Recently, IKEA has released a mobile application that lets you experience and experiment Ikea products into your living room, giving the user the opportunity to get inspired to try different products and styles in real-life settings, without leaving the house (Johnston, 2017). Everything is 3D and true to scale so you can see if it’ll fit by using Augmented Reality technology. It works by obtaining a representation of a scene of a local environment by using a sensor of the mobile device. The Ikea application automatically scales products based on room dimensions, with more than two thousand different products available at launch of the application. The graphical object data that enables a three-dimensional representation of the object (e.g. an office chair), is obtained via the database of IKEA (Arrasvuori, 2006).
The main disadvantage of online shopping has always been the lack of feel of a product, to see how it works, or in the case of furniture, the way it looks. It is obvious why retailers of furniture such as IKEA are interested in such a technology, but why do other industries such as clothing or electronics, care about augmented reality (Alvarez, 2017), when they can easily send their customers the product with free returns?
It turns out that free returning for a customer does absolutely not mean free for the online stores. Think of costs for shipping, handling and controlling the returning orders, but also paying for recycling the parcel and repacking the goods. According to research conducted by the National Retail Federation, merchandise returns in the U.S. represent nearly $16 billion of the retail market (Augment, 2016). If online retailers manage to even drop the returns by 10% with augmented reality functionalities, this could save the overall retail market more than $1.6 billion per year.
As the field of AR will grow in the next few years, it will probably centralize into a few dominator players. Today, a few retailers are at the starting phase of applying AR to the shopping experience. Companies are experimenting and trying to understand how AR can enhance their value proposition to customers. Other companies will need to figure out how they can use AR in their own offerings and strategies in the near future. Of course, the chances of AR taking over the e-commerce world are slim. But, with the technological advancement of today it is important to realize that once it’s here, the first adapters will be able to have a huge advantage over other competitors. Just as most retailers started too late with e-commerce or a social media presence, they might regret not investing in AR sooner.
Sources:
Alvarez, E. (2017, January 31). Gap envisions a future with augmented-reality ‘dressing rooms’. Retrieved September 28, 2017, from https://www.engadget.com/2017/01/30/gap-augmented-reality-dressing-rooms/
Arrasvuori, J. (2006). U.S. Patent Application No. 11/523,162.
Augment, A. (2016). The Future of Augmented Reality and Online Shopping. (2017, February 14). Retrieved September 28, 2017, from http://www.augment.com/blog/future-augmented-reality-online-shopping/
Johnston, R. (2017, September 26). IKEA’s New Augmented Reality App Means You’re Never Not At IKEA. Retrieved September 28, 2017, from https://www.gizmodo.com.au/2017/09/ikeas-new-augmented-reality-app-means-youre-never-not-at-ikea/
Pardes, A. (2017, September 20). Ikea’s New App Shows the Practical Promise of Augmented Reality. Retrieved September 28, 2017, from https://www.wired.com/story/ikea-place-ar-kit-augmented-reality/
Interesting post Gudo,
I agree that AR will be an interesting addition to current shopping experiences. Companies nowadays are not yet fully realizing the potential of adding AR to either their application or through an in-store device. For example, trying on different make-up styles or a new pair of sunglasses through a mirror with AR capabilities. Beside these examples, I think there are a lot of shops that can benefit from AR, imagine trying on multiple outfits without having to change out of multiple clothing pieces. To add to the previous point, with AR customers can also try on clothing, make-up or accessories that are currently not in stock and if they like it they can order it. All in all, I agree that companies should invest in AR since there are a lot of opportunities to differentiate yourself from competitors.
Hi Gudo,
Very interesting contribution! It is a nice feeling to know that couch you have bought, matches with the rest of the furniture. I once ordered a closet and after it was delivered I found out that I bought the closet in the wrong color. It would have indeed been nice if I would have been able to test it first.
Augmented reality is indeed a disruptive technology that challenges our current understanding of social communication and, as indicated in the article, e-commerce. I, personally, consider IKEA’s move into AR as very reasonable since the purchase of furniture is determined by fit the fit of new furniture into existing spatial arrangement, which depends on design homogeneity and the dimensions of the free space and the to-be-acquired furniture. Both characteristics can be assessed with augmented visuals, which spares the need to size the room as well as interesting furniture, undertake a return trip to IKEA and potentially even being forced to undertake a second return trip in case you realize that the furniture design does not fit your existing home decoration. In that sense, IKEA can create a competitive advantage by advancing its technological integration and further undermine its role as market leader.
However, I am very skeptical regarding the benefits of implementing AR into e-retail. You are certainly right that the free returning service is a major cost to e-retailers and there is no doubt that technological innovations will evolve in the coming years to tackle this problem. Yet, AR is a non-physical technology and customers cannot actually try clothes on. Hence, AR does not solve the problem of ordering wrong-sized products. Simultaneously, also the design fit cannot be entirely assessed with augmented pictures since opinions on a dress or a pair of jeans often change when trying clothes on. All in all, I do not think that AR can solve the problem of costly returns in e-retail.
Hello Gudo, thank you for your interesting post! I share your opinion that it is wise for retailers to invest in augmented reality as it is an upcoming and fascinating technology. I can imagine that customers shopping for glasses or make-up products do not have to apply the product in order to see the results. However, I wanted to mention the many benefits that augmented reality has for retailers as well. For instance, retailers could display more stock than they could fit in their brick-and-mortar shops and change the interior and exterior of their shop without having to spend much money doing so. Moreover, retailers can gain information about their customers with augmented reality through in-store apps or surveys. With this information retailers can easily customize their stock to the wishes of their customers. This will enhance the customer experience, eventually resulting in higher revenue.