The technological development of the 21st century gave birth to online E-Commerce marketplaces across the globe. The share of the online marketplace was limited in 1998 with annual sales in US accounting to $5Million, which rose to $389Million in 2016 (Eurostat, 2019). Researchers state that sudden increase in the demand of online marketplaces is due to increase in social media platform and marketing strategies, yet there is an integral role being played by the disruptive technology which is often ignored. Lavinsky (2014), argues that careful product placement and marketing strategies have caused a boost in online sales and increased the popularity of e-commerce marketplaces.
Even though the argument presented by Lavinsky and several other researchers in terms of sales conversion rate is true, yet they have failed to identify the role which disruptive technology played in customer engagement resulting in definite sales. Furthermore, with the Luxury Industry, customers elaborated that they would choose to buy Luxury Products online if the online E-Commerce Marketplaces were integrated 3D & AR Technology (Monotype, 2019).
The development of technology such as cellular devices, 4G internet, and faster website loading speed, consumers were able to view their desired products online and then bought them from the retail stores in person. These trends are the news of the past, as the advent of 3D & AR technology can ensure better customer engagement and definite sales as argued by Raska & Ritcher in their thesis “Influence of Augmented Reality on Purchase Intentions” (Raska & Ritcher, 2017). Monotype presents similar research conducted by Green Insight, which took into account interviews from 1300 consumers, out of which 53% stated that they would definitely buy a product they’re interested in from a Luxury Online Store if it has 3D or VR technology deployed on their website (MT, 2019).
Mike Sorrenti President of Gamepill stated the following about his first encounter with the 3D & AR technology (MT, 2019):
“My introduction to VR was unforgettable. It was like seeing color TV for the first time, I immediately scrambled to get a team together to create a prototype in VR just to learn the ropes and the business has just grown organically from there.”
This article would further illustrate the impacts of integrating 3D & AR technology in e-commerce websites. It will also demonstrate how this technology is able to tackle the limitations of online shopping and highlight the investment made into this field by utilizing examples from luxury brands currently deploying this aforementioned technology.
With the advent of technologies such as the Internet and e-commerce marketplaces, consumers now were given the option to buy millions of products online and on the go, as they please. However, since they were unable to touch or try the products online, they were more reluctant to make a purchase on the Internet, which have hindered with the growth and development of E-Commerce Marketplace (Cuomo et al., 2015). According to the research conducted by Street Fight Surveys, only 12% of the Luxury Brands stated that they are interested in exploring the AR technology (Miles, 2019), which means that almost 88% of the luxury brands across the globe are still missing out on this opportunity. Furthermore, Miles (2019), illustrate that the 12% interested companies only became inclined towards implementing this technology after the recent success of PokemonGO in 2016 (Miles, 2019).
The online sales conversion rate is quite low for most luxury brands that fail to provide a multi-sensory shopping experience, which is usually expected by their high- end consumers. Such shortcomings hinder the luxury business to grow in the digital market, even with high-quality products and almost perfect services (Cuomo et al., 2015). Research conducted by Cuomo and the team also illustrates that customer engagement by 2D marketing and images are quite low as compared to the 3D & AR technology, their research concluded the following:
The research finding clearly illustrates that the customer engagement increases by more than a minute with implementation and integration of 3D & AR technology, and the customers are willing to spend more and the intention to buy also increases by 74% (Cuomo et al., 2015). Needless, to say it illustrates that the intention to buy and sales conversion rates are going to be quite high if Luxury Brands deploys 3D & AR technology in their online marketplace.
COUNTERACTIVE MEASURES: 3D & AR Technology in E-Commerce
In order to overcome the limitations and shortcomings of the online marketplace, brands have invested billions of dollars in social media marketing campaigns and product shoots to make the decision- making the process for consumers smoother. The system of multiple product images then evolved into a 360 viewer technology accompanied even with a thorough video to enable shoppers to get a better understanding of the product and therefore increase conversion rates (Yemchuk, 2016). However, an even more advanced technology, the 3D product configuration, integrated with AR and VR is the one that witnessed a peak in sales amongst luxury brands.
BENEFITS OF AR & 3D TECHNOLOGY
Limitations emphasized earlier in this article show that consumers lack trust, surety, and convenience while making online purchases. Hence, no matter how established a brand is or how positive they maintain an online presence, consumers won’t opt to make an online purchase as illustrated earlier by Cuomo (Cuomo et al., 2015). If consumers are unable to relate to the product or comprehend how it can be personalized in accordance to their own needs the sales conversion rate would remain low as the consumer would only be engaged on the site for 12 seconds. Therefore, brands have invested billions of dollars in R&D to ensure high conversion rates by deploying disruptive technologies (Cipresso et al., 2018).
According to Statista, the retail online sales from worldwide e-commerce businesses demonstrated a stagnant increase of only $200-$300 Million, which are predicted to increase at a rate of $600- $700 Million since the integration of 3D & AR Technology (Statista, 2019).
AR and 3D technology have proven to be the driving force in enhancing the consumer experience, nurturing interests in online shopping and increasing conversion rates and sales.
Following are some factors contributing to increasing the sales of Luxury Brands running online marketplaces and have deployed AR & 3D technology:
Research in the field of consumer behavior demonstrates that, when consumers are engaged to a given product online, whether it’s in the form of multiple images, 360O videos or a 3D render of the product, chances of sales are increased. However, with all the e-commerce sites uploading videos and images of their products, the only strategy which provides them with a competitive edge over the competition is using 3D renders. This allows potential customers to view a product in-depth and to be engaged so they can relate and identify whether making such a purchase is in accordance with their needs.
Augmented Reality (AR) on the other hand, ensures higher sales with a different approach, as it allows consumers to comprehend the story behind the creation of any given product or a brand itself. Businesses and e-commerce sites can create 3D videos and post them on their websites, allowing consumers to have a glimpse behind the curtain and understand how the product was manufactured and what would it brings to the customer. In addition, they can also allow them with features to custom create their products using 3D/AR technology online.
When a consumer views a brand story using AR, they become more curious about the details of the product and whether they would be able to carry the product fashionably or not. Businesses have deployed certain features in AR which fulfills their curiosity to know more about the product and ultimately enforces them to make the purchase.
Another limitation which hinders with online businesses is the lack of accuracy when it comes to product description and presentation. With reported scams and negative online shopping experiences, users are now concerned about the inaccurate information of products available online and the parcels they receive. With the use of 3D and AR technology, customers can get accurate details of the products as if they are viewing in real life.
In order to boost sales, businesses offer free/ paid personalization on their products, however, in most cases, users are unable to precisely picture how the final result will look like? Furthermore, consumers previously were unable to put themselves in the new outfits. This new technology allows businesses to overcome these issues by offering them real-time and interactive 3d models.
HOW 3D & AR TECHNOLOGY BOOST SALES IN LUXURY MARKET
In the hypercompetitive market, where economic uncertainties are forcing businesses, especially luxury brands to develop and implement innovative strategies to ensure sales and sustainable growth, convenience to shopping online becomes a major objective. Luxury brands today are favoring 3D & AR technology as it ensures customer satisfaction by providing a virtual try-on of products that they wish to purchase online.
This is especially true for the luxury industry, as they cannot implement strategies such as bulk sales or offer discounts to boosts sales. Numerous luxury brands today are providing consumers with a 3D render of their products online and using it to illustrate to customers in real-time about how the product would look with the added customization features.
For example, Baume a Luxury Watch brand not only offers customization of their icon products but allows consumers to build their own watch from scratch and see how it might look on their wrists.
Another luxury brand “SCHMiDT”, provides online personalization which enables customers to build a piece of furniture before even ordering the product itself, thus making clients quite sure of how their new furniture would suit their kitchen.
Furthermore, “Kenzo” also allows customization of their shoes online. Even the basic details such as outer sole can be modified in terms of design and color, and the brand renders a 3D version of it in real-time. This provides consumers with satisfaction that the decision they are about to make to purchase the product is the right one for them.
However, all of the above have been offered in some form or other by numerous brands. But the most crucial area of business or one might say the uncharted territory for businesses operating in a luxury brand in the jewelry market. Customers still are reluctant to purchase jewelry online, as they are quite expensive and high levels of customizations are always required in terms of ring diameter, stone size, and materials to use. Yet “edenly” have revolutionized the online jewelry shopping, by addressing all the customer queries with the integration of 3D customization of products and rendering a real-time 3D render of how the end product will look. Furthermore, they even provide an option to create jewelry from scratch and render a 3D image of how each customization would look.
In the end, it can be concluded that research in the field of marketing and consumer behavior clearly indicates that the 3D & AR technology keeps consumers engaged to a product or an online advertisement for more than 83Seconds. This number is significantly higher than the 12 seconds engagement, which is the result of an image or an online video. Hence, if a Luxury Brand wants to ensure an increase in their online sales, they need to deploy and integrate 3D & AR technology to their online marketplaces to ensure definite sales and higher conversion rates.
What is 3D Technology and What can it do for your Business?
- Eurostat, (2019). Online Shopping Trends 2019 & Key Figures – What you need to know. Nation Master. Retrieved from: https://www.nationmaster.com/ecommerce
- Lavinsky, D. (2014). How To Increase Conversion Rates. Forbes. Retrieved from: https://www.forbes.com/sites/davelavinsky/2014/03/18/how-to-increase-conversion-rates/#5f76653b16d4
- Raska, K. & Ritcher, T. (2017). Influence of Augmented Reality on Purchase Intentions. Jonkoping University. Retrieved from: http://hj.diva-portal.org/smash/get/diva2:1115470/FULLTEXT01.pdf
- MT (2019). What brands need to know for success in AR and VR. Monotype Imaging Inc. Retrieved from: https://www.monotype.com/resources/articles/what-brands-need-to-know-for-success-in-ar-and-vr/
- Miles, S. (2019). 5-Brands innovating with Augmented Reality. Street Fight Magazine. Retrieved from: https://streetfightmag.com/2019/01/02/5-brands-innovating-with-augmented-reality/
- Cuomo, M. T., Metallo, G., Scannapieco, V., & Tortora, D. (2015). Consumers augmented experience and digital engagement tools: Some evidence. Research Gate. Retrieved from: https://www.researchgate.net/publication/297283204_Consumers_augmented_experience_and_digital_engagement_tools_Some_evidences
- Yemchuk, O. (2016). How Virtual and Augmented Reality will Influence Decision-Making. ZOOVU. Retrieved from: https://zoovu.com/blog/how-virtual-and-augmented-reality-will-influence-shopping-experience/
- Statista (2019). Retail e-commerce sales worldwide from 2014 to 2021 (in billion U.S. dollars). Statista.com. Retrieved from: https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/
- Cipresso, P., Irene Alice Chicchi Giglioli, Mariano Alcañiz Raya, and Giuseppe Rival. (2018). The Past, Present, and Future of Virtual and Augmented Reality Research: A Network and Cluster Analysis of the Literature. FRONTIERS IN PSYCHOLOGY. Retrieved from: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6232426/
- Scholz, J. (2018). Augmented Reality Marketing: Moving From Gimmick to Strategy. SEJ. Retrieved from: https://www.searchenginejournal.com/augmented-reality-marketing-strategy/254765/