The virtual revolution of retail
The velocity of change in retail over the past few years, has forced retailers to get with the program or fall far behind. As new technologies continue to evolve, they create new marketing opportunities to target consumers. The online shopping revolution is a great example of this.
In the past, you had to be physically present in a store to buy goods. Today, you have access to millions of products at all times with your smartphone. The advent of free shipping, arguably mastered by Amazon with 65 million Prime Members, has made consumers much more willing to shop online, especially with products they already have experience with.
After experiencing firsthand, the challenges in e-commerce and retail; returns, lost packages, replacements, damages/defects, repairs, capricious customers, inventory dysfunction, and mismanagement of analytics, I found myself ideating around different AR/VR/AI technologies that could minimize, if not solve, these problems. Digital platforms are inevitably reshaping retail, it’s vital to leverage technology and have a deep understanding of consumer’s ever-changing behavior.
The current wave of technology, augmented reality/virtual reality/artificial intelligence, can propel retail altogether by bridging the digital gap between brands and consumers. As consumers’ expectations change, and physical retail goes through a digital transformation, retailers and marketers will have to create compelling, predictive, and experiential retail environments to compete for consumer’s short attention spans.
Previously, I worked in the 3D mobile space, it’s been amazing to see the evolution of technology in such a short time. I’m eager to see how AR/VR/AI technologies are used in spaces outside of gaming and film. This is a dive into the virtual revolution of retail.
Augmented Reality Now
The Pokemon Go phenomenon taught us that mass and rapid adoption of augmented reality is possible. At its peak, the app had over 40 million daily users, and engagement at a level never seen before.
What is particularly striking about Pokemon Go, is that it disrupted public life by driving online traffic offline, increasing foot traffic and activity in unexpected locations. If AR can direct traffic offline, it creates a multitude of opportunities for businesses (of all sizes), and can create destinations and landmarks out of ordinary places.
The silent AR evangelist, Snap Inc., transformed the “selfie” with Snapchat Lenses, its interactive facial filter feature. Since 2015, filters have allowed Snapchat users to add real-time interactive face-swapping animations to selfies. What we know, as an overlay of digital information on a live capture, Snapchat’s users know as a fun and interactive, personal and self-expressive filter. What we haven’t really paid attention to is that, Snapchat’s users, the 173 million of them, have already been integrating mixed reality technologies in their daily lives.
The very likely, future purchase journey
Imagine it’s 3pm, you’re at your office and you need a getup for an unplanned evening engagement. You reach over to your smartphone, or AR glasses (see Mira for a relatively affordable pair), and load your AR-powered styleCurator app.
The shopping app is your virtual mirror and personal stylist. In your profile, order history, sizing, favorite designers, and typical spend are saved. Once you take a full-body live scan in front of a mirror, your measurements are recognized and you and your virtual stylist begin to talk about the occasion.
The stylist then aggregates evening wear to suit your body type, budget, and style. After your stylist has curated a selection, you can opt for drone delivery, in-store pick up, or an appointment to try-on in store.
This immersive, completely personal, on-demand shopping experience will come sooner than we know.
Augmented Reality in Beauty
Sephora is ahead of the game. The forward-thinking beauty retailer has been the pioneer in experiential and tech-driven retail. Sephora designed the in-store “beauty playground,” making the beauty counter concept nearly obsolete.
Earlier this spring, Sephora launched an augmented reality app in partnership with ModiFace, an AR/AI beauty tech startup based in Toronto.
Virtual Artist, provides an interactive virtual product experience for customers. Using ModiFace’s facial recognition technology, which maps the location and exact shape of users’ facial features. It’s quite astounding to see the level of accuracy in skin tone color-matching and makeup placement.
Why is this app so impressive? It’s a virtual translation of Sephora’s in-store beauty playground, on-the-go. Customers use Virtual Artist as a digital mirror to try on suggested beauty looks and new products via their smartphone or an in-store tablet. It’s a personalized, on-demand interactive beauty experience.
By leveraging innovative technologies retailers can further enhance the online and in-store experience to provide a seamless and unique interactive brand experience. Discovery and personalization create serendipitous moments for customers, and the opportunity to build deep brand relationships. According to TechCrunch, “in stores, ModiFace’s virtual makeup mirror is increasing sales by 31 percent because customers are more confident they’ll love what they’re buying.”
Another big name in beauty that has partnered with ModiFace, is SmashBox Cosmetics. SmashBox’s Virtual Try On AR app is testing ModiFace’s eye-tracking technology. The Virtual Try On app tracks user’s eye movements when viewing and trying on products. It gauges interest and prompts the user to explore or buy products based on engagement. Smashbox revealed that the technology has resulted in a 27 percent increase in overall conversions since it began using [ModiFace] two months ago. There is no question that technology is developing ways for retailers to “get smart”. The immersive experience will enable retailers/brands to understand and respond quickly to consumer’s attitudes and motivations; they can then optimize marketing strategies, user experience, and provide smart recommendations completely tailored to individual customers.
Behavioral data and sales data is invaluable, but what ModiFace’s technology is proof of, is that consumers will use AR technology within a context that is recognizable and seamless.
Female-owned Virtual Storefront Franchising
Indonesia based AR company, Slingshot, launched MindStore, a virtual store network platform, which enables women to start their own virtual businesses through micro-franchises with low startup costs.
For a minimum $100 investment, women can launch their own virtual stores and start processing orders with a smartphone or tablet anywhere. The $100, serves as starting capital for the purchase of inventory from retailers partnered with MindStore. Once the $100 is exhausted, store owners can purchase additional credits.
In partnership with MindStore, Alfamart (one of Indonesia’s largest retail chains) launched Alfamind app to provide branded virtual stores for MindStore’s pilot program. Alfamind provides inventory and order fulfillment for the virtual store network. The Alfamind virtual storefront is completely customizable, and offers an assortment of products from household items, to apparel and groceries.
Sales can take place anywhere — think of the Tupperware sales model, your mom’s Mary Kay parties in the living room with colleagues, neighbors, aunts, and friends.
Store owners and customers transact in person, typically in “social settings, among mothers waiting for kids after school or during neighborhood get-togethers.” The community-based selling strategy and online to offline channel is a success, because “one of the challenges facing e-commerce (in Indonesia) is the lack of trust. Driven by women, micro-franchising has become a social and typical activity within communities, which has also established trust in technology and online commerce.
As of March, MindStore has 8,000 virtual stores owned by 8,000 women in the country. The virtual store network is quickly changing the shopping culture in Indonesia and shaping a new generation of entrepreneurs (as well as artists and designers). Envision a virtual Etsy. Virtual reality means limitless accessibility, and virtual businesses within emerging and developing economies could drive substantial global economic growth.
Virtual Reality Retailing
Virtual Reality has had all the hype over the past few years in the gaming space. The hype now, is in the potential of VR in commerce. The Oculus Rift was the first VR headset on the map, shortly followed by Samsung GearVR, HTC Vive, Google Daydream, and Sony PSVR. The hope in the industry is that VR will continue towards mass adoption. Once quality content (see JauntVR) becomes more accessible, headsets more wearable, and VR economically viable — adoption will accelerate.
The level of immersion made possible by VR, make it a commerce super tool. Retailers have complete control in a virtual environment. From signage, to store layout and sales bots — retailers have the power to manipulate the shopping experience and consumer’s shopping behavior.
Up-selling, cross-selling, or pressure-selling within an immersive experience can potentially boost sales. Today, consumers are ever-so-fickle but they have the power to buy — VR/AR can direct shopping journeys. A sales bot within the store can notify a customer of low inventory on a product to push sales for a brand or product that isn’t selling well. The bot can also announce a promotion, or share product highlights/reviews to reengage a customer with a product they exhibited interest in.
How many open tabs do you have in your browser? How many browser windows?With VR, customers can go beyond flat images into one complete and interactive immersive environment to further explore brands and products.
Customers want more than just zoom, multiple product images, and contact forms. They demand depth and immediacy — immersive experiences can provide it. In a report shared by Shopify, “online shoppers have an inherent desire to act impulsively, the inability to physically interact with products, limits has resulted in an online return rate as high as 50% in some cases.” Returns are costly — they sacrifice margins. Last year, Amazon lost $7.2 billion from shipping costs. Physical interaction with products, real time customer support, and the ability to have all brand/product information in one interface will allow consumers to shop efficiently and buy confidently.
Alibaba launched it’s virtual mall, Buy+. Within an hour, 30,000 people tried the platform with their cardboard VR headset. Buy+ created a virtual environment in which customers could shop and discover foreign brands. Retailers from the US include; Costco, Target, and Macys. Simulated as a game, you navigate products with your eyes, and make immediate purchases with a head nod using Alipay, Alibaba’s online payment platform. Buy+ is VR shopping in its infancy stage. Korea is making the next move in Virtual Shopping Malls.
VR has the potential to drive commerce
Here’s a very real experiential marketing strategy in VR, Gucci can offer a virtual around-the-world access pass to all consumers. Gucci would have virtual storefronts that replicate each store inside and out, across the globe. The concept combines; luxury, travel, and shopping in one unique immersive experience. The Gucci virtual around-the-world access pass would deliver an experience that to most, is unimaginable. And why not bring your best friend or mom along on this journey?
The brick-and-mortar Gucci experience, would still exist and would provide a seamless and complementary immersive experience. Should the handbag you want be unavailable in store, yet available in Barcelona, you can view it from the virtual catalog as a virtual interactive object (see Avegant). Technology will completely transform the shopping experience for both the consumer and the retailer.
The shared experience made possible with VR will deepen engagement and be a be a driver of discovery. Facebook product review groups, the Sephora’s Beauty Insider Community, and the like will evolve into virtual book clubs, or “hang outs” for shopping. Retailers can leverage the shared experience to create a sense of community in the virtual world, building trust and brand relationships.
VR/AR/AI will completely transform commerce and consumer behavior, and will inevitably be a driving force for global economic growth.