Technology has been slowly re-shaping the way we shop for decades. First, eCommerce revolutionized the way consumers acquire goods. Today, augmented reality (AR) is poised to alter the customer experience forever.
For generations, consumers completed the majority of their shopping in-store (save for a fraction of buyers who leveraged home shopping via print catalogs and TV networks).
If someone needed an appliance or piece of furniture, they visited a nearby showroom. If they wanted new clothes, shoes, jewelry or cosmetics, they sorted through the offerings at their local boutiques and department stores.
Throughout the shopping experience, customers engaged with sales clerks to get their questions answered and, in most cases, tried or tested products before they completed their purchase.
Then came eCommerce.
Today consumers can purchase everything from books and packaged goods to electronics and even cars — and have these items delivered — without ever leaving home. There’s no need to wait until regular business hours to place an order. If you suddenly decide you want to buy an espresso maker at 2 a.m. on a Sunday, the world wide web is your oyster.
But, despite its rapid growth, this technology-driven revolution isn’t without its drawbacks. And retailers are quickly discovering that to remain competitive, they’ll have to invest in tools and tech to streamline and enhance the customer experience.
And that’s where augmented reality comes in.
AR is emerging as a solution to many of eCommerce’s most significant pain points. And over the next few years, its adopters will enjoy an ever-growing portion of the market share.
But why are customers drawn to AR experiences, what does AR look like in practice, and how can companies (of all sizes) leverage this emerging technology?
In this guide, we delve into how AR is changing eCommerce, explore a few real-life examples from successful brands, and explain how you can accomplish similar outcomes through an AR solution.
PART 1: THE STATE OF eCOMMERCE
eCommerce is growing at breakneck speeds, and each year consumers are choosing to spend more of their money online. In fact, the eCommerce industry has grown by a whopping 15 percent for the second year in a row, according to data from Internet Retailer.
The 2018 Black Friday weekend saw $6.22 billion in online sales, and in Q1 2019, for the first time in history, online U.S. retail sales total market share was higher than general merchandise sales, according to data from the Commerce Department.
But this growth isn’t without a few setbacks.
One of the most critical disadvantages to eCommerce is its lack of tangibility. Because consumers are unable to touch, test, or try products before purchasing, they can’t be sure the product they’re considering will meet their expectations— which leads to high rates of cart abandonment and product returns. And as you may have experienced, all these returns are a significant financial drag on retailers’ profits.
At least 30 percent of all products purchased online are returned, compared to fewer than 9 percent of products purchased at a brick-and-mortar store, according to Invesp. And 67 percent of shoppers check the returns page before completing their purchase.
While consumers demand easy and free returns — and retailers oblige to stay competitive — returned deliveries in the U.S. are expected to cost $550 billion by 2020, according to data from Statista. And this figure doesn’t account for inventory loss or restocking fees.
Post-retail sales (which includes returns and overstocked items) totaled $554 billion in 2016 and has been growing at an annual rate of 7.5 percent, according to data shared by The Wall Street Journal.
In many cases, returned goods are either restocked and sold at a discount, or sent into the secondary market — usually for an even steeper discount. Either way, retailers are losing money. And as eCommerce continues to expand, organizations can expect to lose even more.
That is, unless retailers choose to do something different.
PART 2: THE PROMISE OF AR FOR ECOMMERCE
Augmented reality can help retailers overcome many of the challenges associated with eCommerce by providing a more immersive customer shopping experience. In fact, many organizations — from eyeglasses retailers to furniture and fashion brands — are already experiencing significant success with this powerful technology.
But before we jump into AR for eCommerce, let’s back up and address a pretty crucial question: What exactly is augmented reality anyway?
What is AR?
Augmented reality is an immersive technology experience where real-world objects are enhanced through computer-generated information. In most cases, AR creates visual experiences using images and text. However, depending on the technology and its application, it can also incorporate elements that simulate touch, smell, taste, or sound.
It’s important to note that, while people often confuse AR with virtual reality (VR), they’re two distinct technologies. The most fundamental difference is, AR enhances your reality with digitally overlaid graphics and information while VR replaces your reality with a wholly immersive artificial environment. For example, a VR headset might simulate the experience of riding a rollercoaster, even though you’re sitting in your living room.
One of the most pervasive forms of augmented reality is mobile AR, or AR generated through a mobile device. Mobile AR usually works by leveraging a device’s camera to scan an environment and gather spatial data, such as the angles of a room. Then, it creates a 3D projection, which it superimposes into the space.
For example, consider Snapchat or Instagram Stories filters, which use facial recognition software to identify features, such as your eyes, nose and lips, and render a 3D mask. The software then projects the mask onto your face through your smartphone camera.
For many years, people considered augmented reality nothing more than an exciting, futuristic technology — a cool concept, but ultimately far-fetched and fantastical. Today, thanks mainly to the prevalence of mobile devices and sophistication of smartphones, AR for retailers isn’t just possible, it’s already happening.
Brand Spotlight: Nike and H&M
When asked which items they returned after the holidays, 75 percent of consumers said “clothing and accessories,” according to data from Statista — which isn’t surprising. With so much variance between sizing and fits, it can be hard to know what will look best until it arrives. But a few brands are seeking to change this experience.
For example, the Nike Fit app uses a smartphone camera to complete a “hyper-accurate” scan a user’s foot dimensions and offers a recommended ideal shoe size. Additionally, popular fast-fashion retailer H&M is releasing a virtual try-on feature through its app. Users can try clothing using VR overlays, take photos of themselves, and share their looks via social media.
What Does AR Look Like in an eCommerce Environment?
Up until now, AR has primarily been used for top-of-the-funnel efforts, such as to drive awareness, generate hype, or provide a little light-hearted fun. (Take, for example, the Cheetos Vision app — an AR app that allows you to see what the world might look like if it was made of Cheetos.)
But that’s changed.
Today, AR is helping brands make more meaningful connections with consumers in a few different ways:
Enhanced Shopping Experiences
While social media lenses and filters give you the power to adorn yourself with animal ears and flower crowns, AR for eCommerce allows consumers to interact with a product — through a similar form of computer-generated superimposition — before they buy.
For example, imagine “trying on” a lipstick shade or previewing a new paint color on your walls, at home, using nothing more than your mobile device. Not only does this technology already exist, but brands are providing this experience to their customers right now.
For example, in April 2018, Snapchat unveiled a series of paid lenses with Clairol and Adidas — a feature that functions the same as other lenses, but also includes a button to shop products, install an app or view a video without leaving the Snapchat app.
Facebook soon followed suit with AR ad campaigns for Michael Kors and Sephora. And these enhanced shopping experiences are becoming more sophisticated all the time.
AR allows brands to capture new kinds of data you can’t gather through more traditional digital experiences. This includes heatmaps to indicate which angles or sections of a product a consumer viewed or dwelled on longest. For configurable or customizable products, brands could collect data about which combinations were chosen most often.
For example, if an automaker offered shoppers the opportunity to explore a vehicle using AR tech, the manufacturer could collect data to determine which features users spent the most time inspecting and which color and wheel rim selections were most popular. They could segment data by age, geographic location, and other demographics, and use this information to power more accurate inventory forecasting and better-targeted marketing campaigns.
Dynamically Generated and Interactive Ad Content
Marketers have been using dynamic creative optimization (DCO) to create highly personalized advertising experiences for a few years. Instead of a static ad displaying a popular product, DCO ads use viewer data to show more relevant content, such as an image of an item they recently added to a shopping cart. It also uses machine learning to serve ads with products most likely to captivate a viewer’s attention, based on past behaviors. DCO is already a powerful technology, but AR is poised to take it even further.
Imagine ultra-targeted, dynamically generated AR experiences. Not only would these ads offer the advanced personalization offered by DCO, but also the immersive experience of AR. Consumers could interact with products immediately, helping brands form an instant connection while simultaneously gathering even more usable data.
Brand Spotlight: IKEA
Choosing furniture for your space can be frustrating — and IKEA knows it. The Swedish-founded furniture store recognized one of the biggest challenges its customers faced was investing in sofas, tables, and other large pieces, only to discover they didn’t fit or match as expected once they brought them home.
To increase customer satisfaction and curb returns, the company released the first interactive furniture experience in conjunction with its catalog app in 2013. Then in 2017, it released the IKEA Place app, which allowed customers to visualize any of its more than 2,000 furniture products in their spaces. Not only are products correctly sized (to the millimeter), but users can walk up to the product to inspect fabrics and colors in photorealistic detail.
Noticing a trend? Most existing AR experiences require an app. However, the next generation of AR visualization tools will work right in a consumer’s mobile browser providing a simpler, more streamlined experience. More on that tech below.
PART 3: AR FOR PRODUCT VISUALIZATION
Perhaps the best benefit for eCommerce brands is that augmented reality brings online shoppers closer than ever to an in-store experience — but with all the conveniences of shopping online.
Customers can still shop from anywhere, at any time. But product visualization capabilities offered by AR help ease shoppers’ decision-making process and boost their confidence. When consumers can see a product in their space or on their bodies, they’ll feel better equipped to make a choice — and also begin forming an attachment to the product, too. This can reduce cart abandonment and shorten the purchase cycle.
Moreover, leveraging AR as a part of the eCommerce experience can also increase purchase size. Both Lowe’s and Build.com saw a significant boost in average order value (AOV) when shoppers viewed products in 3D compared with those who didn’t. Lowe’s saw a 104 percent lift while Build experienced a 64 percent jump, according to Internet Retailer.
But with all the talk about AR for eCommerce, you might be wondering: will consumers actually use this tech? The data says “yes.”
When asked to share their ideal augmented reality experience, 57 percent of people said they want to place items they’re considering buying into their environment — outranking AR games at 45 percent and Snapchat-style filters and effects at 32 percent, according to Internet Retailer.
Similarly, AR may also outperform video. The same survey found 78 percent of people who have used AR prefer that experience over video content, too.
PART 4: REDUCING FRICTION WITH WEB AR
There’s one disadvantage to many of the AR for eCommerce experiences we’ve highlighted so far: almost all of these require shoppers to download an app — something 61 percent of consumers won’t do, according to data from Zipwhip. Apps take up valuable storage space and, even when people do download new apps, they often forget about them. Plus, some apps are only available for Apple, but not Android (or vice versa), which significantly limits your audience.
So how can brands provide the value of AR without using a custom app? Enter web AR.
What is Web AR and Why is It Better than an App?
Currently, most web AR experiences are only available for newer smartphones with the computational power and graphics processing unit (GPU) to render experiences as intended. However, as GPUs become more standard on a broader range of mobile devices and manufacturers phase out older technology, this will become less of an obstacle.
So while apps have their place, when we talk about the future of AR for eCommerce, we’re talking about web AR. Imagine viewing a product in your browser, and immediately having the opportunity to visualize and engage with that product through an AR-powered experience. It’s smooth, seamless, and mimics an in-store experience — but with all the simplicity and convenience consumers crave. That’s the kind of experience that drives faster and more confident purchasing decisions — as well as greater brand loyalty.
Brand Spotlight: Warby Parker
Before Warby Parker entered the eyewear scene in 2010, consumers had two options for purchasing prescription glasses — try on a pair of frames at a brick-and-mortar store, or order a pair online and hope for the best. Then a mostly-online retailer, Warby Parker offered a Home Try-On program, where customers could rent five pairs to try before placing an order.
Then, in early 2019, the brand released a new feature on its iPhone app which allows customers to virtually try on glasses through an AR-assisted 3D preview. Much like a Snapchat filter, Virtual Try-On uses facial recognition software and “pins” the glasses to your face so you can move your head and check the frames from different angles. Once you find the right pair, you can easily click to order, directly from the app.
From its humble beginnings as a “cool feature” used by massive brands for top-of-the-funnel efforts to an invaluable tool leveraged by brands large and small, AR for eCommerce has come a long way.
Today, augmented reality helps brands of all sizes streamline the purchase experience, bolster consumer confidence and generate higher rates of customer engagement. And there’s no doubt brands who continue to invest early, test new ideas and find useful ways to incorporate AR in the retail experience will outpace competitors.
A superior customer experience awaits, and augmented reality for eCommerce is here to deliver.
Ready to boost buyer confidence, curb cart abandonment, and create better experiences for your customers? Explore Lens.io now.