According to Visa and PYMNTS.com, consumers south of the Canadian border in the United States spend over $250 billion on products and services during their commutes to and from work alone. For the first time ever, more cars were registered with mobile networks than new phones in the United States in 2017, according to Chetan Sharma, a mobile data consultancy. Both of these statistics show the massive market potential for car-based commerce. Merchants that engage consumers through the car can steal share from merchants not engaging in car-based commerce. This would allow merchants to reach new consumers and sell additional products and services to existing ones, resulting in organic growth of the retail market beyond its current size.
How car-based commerce works: Touch versus voice
Car-based commerce can occur in any vehicle with an internet connection; drivers interact with the in-vehicle infotainment system via touch or voice to purchase products and services. Only two automakers currently offer platforms that enable consumers to make purchases from behind the wheel: SAIC in China and General Motors with its Marketplace platform in the United States. Through these built-in platforms, drivers can purchase fuel and coffee or reserve a parking space by navigating the center infotainment screen with their fingers.
While major automakers are focusing on built-in platforms, technology companies are also betting on car commerce. Amazon, a company already deeply ingrained in Canada, is gaining early insights in voice-based commerce through Alexa in non-automotive settings. Alexa is already offered as a convenience feature in vehicles from eight of the 10 largest automakers by global sales. Alexa-based commerce features can be enabled in these vehicles through a remote software update. Other third-party software developers – namely Apple and Google – offer voice-based assistants in vehicles though none focus on commerce.
Voice-based commerce circumvents two major issues plaguing touch-based systems: liability stemming from distracted driving and limited screen space. Because systems such as GM Marketplace require drivers to take their eyes off the road, its functionality is limited to when the vehicle is not in motion. More touch-based features are being introduced into vehicles that leverage the center screen; voice-based assistants circumvent the competition for screen space by reaching drivers through another medium.
Why Canadian grocers and quick-service restaurants are prime beneficiaries
According to Euromonitor International’s 2017 Global Consumer Trends Survey, groceries and household essentials are the most frequently purchased items in Canada weekly, followed by food for takeaway and delivery. The high purchase frequency in these categories means that grocers and quick-service restaurants operate in a category with ample opportunity to increase discretionary purchases through car-based commerce.
A growing share of transactions that occur near the car will be incorporated into vehicles in the near future as a means of saving time for busy drivers. The added convenience will also incentivize these customers to buy more often and consider purchasing products and services they otherwise may not.
Car-based commerce currently operates through a click-and-collect model, which is cheaper for merchants than delivery. Canada’s car-based culture and diversity mean that grocers like Safeway and Sobey’s already operate stores along major thoroughfares and have strategies for targeting the multitude of ethnicities and foreign born residents that make up the Canadian consumer base. Quick-service restaurants like Tim Hortons have a presence across Canada and the United States that lend a similar strategic advantage. Canada’s smaller population allows merchants and software players to be more nimble in testing new strategies to target consumers than in larger markets like the United States or China.
What Canadian merchants can do now
There are two strategies that Canadian merchants can pursue now: partner with existing car commerce players like General Motors or partner with software firms that have a presence in the car like Amazon, Apple, or Google. While GM Marketplace is not currently available in Canada, the delay may be a blessing in disguise for Canadian grocers and quick-service restaurants. Merchants partnering with General Motors in the United States face a scalability issue because the software powering each automaker’s infotainment system is unique.
Third-party platforms like Alexa avoid this scalability issue and are a one-stop solution for merchants looking to enter car commerce. Canadian retailers should use this time to identify stakeholders at third-party software firms and work with them to strategize car-based commerce opportunities. At the very least, merchants need to be aware of the trend and the multibillion dollar market that car-based commerce will quickly become.