Augmented Reality made its breakthrough in 2016 with the launch of Pokemon Go which quickly reached +650 million users worldwide. Instead of immersing the user in an artificial environment like virtual reality, Augmented Reality overlays virtual content in the real world. The success of this game is the most visible part of a trend that has been exploding in the past two years.
In 2017, Apple and Google both integrated their AR frameworks into their mobile operating systems to develop new applications. In the meantime, progress is being made in AR hardware, such as with the Microsoft HoloLens, although it is currently focused on enterprise use cases due to price and form factors limits. According to Digi-Capital, mobile AR (Apple ARKit, Google ARCore, Facebook Camera Effects, Snap Lens Studio) was projected to have a 900 million installed base at the end of 2018 and to reach 3.5 billion by 2022. Augmented reality is being integrated into our daily life, whether you communicate using Snapchat filters, identify constellations with Sky Map or use Google Translate in the real world via your camera.
Augmented Reality is only at its beginning and one of its most compelling use cases is in commerce as it can reshape the shopping experience by bridging the gap between online and physical retail.
Visualizing products in the comfort of your home
Ikea was one of the first retailers to use AR in their 2014 catalog by giving the ability to place virtual furniture in our own home. More than 8.5 million smartphone users downloaded their app to try this new shopping experience. This feature proved to retailers that Augmented Reality had the opportunity to solve the main pain point in e-commerce: the inability for a consumer to visualize a product in his environment. This problem leads to particularly low conversion rates on product categories such as furniture and appliances.
Houzz, an interior design and remodeling community, launched View In My Room 3D by leveraging Apple’s ARKit platform. The app offers a catalog of 500,000 products for users to view virtually, move and install in real-life size in their own room. Houzz said that users are 11x more likely to purchase products and spend almost 3 times more time on the app thanks to this feature.
Virtually try-on clothes and cosmetics
The fashion and cosmetics industries are also focused on bringing Augmented Reality in the consumer journey. Apparel brands have product returns as high as 30/40% on online sales often due to a sizing error. Gap launched a DressingRoom app in partnership with Avametric to help shoppers to see exactly how clothes would fit before placing an order thus increasing conversion and lowering returns.
In 2018, L’Oreal acquired Modiface for their customers to virtually try-on lip colors or eyeshadows through interactive Facebook livestreams made by experts. No need to go to a store anymore to learn about new products and try them on as both can now be done virtually. Prior to its acquisition, Modiface was the go-to AR provider for most beauty brands such as Sephora, Maybelline or Estée Lauder which are all leveraging these new features to appeal to mobile-centric customers. Shiseido even launched an app called Telebeauty allowing Skype users to add virtual makeup during video-conferences.
Augmented Reality can be used for both online shopping and in-store where it can be integrated into smart mirrors. MemoMi develops AR mirrors to make fitting rooms more interactive. Products are recognized through RFID tags which sync up to the store’s available inventory. Customers can then try different sizes, colors and take pictures through the mirror without having to leave the fitting room. This leads to a more engaging and seamless experience for a customer. For the retailer, it increases the conversion rate and the data extracted from the fitting experience can be leveraged to optimize product inventory.
Enhancing the in-store experience
While shopping in-store, Augmented Reality can also be used to add a virtual layer of information on a product. Lego implemented an AR kiosk in their Manhattan store which shows an animated 3D rendering of an assembled product when a box of a Lego-kit is scanned. This entertaining experience helps children and parents as they are considering a purchase. Shazam currently offers an AR solution to provide brands with similar engaging marketing experiences such as 3D animations, 360 videos or mini-games.
Finding a product in-store can also be made more efficient by using Augmented Reality. Lowe’s partnered with Lenovo and Google Tango to create the first indoor mapping app for in-store navigation. Customers can snap a picture of a product or select one from the catalog, such as a light bulb or a specific screw, and be guided directly in store to find it easily.
Two decades ago, the invention of the World Wide Web by Tim Berners-Lee paved the way to the e-commerce boom. eBay and Amazon seized the opportunity by launching their platforms in 1995. Walmart waited until 2000 to offer an online presence and Amazon is now more than twice its market cap. Augmented reality offers the possibility for retailers to bridge the gap between online and in-store commerce in a new customer experience. Whether it is adding virtual information to enhance the in-store experience or allow virtual try-on for online products, it is key for retailers to adopt an AR strategy to engage better with mobile-centric customers who are looking for more than just purchasing a product.
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