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How Big Is The Business Opportunity of Augmented Reality In Ecommerce or Online Shopping?

Over the years, the augmented reality technology has seen a huge growth in application in different sectors, and this will continue, with more brands trying to cash in on the trend to drive more sales and improve customer experience. What is the implication of this for e-commerce? What business opportunity is there to explore in using augmented reality for online shopping?

Image via Pixabay

Online Shopping vs. Offline Shopping

Even after over a decade of the e-commerce revolution, the battle is still on between shopping online and doing so offline. While one presents itself as the future, the other still continues to stake its claim as holding some benefits which the new trend is yet to defeat. Let’s consider both sides.

Traditional retailing experience makes use of physical shops located somewhere in the real world. A customer would have to move to this physical location, search for what they want, examine it and ascertain it fits their expectation, then goes on to pay for the item and carry it home.

On the other hand, e-commerce shops exist on the internet (and may or may not have physical retail locations). A customer locates such shops online via a browser or app on their laptop, mobile phone or other similar devices. They are able to browse through the shop from wherever they are, search for and locate the desired item, make payment for the item, then wait for it to be shipped to their address.

An infographic by Shopping.FM shows survey reports on the customer’s experience and preference for the two shopping methods.

Image via DigitalAgencyNetwork

According to the infographic, the main reasons why people prefer online shopping to offline shopping include:

  • Ability to shop 24/7
  • Ability to compare prices
  • Better prices
  • Time-saving
  • The convenience of not going anywhere
  • Greater variety to select from

And more

However, even with these advantages online shopping has over offline shopping, there are still some reasons why people would rather shop offline than online, including:

  • Ability to see and touch items first
  • Ability to try the items on
  • The concern about products looking different when received than they look online

Amongst others.

Augmented Reality in Online Shopping

Having seen some of the concerns people still have when it comes to shopping online, how can these things be handled and managed, especially with the use of technology? Well, since our concern is particularly on the AR technology, let us see some possibilities.

Augmented reality allows users to experience live views of computer-generated information such as sound, video or graphics, overlaid on real objects. Here are some core areas this fundamental feature of the AR technology finds use in e-commerce.

Product visualization

Image via IKEA

From the infographic above, it is clear that the major concerns towards online shopping revolve around proper visualization of the item to be purchased. People want to see, feel, touch and try out products before committing their money.

Well, with AR, customers can get a better view and feel of items in e-commerce shops. We have instances of retail brands who are using AR in this regard. IKEA, for instance, allows customers to see what a furniture piece would look like in their space where they want to place it, and be sure it fits properly before buying.

Image via Orbelo

Sephora Virtual Artist allows customers to try on different makeup products, see how they look, and buy the one that looks best on them. Home Depot’s Project Color app lets users see what different color shades would look like in the room they want to paint, so they don’t buy the wrong one.

Here is a video by Engine Creative, illustrating this concept via the augmented reality shopping app it created for Argos.

Reduced Returns, More Purchases

This application of AR to aid product visualization has an impact on the rate of returns of purchased items.

According to a report published in 2018 by Retail Gazette, returns already cost UK retailers £60 billion a year. The survey also reported that 76 per cent of consumers would “definitely” or “maybe” purchase more items if offered a try-before-you-buy option. AR provides a digital “try-before-you-buy” experience, and this shows how big the business opportunity augmented reality presents to e-commerce is. If it helps reduce returns and increase sales, then its potential cannot be estimated.

Image via Engine Creative

A Forbes article published in 2017, cited insights from Google to show that 34% of users agreed they would use AR while shopping and 61% said they would prefer to shop stores that offer AR. This clearly shows that customers are already realising the benefits AR brings to their shopping experience.

Image via Engine Creative

Marketing

Here is another area augmented reality serves great use in the retail industry. Augmented reality brings life to a customer’s experience with marketing materials. An instance of this is the partnership between RIXO London, HoloMe Technologies Limited, and London College of Fashion’s Innovation Agency to create an augmented reality catwalk experience, which will play out in a user’s home via their smartphones. You can see our article 7 Best Example Use Cases of Augmented Reality Marketing Campaigns, to see more examples of AR used in marketing.

Customer Service and Expert Support

Apart from purchasing the products from online stores, customers also face several challenges with setting up and using certain products, especially in the area of installation. Augmented reality provides a more efficient way of providing real-time support to customers. See our article How Can Your Business Provide Instant Real-Time Expert Support to Your Customers Using Augmented Reality? for more on this.

Exploring the Opportunity

RetailPerceptions.com cited a survey conducted in 2016 by Interactions, examining how shoppers perceived augmented reality and how they prefered to engage with the technology in their shopping experience. See the image below.

Image via RetailPerceptions

An ABI Research report, Augmented Reality in Retail, forecasts that, by 2020, AR experiences will be responsible for 3% of e-commerce revenue, which amounts to about US$122 billion.

By 2021, mobile shopping would be driving about 73% of overall e-commerce sales, amounting to $3.5 trillion (Statista, 2018). As mobile shopping continues to take lead, it means e-commerce brands have an opportunity to tap into AR to create more business opportunity for themselves by deploying an AR app.

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