E-commerce is fast becoming unstoppable.
In 2017 it was responsible for $2.3 trillion in global sales, and this number is expected to almost double to $4.5 trillion by 2021.
On the back of that stat, consider that e-commerce is being forecasted to account for 95% of ALL SALES by 2040.
That is a year-on-year growth rate of 15%.
One of the big reasons for its continued colossal growth is its embracing of emerging technologies. Augmented reality (AR), in particular, has already added significant value to the customer experience by providing new and engaging ways to shop.
The challenges of commerce – retail space, the ability to ‘try before you buy’ – are all surmounted by AR. By exploring virtual space as a way to experience products we are heading in a whole new direction that may have resounding effects on how we live and interact with life in general.
Let’s have a look at some of the ways AR is changing the retail game.
Personalisation And Engagement
Traditional commerce was always limited by its ability to scale and personalise itself to the consumer.
Some luxury brands overcame this by offering the ‘personal shopper’ experience but, for the most part, normal people did not have access to this level of customisation.
AR is the solution to this.
Take makeup, for instance.
A market worth over 10 billion dollars annually in the UK, with a per head spend of £155 – the fifth highest in the world.
Makeup is a very ‘try before you buy’, brand-oriented market. There are so many big names, and so many looks you can create, that it can be extremely difficult to shell out large amounts of money without playing with the product first.
And that usually meant a trip to the store. Which often meant a lost sale.
Enter Sephora Visual Artist.
By using innovative face-mapping technology you can try on different looks, match it with your outfit and learn more advanced makeup techniques using exclusive tutorials – all without actually travelling anywhere or touching the product in question.
The shopping experience is completely transformed and becomes something more than just a transaction.
It becomes an engaging ‘moment’ between brand and consumer that not only sells products but also builds a brand-consumer relationship.
L’Oreal also has a makeover tool in a similar vein to the Sephora Visual Artist.
The big selling point is that there is zero commitment on the part of the consumer.
You can try and try and try and not buy anything until your heart’s content. But the odds of you doing that are extremely low.
If you want to know how big AR is getting you only need to know that Youtube (Google) are currently in the middle of introducing an AR-driven way to advertise beauty products.
Called Beauty Try-On, the innovative new feature capitalises on the huge market of beauty influencers already using the video platform to sell branded products to viewers.
Leveraging AR technology, it allows you to try on new lipsticks and other products whilst watching your favourite content creators doing the same. Not the first to market – that’s for sure.
But almost definitely a huge hit – and a shift for the advertising industry in general.
The above really only scrapes the tip of the iceberg with regards to the customisaton potential of AR in e-commerce.
Not only is it a fantastic way to stand out from competitors, it also allows consumers to have a unique relationship with your brand – something that has only been attempted before (via retargeting advertising, email sign ups etc).
The American retailer Nordstrom, for example, is known for its fully personalised shopping experience and faultless customer service.
Now, with the use of AR, there is potential for these sort of legendary shopping experiences to be delivered to everybody.
Pokemon Go was probably the first AR-driven application to really hit the mainstream.
Launched in 2016, it allowed users to hunt and capture Pokemon in real-world locations, with the use of their smartphone screen.
Created by Niantic Inc, an American software developer, it introduced for the first time (at least to the general public) the idea of the real and virtual worlds colliding and, in some cases, combining.
About AR, Niantic CEO John Hanke said: “We’re adding things [to the world] but the things we’re adding can deepen our appreciation and understanding of the world. [AR] can allow us to see the world in a fresh way.
It allows us to do that in a shared way and have these experiences together.”
IKEA continued the evolution with its release of the IKEA Place App in late 2017.
It was a huge step (and testimonial) for AR use in e-commerce because it did something no one else had yet managed to do: solve a real business problem.
Before the Place App the majority of furniture buying was based on paper catalogues, multiple trips to the store and educated guesswork.
IKEA’s team, in a moment of genius, realised that the majority of us have – at some time or another – purchased a sofa or a dinner table only for it to not fit or match the rest of the decor in the room.
This pain point was a real cause of frustration for their customer base and they set out to do something about it.
Thanks to AR technology, the Place App allows you to see exactly how a specific piece of furniture (out of their 2000-strong virtual catalogue) would look in your home.
Before you even think about buying you can make sure it fits, ensure the colour scheme matches and that the style is to everyone’s taste.
Using just the lens of an iPhone camera you can place true-to-scale 3D furniture in any location you wish.
You can even walk around and interact with the virtual placement as if it were real.
By saving mapping data you can even leave a room and come back and the furniture will still be there!
IKEA took a real issue – lack of confidence to purchase – and turned it into a massive strength using emerging technology.
And it’s not just consumers that are benefiting, either. The environment is also a winner as the number of paper catalogues being created continues to fall.
Imagine what an impact it would have if all other retailers followed suit?
The tech is amazing – no doubt about that – but has the app been a commercial success?
Well, as of this writing, IKEA Place is the second most popular free app built on Apple’s ARKit and is first among non-games.
It’s also been the catalyst for several other companies to bring out their own AR-driven offerings (Amikasa, for instance), indicating a shift in attitude towards more immersive technologies.
Though there is no hard financial data available about IKEA Place it is safe to say it has blazed a trail for all future e-commerce offerings and has no doubt streamlined IKEA’s sales cycle.
That’s not to say AR doesn’t have direct financial benefits, however.
An AR-based application that we built for a client received an online sales increase of 988% in ONE MONTH. You can read more about it here.
We’d call that pretty successful, wouldn’t you?
Where do we go from here?
One thing is certain: augmented reality is going to upgrade the e-commerce experience.
For far too long AR has been considered a technology built for gaming.
Whilst it is fantastic in that arena it has the potential to be just as impactful for e-commerce, by providing immersive experiences and increasing the confidence of potential buyers.
The most important thing for interested businesses is that the cost of entry is still relatively low (though rapidly climbing).
With larger competitors slow on the uptake this is the perfect time for smaller companies to take advantage and grab market share. It’s happened before.
Big companies are reluctant to change what works for them. This provides a huge opportunity for smaller, more nimble businesses that have a lot less to lose and a lot more to gain by embracing the new wave of technologies.
The risk at the moment is that e-commerce businesses will see AR as a simple ‘add on’ to their current marketing and sales strategies.
This couldn’t be further from the truth. If the movements of the big players are anything to go by AR should – and will – become a core channel in the very near future.
With that said, AR isn’t a magic bullet either. Without the proper investment and support it is unlikely to thrive, especially as competition increases.
Make it a serious part of future planning if you want to see the benefits in the years to come.
It’s easy to think of augmented reality as a novelty or a toy but, remember, people said the same thing about social media.
There are always naysayers and detractors.
The indications from the market are clear – widespread AR use is coming in a big way. In fact, 35% of consumers have already said they would shop more online if they could interact with the products virtually. And that number is only going to grow.
The question is: will you be ready?