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GUEST COMMENT Introducing the future of commerce: Programmatic Commerce
by Neil Stewart
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IDG recently predicted that online will remain the foremost growing channel at over 68% over the next five years.
As online continues to grow and offer consumers more choices, retailers need to think ahead and plan what services they can move into place to capture market share.
Looking ahead, an area that we predict will see further development thanks to the proliferation of online is the Internet of Things (IoT). As is stands, Cisco predicts that there are more than five billion devices connected to the internet, and also that by 2020 there will be 26bn connected devices across the globe.
Consumers will embrace anything which offers convenience. With developments in technology continuing to drive changes in commerce, it is imperative that retailers adapt their methods to match the changing consumer appetite.
We predict that IoT and connected devices will bring about a new era in purchasing over the next decade, termed ‘Programmatic Commerce’. This is where smart devices will be able to make automatic purchases on behalf of consumers according to pre-set parameters.
Connected devices, ranging from fridges to cars, are increasingly becoming part of consumer life. The next stage will be for brands and retailers to coordinate to link purchasing directly with the Internet of Things. We are already seeing this to some extent with the Amazon Dash buttons, which enable customers to hit a button to refill their detergent.
There is a real opportunity for retailers and brands to take this one stage further, by forming partnerships with manufacturers to enable consumers to set up automated reordering through their connected devices. By enabling the delegation of routine purchases, Programmatic Commerce can bring new levels of convenience and cost-saving into everyday life. The retailers and brands that are quick off the mark will reap the advantages.
This concept of programmatic commerce encapsulates a shift in consumer behaviour, with buyers allowing purchase decisions to be delegated to connected machines. Recent research has already shown that there is an existing need for automation of peoples purchasing decisions in order to make people’s lives easier. In practice, imagine the coffee machine in your kitchen not only detecting when the coffee is running low, but automatically reordering supplies according to your pre-set preferences. Or, picture the tyres on your car detecting when the tread is close to the legal limit, then sending a message to the cars’ manufacturer, enabling them to order replacements in advance. Buying and selling, particularly of routine purchases, will be transformed into an automated process, guided by artificial intelligence.
We anticipate programmatic commerce will include three major trends:
1. ‘Robots’ will make decisions
We are already seeing marketers making use of data to achieve personalisation for consumers and their marketing campaigns. Programmatic Commerce however will take this one step further with replacing consideration with automation for repetitive purchases. Connected devices like fridges will learn consumers’ product preferences and prepare replacement orders. There will be scope for the process to be fully automated, depending on user preferences. As a result, machines would be pre-programmed with brands, meaning that retailers could effectively be locked out of the ordering process. Brand marketers would need to engage with consumers at a much earlier stage in the process.
2. Digital assistants come of age
Consumers are becoming much more comfortable with digital assistant such as Siri, Alexa and Cortana – and crucially, are comfortable with allowing them to access personal data. Currently, smartphone personal assistants can alert you to an upcoming anniversary, using personal data to provide convenience. Programmatic commerce will take this one step further, as your assistant could recommend a gift based on its information about the recipient’s age, gender and wish-lists. As a consequence, SEO would become far less dominant in product searches, and marketers would need to ensure that products and content are clearly targeted to meet assistants’ search criteria.
3. From demand creation to anticipation
The increase in device sensors, combined with accessible personal data, will create a situation where demand can be anticipated. As above, car tyres could alert manufacturers as tread wears down, giving manufacturers unprecedented insight into likely demand. This will enable improvements in supply chain efficiency and cash flow. Manufacturers can ensure that replacements are available for consumers, and consumers can benefit from improved convenience. This may result in the sales and marketing department playing less of a role in creating demand for a product in the market.
The not so distant future
Programmatic Commerce depends on one key facilitator: the willingness of the user to allow decision-making to be delegated. As we continue to see consumer behaviour change thanks to the digital technologies made available to them, this will undoubtedly change the world of commerce and the expectations of consumers upon retailers. Retailers are going to face new challenges, in needing to form a bond between the consumer and brand at a much earlier stage in the consumer journey. But there are also huge advantages in terms of operational efficiency.
It is the retailers who are quick to see the need for this change and adapt, in order to provide enhanced consumer convenience that will ultimately win. As the IoT becomes more widespread and integrated into everyday lives, retailers must ensure that they invest in strategy to ensure they are poised to take advantage of Programmatic Commerce.
Neil Stewart is CEO of Salmon
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