The Role of Augmented Reality in Retail and E-commerce

Why brands and marketers need AR

According to statista.com, in 2021, retail e-commerce sales amounted to approximately 4.9 trillion US dollars and are estimated to grow by 50% in the next four years. The COVID-19 global pandemic has been earmarked as the defining factor in the surge of retail e-commerce — a surge born out of necessity.

The steady ascent of retail e-commerce can be attributed to other factors like trust and ease of use. Marketing specialists, brands, and web designers have gone overboard to make shopping as seamless as possible. Different forms of artificial intelligence have been included to offer users a more individualized shopping experience that will match their needs, including using machine learning to analyze preferences. More payment options are available to users, with recourse for returns, delivery, and shipping. Web designs are user-centric, allowing users to move from one product page to another.

The one challenge e-commerce is yet to overcome is offering brick-and-mortar engagement to users who would want a feel of what they are buying. When customers like a product, they want to know what it feels and looks like on them. Just like the changing room in a physical boutique where customers get to try on clothes before buying.

If it is for a space, customers also want to be sure it fits that space. That it is the correct length, width, and angle. The hassles of product returns and refunds for inconsequential reasons are avoided this way, and their trust in a brand is solidified. Having the ability to visualize what a product is going to look like on a person or space for which it was bought could be the difference between a fast, straightforward purchase, and a hesitant one. The efficiency of the buying process can be fast-tracked with augmented reality.

What is augmented reality?

Augmented reality is an immersive, interactive experience that extends real-life to a virtual one, or a computer-generated one. It is often mistaken for virtual reality (VR) which is a virtual experience of a person in real life. Virtual reality completely changes a person’s immediate environment, experience, and senses, immersing them fully in an alternate reality different from where they are.

What augmented reality does is that it manipulates products online, so they can be altered, changed, and modified to fit an existing real-world environment. Augmented reality in e-commerce retail is an innovative, challenging, yet life-changing addition to the shopping experience. With augmented reality, customers get to see online products as they would appear in real life. It gives the brick-and-mortar feel of trying on products before they are bought.

How small businesses view AR

Common misconceptions about augmented reality limit the way businesses and brands view it. Many are not clear about the scope or usage of AR and how it can be used in applications. Does it drive sales? Is it an effective marketing tool? Does it cost too much? Will customers like it? Is it not too much?

If business managers can answer these questions, they would be interested in investing in augmented reality for their brands.

Forbes describes AR as a powerful sales channel that is always at the customer’s convenience, allowing customers to interact longer with products in a personalized way. Jes Scholz at Search Engine Journal sees AR as a marketing tool and brand differentiator. it could leave a lasting impression on consumers, which is expedient for repeat businesses.

The similarities between virtual reality and augmented reality downplay the effectiveness of AR in marketing and usage. Virtual reality seems a bit much for small brands. It requires a headset to get involved in the virtual world — a fun thing for gaming, but impractical for small businesses and retail.

Business managers understand that customers are very impatient. Delays in e-commerce transactions have been known to directly impact sales, repeat business and search rankings. According to Quicktech, 47% of consumers will only wait 2 secs for a web page to load, after which they will abandon a cart. If something as mundane as internet speed is enough to take customers off a page, what would additional expenses and gear mean for consumers and conversion rate?

The thing is, separate showrooms or gadgets are not needed for AR implementation. It could be used right on a smartphone or social media. All the brand needs to do is provide a meaningful connection for interaction. AR should not look forced. It should be related to consumer needs for better engagement. If it doesn’t solve a problem, then it’s not needed.

Business managers who are concerned about sales need to know that AR has a great impact on sales. A study by Deloitte Digital Study shows that using AR leads to a staggering 94% higher conversion rate. The key to better engagement is to be agile and proactive when it comes to new tech and new paths to market.

Brands that have used AR in E-commerce Effectively

To understand how a small business can integrate AR into their e-commerce, we can study other businesses that have tackled this challenge and see how they tell a different marketing story using AR. Pokemon Go is a good example of a location-based AR game that allows users to find Pokemons based on their location. It gained lots of popularity in 2016 when it came out. But there are two brands that stand out to me and are worth researching — Ikea Place and Sephora Virtual Artist.

IKEA PLACE

Ikea Place is an application where users scan/take pictures of their room or space using a smartphone camera. All Ikea products on the app are in 3D and true to scale. Users can virtually place any furniture or product on the app in the space they scanned, creating a lifelike visualization of the virtual product in a real space.

They can change the size, color, angle, width, and height of a product as it would look in real space, all on their mobile phone. The visualization of furniture in a space is exactly as it would look physically in that space.

SEPHORA VIRTUAL ARTIST

Sephora partnered with an AR company — Modiface to create an app that allows users to try on different makeup looks. With the front camera, the app will scan the user’s face, and pinpoint the eyes, nose, and lips — which are important for product placement.

Once the scan is completed, the user experiments with thousands of lipstick shades, false lashes, foundations, and other makeup products. Artificial intelligence is used to match skin tone to the right foundation. Not only can a user try on different products individually, but they can also try on completely different makeup styles to see how it fits on their face.

Conclusion

The future of retail e-commerce is augmented reality. A 2021 Deloitte Digital Study commissioned by Snapchat Inc. predicted that by 2025 nearly 25% of the global population and almost all smartphone users will be frequent AR users. The important thing for a marketer or brand is to understand how to move from novelty to compelling AR use cases and storytelling.

Also published here.