AWS for Industries
How Immersive Technologies Are Changing the Retail Landscape
Consumer adoption of ecommerce across the retail sector has accelerated due to COVID-19. This increase also pushed up the demand for technologies that improve the buyer’s shopping experience. As digital properties are becoming retailers’ flagship stores, from fashion to beauty and eyewear to home goods, many product categories have incorporated immersive technologies, such as 3D modeling, augmented reality (AR), and virtual reality (VR) as new methods for interacting with consumers. These retail trends and opportunities have also been boosted by advanced technologies like WebXR and WebAR, providing direct web-based solutions that don’t require app downloads. Moreover, the expansion of 5G services supports richer digital content and eliminates many of the current limitations for immersive technologies.
3D, AR, and VR are dramatically changing the retail landscape globally, with 68% of consumers in APAC and 58% in Europe reporting to have advocated for immersive technology experiences. Recent research also shows that nearly 20% of the US population (66 million users) will be experiencing VR, and 33% (110 million users) will be using AR at least once a month by 2023. These numbers show that consumers are ready to embrace immersive technologies in their daily lives. This is a call to action for retailers to reimagine digital commerce and face the shifting demand for immersive experiences.
To help ignite your creativity and demonstrate what’s possible, here are some examples of how retailers and brands are utilizing immersive technology to drive virtual opportunities.
Virtual Try-on/3D Modeling
Most of us have already either used or read about virtual “try-before-you-buy” experiences. These range from placing furniture in your home to previewing how some makeup or a pair of eyeglasses would look. However, we are going beyond simply visualizing products in real life: Several apparel and shoe brands have been utilizing AR to provide useful customer information, such as their body or shoe sizes by measuring them through AR. For example, Nike has introduced Nike Fit, a feature incorporating a combination of computer vision and AI to recommend the right shoe size for its mobile users, all in AR.
AR-ready, 3D products provide businesses even more sustainability by replacing traditional, manual processes with digital ones. They also accelerate time-to-market by replacing physical samples with digital models and eliminating traditional logistical challenges (i.e., training employees on new products, producing ecommerce photography and packaging design). Furthermore, digitizing physical products and presenting consumers with immersive trial experiences lets them make more confident decisions, resulting in more purchases and fewer returns. For example, traditionally, a prominent furniture business challenge has always been the high returns volume. Many customers who like a piece of furniture in the showroom end up not liking it in their homes. This has been greatly mitigated by immersive technologies. A good example is IKEA Place, IKEA’s popular AR-enabled app—downloaded 300,000 times in August 2020 alone—which lets customers virtually test-furnish different products in their homes. It not only automatically scales the product to fit the room’s dimensions, but also lets the customer see the fabric texture and the impact of different lightings. Implementing AR app experiences increased IKEA’s ecommerce sales by 43% year-over-year.
Virtual Pop-up Stores
Changing consumer behaviors are forcing retailers to be more creative with product launches, and many are turning to virtual pop-up stores that showcase AR-based store experiences to anyone globally and at any time.
For some brands, running a virtual pop-up store goes beyond new product promotions. Their goal is generating traffic back to the physical stores. For example, global pop-ups by Burberry was scheduled to align with the release of its new Olympia handbag collection. These pop-ups delivered an AR experience that animated the Greek Elpis and celebrated modern classicism. Beyond promoting their latest collection, Burberry’s goal with the AR pop-up experience was to bring customers back into physical stores.
For other brands, providing immersive experiences is more for reaching the global audience via social media. When Footlocker and LeBron James’ AR poster campaign delivered the experience of transforming a 2D poster into a 3D digital model, the footage was viewed over 1.25 million times within an hour of posting online.
Virtual Avatar Economy
This leads us to another important topic in the future of digital commerce: major gaming platforms serving as marketplaces that drive transactions across different sectors, such as auto, art, fashion, and media and entertainment. Since consumers started spending more time indoors in March 2020, global video game spending has surpassed $10 billion every month, and playtime has increased by as much as 75%.
Fortnite, developed by Epic Games, has a staggering 350 million monthly active users (MAU), more than the entire population of the US. Besides Fortnite, Minecraft has 126 million MAUs, and Roblox has 158 million MAUs. And beyond gaming, virtual environments are becoming hubs for concerts, creating unbelievable usage and revenue stats. For example, the major EDMfestival Tomorrowland created its own online virtual experience using Epic’s Unreal Engine. One million tickets were sold at $20 each. In Fortnite, a Marshmello concert in 2019 had 10 million live attendees, and Travis Scott’s Astronomical experience in 2020 had almost 28 million unique attendees.
But why should retailers pay attention to these usage and revenue stats? Because this is the modern digital world, where people attend events, socialize with friends, and spend a lot of time, which inevitably creates a new retail environment. Years ago, many people spent time at physical shopping malls, but now they are online. Today, most retail brands live on Instagram, Snapchat, or YouTube in order to reach new customers and engage better with existing consumers. A new form of virtual space, the metaverse (combining “meta” and “universe) provides a digital overlay of reality. By converging ecommerce, social networks, and entertainment, it will significantly impact business models and how people interact.
The market for virtual goods has reached $190 billion. Its growth was accelerated by demand for virtual character (avatar) skins and the emergence of non-fungible tokens (NFTs). Digitally native and first-mover brands are generally more advanced with the concept of direct-to-avatar (D2A) commerce. This creates socially engaging shopping experiences that are difficult to replicate through other online channels. For example, Jordan Brand, Levi’s, and Ralph Lauren have teamed up with Snapchat to sell outfits for Bitmoji avatars. Furthermore, Nike, Gucci, and Louis Vuitton have partnered with Fortnite, Roblox, and League of Legends to sell virtual outfits.
For those who don’t quite understand the virtual avatar economy yet, think about it like shopping for an online identity. Online identities are nothing new. Just like tweeting opinions or sharing creative images on Instagram, Gen-Z consumers have made virtual avatars yet another expressive medium. The better they dress or decorate their virtual selves, the better their reputation. This is similar to how growing the number of followers or increasing likes can boost a reputation on social media.
Immersive Technologies and Innovation
For consumer retail businesses looking to innovate, immersive technologies like 3D, AR, and VR offer seemingly unlimited potential for connecting with customers through unique, memorable, and interactive experiences. What seemed like a far-fetch concept only a few years ago is now practical, with companies discovering innovative opportunities every day.
AWS has guided leading retail brands through the immersive technology landscape in order to identify the solutions best-suited to their business needs. To learn more about how AWS can help your immersive commerce initiatives, contact your account team today to get started.