
they have a critical mass of consumers and their friends on the
platform who use it exclusively.
That, and the wide appeal of messaging apps, worldwide, has
inspired all messaging apps to consider use cases that go beyond
that while nearly 50 percent of smartphone owners 18 to 29 use
messaging apps, nearly 40 percent of those 30 to 49 do as well, and
nearly a quarter of those 50 and older do, too. Granted, a lot of
those use cases are parents and grandparents wanting to stay in
touch with kids and grandkids, but getting those users on board has
now given birth to a worldwide market of more than 2 billion people
with whom messaging apps would like to engage.
Facebook owns two of the giants: WhatsApp with more than 900
million monthly active users, and
Messenger with more than 800 million
monthly active users. WhatsApp revenue is pretty much a pittance -
$10 million it was reported in 2014 which would make the return on
Facebook's $22 billion investment largely incalculable. And David
Marcus, Messenger's Chief, says that Messenger isn't about making
money right now.
But it appears to be a lot more than messaging.
In March 2015, Messenger announced a significant upgrade to its
It's now possible to
send and request money
(as long as the people you are sending and receiving money from are
also on Messenger and monitor it with regularity (hint hint to the
person from whom I requested money a while back and might be
reading this), get status updates from participating retailers via
its Business with Messenger capabilities, and even order an
David Marcus, Messenger's Chief,
said at the beginning of 2016 that his team's
is to "make Messenger the best place to communicate with all the
people and businesses in the world."
In other words, using the Messenger ecosystem to trigger
commerce wrapped around context and conversation inside of that
Last week, Messenger announced a partnership with KLM Airlines
which now allows Messenger users to get status updates and resolve
customer service issues inside of the app including rebooking
flights - an obvious link to commerce.
Messenger's hope is that getting commerce enablers onboard will,
in turn, pull more consumers inside the ecosystem and keep them
there because they can get valuable services not available inside
their existing apps or smartphone texting platforms. And if they do
that, they will, in fact ignite commerce inside of the app.
Consumers may be something Messenger has in droves, but usage is
a function of having a critical mass of consumers in the same
social circle who use it regularly. From my informal survey, that
seems to be a mixed bag - and one of Messenger's core business
challenges, commerce notwithstanding.
Creating context for those consumers is critical to driving
commerce. Messenger's success in doing so will depend largely on
three things: ((a)) getting a critical mass of retailers on board
that enable those contextual experiences; ((b)) delivering a more
inside of Messenger than any other messaging app or the retailer's
own app delivers (or could); and ((c)) whether enough of the
retailers that consumers engage with use Messenger as their
preferred channel to engage with consumers.
Which they won't do unless enough consumers use Messenger as
their preferred platform to engage with them.
It will be interesting to see how their use case with the
airlines evolve. I suspect it might be a tough hill to climb for
the simple reason that anyone who is already a preferred customer
of an airline probably uses their branded airline app. Messenger
would have to offer something above and beyond what's available
inside those apps to get those customers to switch.
Or, alternatively, be the only platform available for consumers
to communicate with brands - which they could be well positioned to
become in lesser developed markets.
Amazon: Making Omnichannel Contextual
When Amazon introduced its first couple of
on March 31, 2015, people thought it was an April Fools' joke.
One hundred Dash buttons
and an entire Dash Replenishment system later, it's clear that the
joke was on those who didn't understand the power of connecting
commerce with context in novel new ways.
These buttons now drive, Amazon says, more than 10,000 orders a
week from its very best customers: Prime members.
The idea of sticking plastic buttons all over one's house as visual
cues to order things like laundry detergent, diapers, toilet paper,
snack food, batteries, paper towels, and cold medicine in the very
places that consumers can see that supplies are running low has
evolved into software embedded inside of products that
automatically reorder when data and algorithms calculate that it's
time to do so.
Now, everything from printer cartridges to pet food are part of
an Amazon ecosystem that not only makes ordering and payment
invisible, but commerce tied directly to a very specific use case,
solving for a very specific consumer need.
But that's just one small slice of the contextual commerce pie
to which Amazon wants to lay claim.
The Alexa ecosystem
is using voice activation to extend commerce into a variety of
contextual applications. Through Echo inside the home, Alexa can
build a shopping list and order those items. She can order a pizza
from Domino's (
), and an Uber. With Ford cars, Alexa will be able to unlock the
You don't have to be a Nobel Prize winner to see where this is
"Alexa … I don't feel like cooking, what restaurants nearby have
a reservation for 4 at 7:00 tonight?"
"Alexa … I don't feel like cooking, I'd like to order Kung Pao
Chicken and a side of rice and green beans from Gourmet
Or on the drive to work:
"Alexa - I'd like to order a large coffee with two Splenda and
whole milk and a dozen Munchkins from the Dunkin' on Washington
Street at 8 AM."
All linked to the user's Amazon account and card on file and
enabled by an ecosystem that's moved beyond a destination on the
Web to where the consumer lives.
This capability is as disruptive as it is innovative.
For the first time, brands have the ability to have a major
branding opportunity inside a consumer's home in a way that was
never before - and for that brand to establish preference in a way
that was never before possible. Consumers aren't ordering just any
laundry detergent, they're ordering Tide. Consumers aren't ordering
just any paper towel, they're ordering Bounty.
And for Amazon to enable a direct-to-consumer experience that
cuts out the middleman - a middleman called the
- by making commerce not only contextual, but where it's convenient
for the consumer to make those buying decisions - inside of their
home where they can see what they need and want to buy.
By the way, 12 companies will have the opportunity to partner
with PYMNTS and Alexa/Amazon to participate in the Alexa Challenge
starting on April 27th. Your idea plus four weeks of intensive
mentoring by me and the lead Alexa developer evangelist will
produce 12 ideas that the community will vote on for best in class
Alexa skills. Some of the ideas that we've seen are incredible.
There are only a few slots left;
get details here
if you'd like in on this remarkable opportunity.
Braintree: Using Scale To Enable Context - And
the launch of its Auth platform
last week. It's making commerce contextual by, among other things,
helping Braintree merchants seamlessly embed commerce into their
partner's environments. Braintree is what enabled Uber inside of
Facebook and will make it possible for the hundreds of thousands of
merchants that use Bigcommerce or WooCommerce's eCommerce software
and shopping carts to light up a variety of new payments and
commerce experiences inside of their virtual storefronts.
Auth will allow merchants to create new Braintree merchant
accounts on behalf of its partners and for them to instantly accept
payments, including PayPal and PayPal One Touch and alternative
payments like Apple Pay, Venmo, Android Pay and others as they
become available. Auth also allows access to a Shared Vault which
means that a tokenized card credential stored with one merchant on
a platform can be used in a single-click checkout on behalf of that
same customer with another merchant connected to that master record
inside of that platform.
Through that capability, Auth eliminates the need for customers
to reenter their credentials at each of those connected
As an enabling platform, Braintree doesn't touch the consumer.
Its role is to give those who do the tools to create commerce
inside the context they bring to that consumer. Their value
proposition is to use the scale of their platform - their
merchants, capabilities and 250 million stored tokens - to help
other platforms scale more easily without having to get into the
weeds of payments technicalities.
Spotify: I'll Name That Tune In One Bottle Of Whiskey
Music and alcohol have a long and somewhat controversial
In the early part of the 2000s, a U.K. study reported that
in clubs increased alcohol consumption - which explains why you
can't hear yourself think in most nightclubs. The higher the
volume, the more people pound them down. And the more money they
Don't look for quiet nightclubs any time soon.
Another study done by a Boston University professor
music itself is a marketing platform for alcohol. He found that
four major brands more or less show up in most songs that reference
alcohol, linked not so coincidentally to tens and even hundreds of
millions of dollars of lucrative contracts that rap and hip hop
artists who sing those songs have with alcohol brands.
Now, it seems that the possibilities of contextual commerce are
taking the music/alcohol dance a step further. Streaming music
platforms are now embedding ads to enable its instant purchase and
A colleague sent me a text describing his experience late one
afternoon last week.
He was listening to Spotify and 7 seconds before a song ended,
he said he was presented with an ad saying that he could get a
bottle of Jameson delivered in an hour or less by using an app
(that he had installed on his phone) to place that order.
Their wish was his command.
One hour later, his Jameson was delivered, underscoring the
commerce potential that embedding commerce inside of an environment
that consumers are using for other things creates.
It's not as if my colleague intended to buy a bottle of Jameson
that day. But it's a brand he likes and in the context of listening
to some cool tunes, he decided to act on his impulse. Something he
probably wouldn't have done if the offer was a T-shirt or a car
wash. In this case, the context was entertainment - listening to
music - and the offer was something that loosely connected music
and the late afternoon - kicking back at some point later and
having a drink.
All enabled, of course, by an app with card credentials stored
inside, making the act of purchasing easy, seamless and
Risks And Opportunity On The Road To Contextual Commerce
As I said
, Contextual Commerce 2.0 will make it possible for new
relationships between brands and consumers to be established and
for the retail playing field to be defined differently and on the
And those who master Contextual Commerce 2.0 will do so because
they are able to create value by making commerce accessible "in the
moment" and across any operating system, channel or buying
environment. In each of the instances that I described here, the
contextual platform is an app or software that can go anywhere the
consumer takes it on their mobile device, one that is enabled by
secure digital account credentials that flow with that context.
For those ecosystems, the imperative is to provide the context
that will trigger the commerce impulse, add value to that consumer
experience and remove the friction from making payment
For issuers, it raises the decibel level of making sure that
their products are attractive enough for consumers to want to stick
inside those apps. Platforms that are about creating context do
that by bringing in more third parties to add that value, and
leverage the account credentials they have "on file." The more
options that these ecosystems provide to those consumers across the
platform, and the easier it is for those consumers to use those
stored credentials, the fewer opportunities issuers will have to
influence those choices downstream.
For mobile wallets and
the challenge will be to get consumers to register "a wallet"
inside of an app. And that will be a function of making sure that
enabling platforms make it easy for retailers and other third
parties to accept that method of payment and for consumers to use
Since where context will drive consumers, it will also pull
along their payments preferences.
Orchid Island Capital's Latest Update Disappoints
And Affirms My Ratings