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Contextual Commerce: The Next Big Thing in Digital

Over the past two decades, retail has come a long way from brick-and-mortar to online. The future is even more exciting as contextual commerce promises to transform the customer experience.

So, what is contextual commerce?

Simply put, you can buy goods and services while you are engaged in your usual activities—like browsing the Internet, cooking, watching a movie, or commuting. It’s more similar to a “hidden” or “transparent” approach to buying.

In a more formal sense, contextual commerce allows customers to buy anything, anytime, anywhere. It simplifies the buying experience and removes friction by cutting out tedious transaction details from the process. Sometimes, it makes the buying process completely transparent for the customer.

Contextual commerce is not about all or nothing and is also not restricted to using specific technologies. Therefore, it can be equally applied, though in a limited way, to brick-and-mortar stores. For example, Amazon Go and other retailers are experimenting with different technologies to cut the checkout process from the buying experience.

Rationale Behind the Transformation

Even though technology has changed how people shop in stores and online, big changes in customer expectations and behavior need a solution that revamps the entire shopping experience.

  • Cell phones and social media are everywhere, which makes customers more demanding, and they expect everything quickly.
  • In many markets, buyers are now more interested in saving time and effort than in getting a good deal, though the recent economic downturn might make this situation worse for the time being.
  • While it started with online commerce, the pandemic has raised customers’ expectations that they shouldn’t be going out to buy anything but that the products and services should be delivered.
  • It’s important for customers not to be interrupted by the purchase completion process once they decide to buy the product or service.

Benefits to Customers and Retailers

Notable benefits of adopting contextual commerce are

  • Customers don’t need to wait in long queues for price checks, scanning, and payment at brick-and-mortar stores.
  • Customers can instantly buy anything, irrespective of what activity they’re performing.
  • It saves time and effort and optimizes the entire buying experience.
  • Context-based shopping makes buying fun instead of a boring or scary task.
  • Retailers have the upside of increased sales, decreased overheads, and enhanced customer loyalty.

What Is Required to Enable It?

Contextual commerce is already available in the form of in-app purchases, social media buying, no-checkout stores, and ride-hailing apps, but these are isolated, closed-loop experiences. So, what would it take to offer contextual payments at full-scale? Here are a few thoughts.

  • The technology needed to enable contractual payment—mobile apps with visual search and chatbots, smartwatches and speakers, RFID, beacons, NFC, virtual and augmented reality, Internet-of-Things, artificial intelligence, and digital wallets—is already there.
  • Businesses need to make these technologies work together to give customers a seamless, omnichannel buying experience.
  • Since a lot of customer information is collected, stored, and processed in this process, there must be security measures that can’t be broken at any step.

Most markets still don’t have enough infrastructure and technologies to connect all the dots; therefore, full-scale adoption will take a while in these markets.

Challenges In Adoption

While going for contextual commerce, retailers need to avoid the “one size fits all” approach. Apart from it, a few additional downsides associated with contextual commerce are

  • Customer privacy is the major concern that could slow down the growth of contractual commerce.
  • Customers will be more likely to buy impulsively, which might cause them to overspend and face social problems.
  • Service providers could hide important transaction details to promote and protect their own interests without the customer’s consent.
  • Like mega retail chains and online giants, it could put small retailers and mom-and-pop stores out of business, resulting in increased unemployment.

Aside from these things, each technology used to give customers this transformative experience has its own security, ethics, and privacy concerns that should be considered before starting this journey.

Impact On Banking and Payments

Contextual commerce has led to “contextual payments” and “embedded banking” in the banking sector, just like many other ideas borrowed from retail and marketing.

In contextual payments, only the payment part becomes transparent, whereas, in contextual commerce, the entire buying process is affected.

With embedded banking, customers don’t have to go to the bank to get services. Instead, banks put their products and services, such as deposits, loans, insurance, and spending, right into apps that customers already use.


While contextual commerce isn’t a new concept, it’s gaining momentum given the availability of enabling technology and supporting infrastructure. It promises to optimize the buying process, making it a fun experience for customers. But, like anything else, it has advantages and challenges that require careful consideration before opening doors to customers.




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Muhammad Faizan Siddiqui

Muhammad Faizan Siddiqui

Head of Strategy


Member since

22 Jul 2021



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This post is from a series of posts in the group:

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