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E-commerce in 2019: The Year of Augmented Reality?

January 2nd, 2019

E-commerce in 2019: The Year of Augmented Reality?

by Dalia Lašaitė, CEO at CGTrader

E-commerce is a huge and fast-growing industry: it is expected to generate more than USD 500B in revenue in the US this year, and continues to grow at 14.5% annually. The media continues to report onslaught of e-commerce and death of retail on a regular basis. And yet, e-commerce still comprises only 10% of the total US retail market, and therefore, even in 2018, absolute majority of sales still happen offline.

Why is that? A study reports that 30.8% of consumers buy in physical stores because they want to see or feel the product in person, and 29.9% want to buy a product right away. Moving some of the physical sales online is a huge opportunity for e-commerce, and many solutions have been tried to achieve that, including free returns, 30 minute deliveries, physical showrooms and others.

In recent years, another massive solution is emerging to address these issues: augmented reality for e-commerce. In e-commerce, augmented reality (AR) allows consumer to place a 3D model of the product onto the user’s physical environment, and, effectively, solve the biggest challenge of buying online, that is trying before buying.

Augmented reality technology is already mainstream

As augmented reality often refers to futuristic Magic Leap or Hololens glasses, it may be hard to believe that in fact AR technology is already in the hands of hundreds of millions of consumers globally – namely, everyone with an iPhone.

In September, Apple launched the ARKit and made AR and 3D models available to every iPhone user via its native internet browser. As a result, Apple customers are now able to explore any website that offers AR and see its products projected onto their physical environment without downloading any additional apps.

How Augmented Reality enhances user's shopping experience

Does AR really work for e-commerce?

While the technology looks amazing, the question remains – does it really replace the physical experience and increase sales?

We looked at the data from several industry pioneers, who started investing in AR years ago, when technological infrastructure was at a much earlier stage. In 2017, IKEA, Houzz and Wayfair launched their specialized apps enabling users to preview their products in AR.

These apps are still among the most popular AR apps even after a year of their release. Houzz reports that the users who engaged with the AR app, were 11 times more likely to purchase the product. Ikea is betting on augmented reality to drive its online sales from 1.6B USD in 2016 to 5.9B USD in 2020, and a study finds that Ikea’s AR app has an impact on both purchase intent and product knowledge. Wayfair claims that people, who engage with their 3D app, are more likely to add an item to their cart. AR previews seem to make customers more confident about the actual purchases. So, while the data is limited, the early results are very promising.

Considering the examples of the major trailblazers and the spread of the technology, we believe that smaller businesses will start experimenting with AR in 2019. Their path will be much easier, because earlier this year the largest and most popular e-commerce service and platform providers have begun allowing AR integrations (e.g. Amazon AR View, Shopify AR, etc.) and the smaller ones are following suit. It is therefore likely that 2019 will mark the year when AR previews will become a default consumer expectation, rather than an innovation, in certain sectors, such as home décor, furniture, fashion accessories, home equipment and others.

Xootr Australia & New Zealand replaces physical store with a virtual one using Augmented Reality

Enabling AR in e-commerce

Decision makers, willing to take the first step towards AR adoption in their e-commerce business, should consider two practical things.

Firstly, their e-commerce platform should be compatible with AR technology. Major platform and service providers have already secured this by developing their own solutions as well as allowing third party module integration. Even those websites that are not based on any particular platform can be made AR-compatible fairly easily as well.

Secondly, businesses should secure the 3D models of their products to be previewed in AR. Typically, this is the largest part of the cost, because 3D design is time-consuming, and 3D designers are expensive and difficult to find. It is possible to hire an inhouse 3D designer if demand for 3D models is constant or engage an external partner if scaling is essential, and the number of models is large or often changing. At CGTrader, we accomplish that by engaging our proprietary technology and community of 1.7M 3D designers, allowing global e-commerce leaders to convert their products into 3D models at scale. The models have to be delivered in the .usdz format, which is Apple’s default format for augmented reality applications and can be converted from standard 3D formats. Once both of these steps are done, the AR experience is ready to launch.

Given the simplicity and accessibility of the technology for businesses, we believe that 2019 will be the year when most e-commerce stores will start to at least experiment with AR. It is not a unique point of view: Gartner recognized immersive experiences as one of the top trends impacting digital commerce in the coming years. It is going to be very interesting to see which brands will become the frontrunners to capture the opportunity of AR in e-commerce in 2019.

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