Two people holding a tablet up to a room with a representation of furniture in augmented reality.

How extended reality is redefining the eCommerce experience

The line is blurring between in-store and online shopping experiences now that more brands are experimenting with augmented reality (AR) and virtual reality (VR) to create innovative customer experiences.

For the last few years, AR/VR technology has been touted as "the next big thing," but adoption was a little slower than initially anticipated. After all, why imagine a virtual shopping experience when you can just go to the store and see it all in-person?

This held true for a while — until customers couldn't go to the store anymore due to pandemic restrictions. In January 2020, just 8% of retailers said they were interested in AR/VR. Six months later, that number rose to 20%, according to a report by CommerceNext. Pushed by surges in online shopping volume, retailers are seeing the opportunity of extended reality (a general term used to refer to AR/VR) in a different light. This trend is aided by the increasing use of AR and VR in gaming and popular social media apps.

With most brands offering some type of digital shopping experience, the race is on for leaders to distinguish themselves using new and innovative tools that elevate the customer experience (CX).

The difference between virtual reality and augmented reality

AR and VR both sit under the extended reality umbrella, but each offers a different experience. With AR in eCommerce, shoppers are able to preview products in an augmented version of a real setting.

The technology is particularly popular with companies selling home furnishings. IKEA, Crate and Barrel, Lay-Z-Boy, Kohl's and many other major retailers are now on board with view-in-room and design technology. In fact, IKEA has been a frontrunner since it introduced its Place app in 2017. The company recently launched a beta version of its brand-new Studio app, which lets shoppers with iPhones use the sensors in their phones to design entire rooms.

IKEA Image of IKEA extended reality application.

Fashion and makeup brands have also embraced the trend, with Nike, Adidas, Allbirds, Warby Parker, L'Oréal and Sephora all creating AR experiences that enable shoppers to try on shoes, glasses, makeup, clothes and eyewear virtually using their smartphones.

VR differs from AR in that it requires a VR headset. That distinction has slowed its uptake amongst brands, since most owners of VR headsets are gamers who may not need a credenza or a used car in the middle of an immersive gaming session.

Brands are helping to bridge the gap by providing headsets in-store, with home improvement and décor retailers among the early adopters. Lowes has experimented with VR headsets to allow customers to move around within a space and see their virtual home renovations. And, Italian furniture retailer Natuzzi created a VR showroom at a New York store where shoppers can decorate a virtual version of their home.

ECommerce brands are still working to overcome common adoption hurdles, but AR and VR technology have their own potential to reinvent digital CX and create new customer expectations.

The promise of augmented and virtual reality in retail

Social media platform Snapchat was an early adopter of AR, and has helped normalize the link between trying something on virtually and physically purchasing that product. According to Snapchat investor relations data, more than 200 million Snapchatters use AR every single day. High engagement rates could be attributed to brands using the platform to reach customers.

For example, MAC Cosmetics, which allows Snapchat users to try on makeup using AR, found those who used the app were "three times more likely to buy an item, spending 10% more, on average," reports Forbes. Meanwhile, eCommerce company Shopify released data last year showing that 3D/AR content showed a "94% higher conversion rate than for products without AR/3D," resulting in lower cart abandonment rates.

These findings signals two important changes in consumer mindset: first, that people have never been more comfortable buying online; and second, that AR/VR experiences help overcome the gap between brick-and-mortar and eCommerce.

Brands' next steps on the AR/VR front

After a slow introduction, the value of AR/VR is emerging. Use cases are wide-ranging as brands work to design innovative customer experiences.

From the CX perspective, these technologies offer personalization that can't be easily reproduced in a non-visual experience and give customers the option of seeing a life-like preview, which reduces the cost and logistical burden of returns. According to consulting firm Invesp, 22% of returns are due to the fact that the item looks different in person than it did online. And according to the National Retail Federation in the U.S., the estimated cost of returns is approximately $101 billion.

At their core, AR and VR both drive connections with products, engage customers and give them an opportunity to interact with their purchases in a digital environment. While both technologies — and supporting infrastructure, like 5G — are still evolving and changing, they're now following a clearer path to success. With wider adoption, AR/VR gives brands the ability to innovate their CX for the digital age.

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