ECOMMERCE: AUGMENTED REALITY

Augmented Reality in eCommerce: Key Insights

• Consumer Expectations: In 2023, 36% of consumers worldwide expect their favorite brands to offer augmented reality in the future. By consumer demographic, Gen Z shows the highest levels of enthusiasm for AR, followed by Millennials.

• Applications of AR in eCommerce: Online stores including those by IKEA, Sephora and Walmart are using AR in different ways to enable an interactive online shopping experience for several product categories.

• Outlook: While augmented reality offers many benefits like higher conversion and fewer returns, barriers to its adoption in eCommerce exist, which must be overcome before its usage can become more common.

Augmented reality (AR) bridges the gap between physical and digital shopping. Once relegated to the gaming and entertainment landscape, today, it is making inroads in eCommerce.

AR adds images, sounds, graphics, or haptic feedback (vibrations or motion) to the real world, allowing shoppers to test products in real time. Retailers have begun integrating AR on their online platforms to tailor a more interactive and personalized shopping experience than ever before.

How is the advent of augmented reality in eCommerce shaping consumer preferences? How are big online stores integrating AR?

Consumer Expectations: The Use of AR in eCommerce Highly Anticipated

A recent survey by ConsumerX revealed: AR-powered shopping is the top tech-driven experience to rivet customers. 36% of those surveyed said that they expect their favorite brands to offer augmented reality in their future online shopping experience.

The findings put AR’s popularity squarely above several other popular trends, including those undergoing rapid growth, like social commerce (28%) which ranks fourth. The second and third most anticipated trends are virtual shopping assistants and live shopping, at 32% and 31% respectively.

The survey underlines consumers’ openness to the integration of cutting-edge technology in eCommerce, with 22% respondents choosing “none” from the list.

Interest in Augmented Reality for Shopping Across Product Categories by Generation

Tech-savvy younger online shoppers are more likely to welcome the use of experimental technology, including AR.

A consumer survey by Statista shows that amongst all generational cohorts, Gen Z shoppers are the most interested in using AR in online shopping across several product categories, with Millennials a close second.

For instance, while 94% of Gen Z shoppers said they want to see what a furniture piece looks like inside their homes using AR, a comparatively small 75% of Boomer respondents agreed.

The survey also shows that consumer preference for the use of AR across all generational cohorts is highest for products in the category Furniture & Homeware.

Today, several retailers are using augmented reality on their online platforms to drive eCommerce sales in various categories while radically changing their customers’ shopping experience.

Applications of Augmented Reality in eCommerce: Cases of IKEA, Sephora, Walmart

Online stores by IKEA, Sephora and Walmart offer three examples of innovative augmented reality integration in online shopping.

Below, we briefly introduce online stores operated by IKEA, Sephora, and Walmart, before exploring how they use AR.

IKEA: Place and Kreativ Apps, 3D Showrooms

Ikea.com is an international online store focused on the Furniture & Homeware category.

Online sales for ikea.com reached US$11.8 billion in 2021, recording year-on-year increase of 80%. After a 2022 decline, growth is now recovering. In 2023, the store generated revenues worth US$10.6 billion.

IKEA’s use of AR includes:

• IKEA Place app: When customers select a product in the app, their camera scans and maps an area – for instance, their living room. They can drag the product around to visualize it in their home.

• IKEA Kreativ app: With this app, customers can virtually remove their existing furniture or clutter before viewing a new product in its place.

• 3D showrooms: Users can browse 3D showrooms from IKEA’s product catalog and design ideas. They can stack, rotate, swap, move, or hang products to see how furniture combinations would look in a realistic spatial setting.

Per AppifyCommerce, since its launch, the Place app has helped decrease product returns for IKEA by 20%.

Sephora: Virtual Try-Ons and Shade Match

Per ECDB, Sephora’s online store sephora.com, with the United States as its main market, has grown consistently since 2018.

The store’s net sales saw the largest jump in 2020, when revenues hit US$2.1 billion. In 2023, sephora.com made sales worth US$3.3 billion.

Sephora’s AR features include:

• Virtual Artist: This try-on feature gives customers a virtual makeover using products from the store’s eye, lip, and cheek range. The Sephora app scans a customer’s face, detects their facial features, and applies a product to their image. While popular, this feature is now discontinued in the U.S. but is available on other Sephora online stores.

• Shade Match: This function uses AR to scan a customer’s face and assign it a color IQ number. The app also recommends precise foundation matches from Sephora’s product range.

According to the Glimpse Group, the try-on function accelerated online makeup sales for Sephora by 35%, while increasing the add-to-basket rate by 25%.

Walmart: Virtual Try-Ons for Clothing, Eyewear, Furniture

Walmart.com, operated by Walmart Inc., generates all its sales in the U.S. Fashion is its largest category, but it is an all-round store selling products in other categories as well.

Per ECDB, walmart.com experienced its highest growth of over 85% in 2020. In 2023, its net sales crossed US$58 billion.

Walmart.com’s AR enabled features include:

• Virtual Try-on: Customers get a close-to-in-store fitting experience when shopping for clothes online, using two options: Choose My Model and Be Your Own Model. The feature creates a realistic simulation, including fabric draping and shadows.

• Optical Virtual Try-On: Customers can try over 750 eyewear products. They can also upload their prescription and allow a facial scan to customize their lenses.

• View in Your Home: Customers can visualize a piece of furniture in their homes with this function. It uses haptic feedback, creating a vibration if a 3D model is dragged beyond the room’s boundary.

Walmart.com is the first store to offer virtual try-on for clothing products at scale, with more than 270,000 apparel items available for customers to try out.

AR in eCommerce: Closing Remarks

Reputable online stores are using augmented reality to engage their customers today. With benefits like improving the purchase intention and reducing returns, retailers stand to benefit from using AR.

However, barriers to its adoption exist. AR technology is costly, with development costs generally high at present. It works on accessing a customer’s camera or location, thus posing privacy and security concerns.

Moreover, AR usage demands technical navigation – for example, ensuring hardware compatibility, a responsive user interface, and integration with an existing online shopping platform. Such challenges must be addressed before augmented reality becomes more widely used in eCommerce.

Sources: AppifyCommerce, The Glimpse Group, Walmart