“I do think that a significant portion of the population of developed countries, and eventually all countries, will have AR experiences every day, almost like eating three meals a day. It will become that much a part of you.”

 

Tim Cook

CEO, Apple Inc.

 

AR has magnificently disrupted the way we interact with digital platforms, especially with e-commerce platforms. It paved a plethora of avenues for the e-commerce industry, facilitating the online retailers to let customers experience their offerings even before making the purchase. 

 

What is Augmented Reality and how does it work?

 

Augmented Reality helps in the real-time integration of digital information with the user’s surroundings. By embedding digital audio-visual elements and other sensory inputs, AR enhances our physical world. AR helps in virtually channeling a digital item into the physical world. AR information depicts as a 3-Dimensional experience superimposed across the physical world. Therefore, what the users see in front of them is partially real, partially digital. Inspired by the effect AR produces, it is also referred to as Mixed Reality as it augments the reality by overlapping it with virtual effigies. This feature of AR helps users interact with virtual objects in real-time.

 

Any AR supported device can create a digital impression through the camera lens by scanning the item. The AR algorithm and software calculates the distance and ultimately overlays it with virtual content like graphics, audio-visual media, GPS, etc. AR engenders through applications on standard devices such as smartphones, tablets, Smart glasses, Smart headsets, etc. The technology is progressing steadily and is likely to disrupt new spheres and sectors to enhance workflow, especially after the advent of 5G. The biggest IT companies like Google, Facebook and Amazon are generously implementing AR to their offerings. Snapchat and Instagram filters are the most prominent examples of the same. 

 

What difference is AR making to e-commerce?

 

Traditional retail shopping takes the cake owing to the tangibility it provides. It allows customers to feel the products and physically examine them. This factor is important enough for a lot of people to not indulge in online shopping at all. According to research published in Emerald Insight, the top factors inhibiting the indulgence of customers in online shopping are- convenience, reputation and experience. Some customers also avoid online shopping because of insecurity, lack of product information and trust[1]. Despite the origin of online shopping stemming from convenience, some customer categories- especially late adopters and laggards find convenience in the comfort zone of offline shopping. It is one of the aspects where AR can make a big difference for the e-commerce industry.

 

AR is often called a technology custom made for e-commerce. It allows users to try the products like shoes, clothes or digitally position pieces like furniture or interior décor accessories in their spaces by using the camera of the mobile phone, tablet, etc. Execution of highly sophisticated AR technology by the world’s leading brands like IKEA, Target, Gucci and many more in their consumer shopping experience is the testimony of the influence of this trailblazing technology on the sphere of e-commerce. 

 

What is the verdict of statistics? 

 

If we talk about the current prevalence of AR in the retail industry, the figure is not very impressive. Just over 1% of the online retail businesses around the globe uses AR. It will likely go up to 5% by 2022 and for all the right reasons[2]. AR indeed holds tremendous potential to take over our day to day life one day, as predicted by Tim Cook, but the ground reality is that it is still a work in progress. Even big businesses are trying to break in. Visionary business leaders understand its caliber to transform the e-commerce industry. Between 2019 and 2020, the global AR advertising revenue increased from half a billion to $1.41 billion. It is estimated to go over $8 billion by 2024[3].

 

Although the pace of AR implementation is slow, the stats are promising and inspiring. The probability of conversion increases by 40% if an e-commerce business uses AR for user interaction. The potential of AR from the customer perspective is quite apparent as 61% of the customers prefer shopping apps that are AR-enabled. 71% of customers expressed that they would buy more if AR powers their online shopping process[4]. 

 

 

AR holds the potential to increase customer confidence to buy from online platforms as it brings the product within their vicinity. To illustrate, customers can examine which furniture piece would suit their living room décor. AR accommodates a live showroom within our homes, making it easy to understand aspects like the size fit and placement angle. It notches up the shopping game through e-commerce platforms on factors like convenience, quality and shopping experience. 

 

How does Augmented Reality enhance the e-commerce selling process?

AR helps customers envision products in their own space

 

Minimizing product returns 

 

Managing returns is tedious and unproductive for any business. An easy return policy is one of the most crucial elements of the e-commerce industry as it gives an assurance to customers that they are not duping their money. With customers becoming comfortable around the concept of online shopping and convenient return policies, the rate of returns has amplified over the years. Customers are returning products more than ever now. This reversal of logistics costs heavily in terms of time, money and other resources like transportation, fuel, etc. Product returns hold financial and environmental implications. According to Forrester, half of the online returns have minimal to negligible salvage value. AR can help businesses minimize this concern to a great extent[5]. The 3-D depiction, virtual trials of items like clothing and accessories and demos fill this gap of assumption about the product quality, fit and functionality. A well-informed purchase is likely to inhibit the constantly rising rates of purchase returns by customers. 

 

Better customer engagement

 

AR offers an immensely immersive shopping experience to customers. It allows online retailers to engage and build long-term, lucrative relationships with customers. E-commerce is a highly competitive industry. To cater lucratively to an intensely competitive market requires reliable and efficient tools. AR is one of the tools that are likely to become indispensable for e-commerce businesses soon. Plenty of online retailers are already executing AR to enhance customer engagement and relationships. For instance, scanning QR codes can retrieve information about the manufacturing process and ingredients. It infuses transparency in the buying process. AR can also help improve after-sales services. It can improve maintenance and support services by interestingly educating the customers. Accessing an interactive guide about the use and maintenance of a particular product by scanning QR codes is an example of the same. 

 

The advent of AR has opened up vast avenues for the e-commerce industry, and it is just getting started. This trailblazing technology holds colossal possibilities to transform the e-commerce industry in the future. Vertebrae, the AR partner of Facebook, has revealed in research that e-commerce businesses that implemented AR amidst the pandemic saw a surge in customer engagement by 19%[6]. As avant-garde technology, AR is already doing wonders for e-commerce. What we are witnessing is just the tip of the iceberg. In light of all the big plans that tech giants have for AR, the future of e-commerce with AR seems limitless. 

 

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[1] A study on factors limiting online shopping behaviour of consumers | Emerald Insight

[2] Forecast augmented and mixed reality software segment breakdown 2022 | Statista

[3] iPhone 12 will supercharge mobile AR in 2021 - Insider Intelligence Trends, Forecasts & Statistics

[4] 20 Augmented Reality Statistics You Should Know in 2021

[5] Forrester

[6] Why retailers should embrace augmented reality in the wake of COVID-19| Industry Viewpoint | Retail Customer Experience