The Impact of Augmented Reality on Ecommerce and Retail

The Impact of Augmented Reality on Ecommerce and Retail

Amazon’s recent applications for patents related to AR have thrown augmented reality’s role in ecommerce back into focus. Augmented reality, as the name suggests, is the augmentation of the virtual on the real. Now why would ecommerce businesses want to include such sophisticated technology to the shopping experience? The answer lies in a recent study by Retail Drive, which found that “62 percent of customers chose traditional stores in order to see, touch, and try out items before they bought them.”

AR, as many know by now, brings the online shopper as close as possible to “touch and feel” as one currently can.

In this blogpost we explain the application of augmented reality in retail and illustrate the impact of this technology on e-commerce.

Use cases of augmented reality in retail and ecommerce

Augmented reality features can be offered in four ways which are as follows

  1. Black and white markers based augmented reality – In this case the markers act as activation triggers for more information. Each time the marker is detected, the information is superimposed.
    This technology has been long in use through bar codes. It’s being further employed by retailers who have smart labels on products. These labels can be scanned to access reviews of the product, availability in other stores, price comparison, and more details.
  2. Markerless augmented reality – This technology does not use markers. In this case the real environment is recognized using any kind of support such as objects, faces etc. This technology is far superior to marker-based technology and leads to more complex augmented reality applications.
    A popular application that uses markerless AR is Layar. The app’s rich usefulness has helped it grow. With Layar, users are able to access information about their surroundings simply by scanning the environment with the phones. Layar serves as a platform for information such as retail offers, proximity to locations, directions, etc.
  3. Sensor based augmented reality – This technology relies heavily on sensors. Whenever a sensor sends a signal to the receiver only then the information is processed and sent to users. This technology is superior to markerless technology and is particularly useful in conditions when lighting is limited.
    If you have used the wildly popular app Snapchat, you know what we are talking about. The app recognizes your nose and places the doggie nose and ears just at the right places on your face.
  4. GPS or location based augmented reality – This technology uses mobile phones and tablets to access high speed wireless networks. This technology focuses primarily on content and context. It provides the right information to right people at the right time, and at the right place.
    Remember that game that had the world in a tizzy? Pokemon Go is a location-based AR app that had people chasing down virtual creatures in the strangest of places.

Let’s find out how this new technology is going to affect the customers using e-commerce or m-commerce channels. The following figure illustrates the customer decision cycle. It is as per this cycle that we will consider impact of augmented reality on e-commerce.

Customer Decision Cycle

Customer Decision Cycle

Consider: – This technology may be successful in trying to capture customer’s attention.  Using this technology, retailers can differentiate their products or service offerings from their competitors. While conceptualizing their ecommerce solutions, retailers can also include some AR features like 3D animation to grab eyeballs and compel customers to consider that product/service.

Sephora is a cosmetics brand that has used AR to draw customers to it successfully. Through its app, it has taken makeup tutorials a step further by overlaying them on the user’s face. Learning to use a bronzer? Sephora’s app will show you how to do it on your face, instead of a model’s.

Evaluate: Features like virtual changing rooms help the customer to evaluate the product in a better way. One of the major drawbacks of ecommerce solutions is the fact that the customer never gets to try the product or service. This feature will help in mitigating this drawback to a certain extent and definitely improve shopping cart abandonment rate.

The key feature of one of the new patents filed by Amazon enables the use of extremely-realistic AR to aid the purchasing decision. Imagine you are buying a gold bracelet off Amazon. Using AR, the phone camera will show what the bracelet looks like on your wrist. But what happens when you move your hand around? In a simulation of the actual play of light, the sparkle on this virtual bracelet too will alter as per the light in your environment!

Buy: Customers will be able to make a more calculated decision based on this technology. Features like virtual changing rooms will help customers in having a clear idea about a product. This will improve the most obvious problem of high rate of return that has haunted the ecommerce industry for years.

Fashion retailer Gap has developed the ‘Dressing Room’ app that lets online shoppers create a virtual avatar of themselves. This avatar, based on height, weight and measurements provided by the customer, can model clothes you like, displaying how they’d look on you without you actually having to try them on. If you are teetering on the edge, this AR simulation can certainly help you make a decision.

Experience:  This technology will help the overall customer experience by providing more customized and personalized shopping experience. Customers will have the feel of the product before actually buying the product.

BMW is aiming to provide just that personalized experience to its shoppers through AR. The leading car brand uses Google’s AR platform called Tango to show customers just what their car of choice of would look like with customizations such as a fur trim on the steering, plush seat covers, and parked in their own driveway.

Advocate: This technology will differentiate retailers from their peers and customers will recognize this fact. The customers will advocate about their experience through word of mouth or other channels such as social media.

Bond: Retailers will witness increased brand loyalty because of this technology as it provides more personalization and customization. Moreover, the rapid increase in the use of tablets and smartphones will boost the usage of this technology and increase the bonding.

Augmented reality is here to stay. Many top brands like Rebecca Minkoff and Ikea have identified the benefits of using this technology in solving problems associated with e-commerce. It’s time for other retailers to identify the potential of this new technology and incorporate the features associated with this technology on their respective ecommerce websites and mobile apps.

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