An Intro to “Immersive Commerce”

Digital Change has not changed much.

Amazon is one of the most innovative companies in the world. Every aspect of its business has been under constant innovation for over 20 years now — except one very central element: the shopping experience itself!

The process for buying something online has barely changed over the years:

1. Search a product.
2. Read the product description.
3. Put it in the shopping cart.
4. Go through the check-out process.
5. Wait for delivery.

Every step has been optimized again and again. But the overall process itself stayed the same — as did the UI and the structure of an e-commerce website in general.

Have you ever realized that after 20+ years of digital change in online retail, very little has actually changed? We learned how to do e-commerce in the mid-90s of the last century, and then we were more or less finished. Today we optimize all the small details of selling & buying things online — traffic acquisition, product discovery & presentation, conversion. But we totally forget that something is still eerily missing: making shopping online an actual experience!

Isn’t buying something supposed to be fun?

Making shopping fun is a tried and tested strategy used by physical retail stores for ages. Using it to draw people in and get them to stay longer is a no-brainer for many brick & mortar businesses. But no online player is using emotion to drive sales. Instead, online commerce is driven by efficiency only, and all the usual KPIs make sure that things stay that way.

But everyone optimizing the same KPIs across the entire industry causes issues:

1. Online stores often find it hard to differentiate themselves against competitors, when every player is optimizing the same KPIs.
2. In an efficient store, customers tend to be efficient, too: they come in to buy something specific and are out once they got what they want. There is simply no reason for sticking around and spending time browsing.
3. Price & scale is regularly the only way to stay ahead of the competition — driving down profits and excluding certain categories like luxury in the process.

The world is changing. Fast. Things that we took for granted yesterday, will probably change tomorrow. Things like the lack of experience and emotion in online retail. Digital commerce players who can re-think the customer experience will probably be able to re-shape customer expectations. And this will put them far ahead in the game.

Goals for Re-Thinking the Customer Experience in Digital Commerce.

But putting real experiences into digital commerce should not be done just for the sake of it. It has to be a means to an end as part of a broader strategy. And there are many goals to choose from — e.g.:

1. Boost KPIs
   Attract new and existing customers or keep them longer online with highly engaging content and use cases.
2. Make commerce more inspirational
   Make it possible to browse products casually in order to get inspired instead of just buying what you need.
3. Enable emotional brand building
   Connect with the user on a more emotional level to build trust and a stronger relationship.

When it comes to combining e-commerce with entertainment, Digital China is far ahead of Western markets. The fusion of social media, entertainment, and commerce is a longstanding trend there, and it has created a situation where e-commerce platforms like Taobao or T-Mall are competing with the Chinese likes of Netflix for entertaining consumers in the evening. Trends like live-shopping or gamification have turned e-commerce apps into a real alternative to watching your favorite tv-show after work. The goal for immersive commerce should be to achieve a similar positioning with Western consumers. Functional Western commerce offerings can learn a lot from their Chinese counterparts about how to get there.

Trends driving Immersive Commerce.

Immersive commerce has the potential to drive business by creating a better experience, being more engaging, and connecting with the consumer on a deeper, more emotional level. While this sounds so compelling that every company should be busy thinking about it, very few actually are. Even fewer have produced really successful cases.

But a couple of current trends might change this by creating a perfect storm that could push immersive strategies into the mainstream:

1. Immersive technology gets ready for primetime
   With 5G rolling out and FTTH growing, we will soon have a much broader broadband internet available to more people than ever. At the same time, the hardware has gotten much better. Today’s mobile phones are yesterday’s high-speed computers, often equipped with great cameras and even LIDAR sensors which enable immersive use-cases like AR in a great quality for a low price. Also, VR headsets are getting smaller, lighter, and much easier to use.
2. More digital and less physical leaves a void
   The trend towards more digital experiences is still speeding up. Covid has often put this into overdrive and forced consumers to try new applications like video conferences and socializing over the internet. But more digital means less physical experiences which often comes with side effects: things like the loss of physical closeness to other people or the inability to touch a product can erect new barriers to trust-building and leave a void that immersive technologies might be able to fill.
3. Finally — a great new hype: the metaverse
   XR, VR, AR have been talked about for years — but without picking up much steam. That changed the moment Mark Zuckerberg pivoted his global internet giant towards the metaverse. Suddenly these concepts became a thing. Google search traffic for the term metaverse exploded worldwide and kicked off a frenzy that might be more than just the hype of the moment. The metaverse is likely to be the next phase of the internet and has the potential to create a whole new virtual economy. Immersion there will be the norm, not a nice-to-have option.

All this drives the need for re-thinking many aspects of today’s business — especially in branding, marketing & sales — because it creates a massive potential for companies that figure out how to make good use of it. Or a lethal threat for those whose competitors do.

Forms of Immersive Experiences

An immersive experience relevant for commerce is any interaction you have in connection to a product or service that pulls you out of the current reality and into another. That can happen on many levels and with varying intensity using different senses.

For this text, we will focus on digital immersion, like a great-looking 3D model of a product in a web browser, an AR mobile app putting a product right into your living room, or an audio podcast, which lets you forget the world around you. But of course, it can also be an entirely different world which you experience using a VR headset that entirely separates you from the physical reality.

When immersion works really well, it does not just compensate for what gets lost by making an experience digital. It creates an entirely new experience that might even be superior because it is easier, more convenient, or comes with opportunities that wouldn’t be possible otherwise. It might even be a lot cheaper than the real version.

Virtual Showrooming
One application of immersive experiences, where the virtual version is much cheaper than the real one, is virtual showrooming. Real showrooms are expensive to run and they are increasingly under pressure from digital channels, shifting consumer behaviors, and last, but not least the pandemic.

Building virtual showrooms is now often a viable alternative if you combine great content with an even greater technical presentation to create a compelling experience for the user. Where it makes sense, an AR option can be used to try on products or place them in the users’ reality, which can alleviate some issues associated with not being present in reality. A configurator could also be added, where users put together individualized products, and suddenly the virtual room has some additional functionalities the real one usually lacks. This can be used not only for cars but all product categories with a high degree of customization — from fashion to industrial goods. Finally, synthetic modelling with completely computer-generated product images in a virtual showroom can give the user access to an unlimited number of choices.

So, virtual showrooming is not primarily about lower costs. The combination of immersion and additional functionality can often provide the user with a superior user experience. And this can even be enhanced when the virtual and the real showroom are merged into one consistent ecosystem.

Conversational Commerce
The most immersive social activity is the conversation. Usually between humans, but more and more often this also can happen with an AI — either through the keyboard with a chatbot or more naturally by talking with Siri or Alexa. If done right, this can combine more convenience for the customer with near-effortless scalability for companies — which often is a problem when 1:1 conversations are the goal. Systems like this can be used to inform users, entertain them or sell products.

So far, those bots are not living up to the hype surrounding them for the last couple of years. But with the current advances in AI technology, it is expected that these will get better and will finally become a real alternative for human interaction. Maybe even enhanced with additional features no human agent can offer — like real-time translations of conversations. Or entirely computer-generated avatars that turn online shopping into a conversational and much more immersive experience.

Connected Car Commerce
Being in a car creates a reality by itself, which can be enhanced by digital technology. First and foremost, by internal systems like car entertainment, navigation, etc. Also by digital assistants — either again provided by the car itself or by services coming from the likes of Apple, Google, or Amazon.

So, playing a podcast or talking to a voice-based, interactive assistant creates an immersion by itself. This immersion can go deeper by external systems brought into the car. A good example here is Holoride, where passengers can use VR headsets connected to the vehicle to experience virtual realities while driving.

As the car is nowadays a connected device, those systems can also be the basis for various commercial activities and new business models.

As seen above, “Immersive Commerce” is a complex field with numerous aspects and many unused potentials. Some require fairly sophisticated technical innovation to get realized, and others are really quick-wins that everybody could start working on right away.

In subsequent POVs, we will describe how those immersive prospects can be utilized for Virtual Showrooming, Conversational Commerce, and Connected Car Commerce.