Virtual reality is making its way into ecommerce, but the question remains whether it is a “nice to have” or a “need to have” for consumer engagement?
Cleveland Brown, CEO of merchant services provider Payscout, said from July 2015 to June 2016, $2 billion was invested in virtual reality and augmented reality startups. Mergers and acquisitions for virtual reality and augmented reality are on the rise as well, rocketing to $849 million during the same 12-month period.
Several ecommerce brands are embracing virtual reality as an option to enhance the overall customer experience.
For example, Wayfair launched Patio Playground, a first-party virtual reality app that allows users to browse Wayfair’s product catalog, selecting outdoor furniture and design a background setting. Wayfair is making this possible through a Facebook-owned Oculus Rift headset.
While Wayfair is enhancing the customer experience with virtual reality, it is simply for brand awareness, and does not yet offer a transactional experience. Mike Festa, head of Wayfair’s Research and Development Lab, said Wayfair is looking into adding ecommerce to its next iteration.
Festa said Patio Playground is more focused on the opportunity to showcase some of its items in a new setting. He said this demonstrates Wayfair’s thought leadership in virtual and artificial reality fields, ecommerce industry and increased awareness.
“For now, we want to use Patio Playground to test the virtual reality experience, look at how consumers are engaging with it, and integrate that feedback into our future applications,” Festa said.
Since implementing Patio Playground, Wayfair has been able to track the number of downloads, length of time playing, and how often certain features are being used, such as teleporting, loading products, saving and more.
Festa would not say yet what other ways Wayfair is looking to incorporate virtual reality.
“We are anticipating that consumers will not adopt virtual reality technology for a few years, but when it does happen, we will be well positioned to take advantage of the new platform,” said Festa.
Festa said virtual reality technology is a great platform to provide inspiration for customers looking to decorate their homes and considering new product purchases.
“It is an immersive experience that can bring the sensation of being in a showroom to your home, and allows for easy customization of everything on display,” said Festa.
Is VR the Next Shiny Object for Ecommerce?
Like so many passing trends in ecommerce, we have to ask if virtual reality is the next big thing, or the next shiny object. Virtual reality definitely enhances the overall experience, but is it needed?
CMS Wire reported that, as it stands right now, bricks-and-mortar stores and ecommerce are able to provide the experience, and that virtual reality could at some point act as a middle ground between the convenience of ecommerce and the interactive elements of bricks-and-mortar.
Some barriers of virtual reality could keep this enhancement at bay. For example, costly hardware is one reason, since shoppers are expected to have the proper virtual reality headset to make this a possibility.
Both online and bricks-and-mortar stores would need to provide a decent virtual reality experience. Ecommerce fills a need, while virtual reality is more of a “nice to have” capability.
Earlier this year, Moosejaw Mountaineering released a virtual reality app allowing consumers to experience an array of outdoor activities and win gear from brands such as The North Face, Patagonia and Arcteryx Marmot of a $500 Moosejaw gift card.
One of the experiences is based in Moab, UT – home of Arches National Park – and includes assistance from desert gnomes and drones. New experiences and contests – such as skiing, snowboarding and ice climbing in the backcountry of Ouray, CO – will be released on a regular basis.
Earlier this year, Forbes reported that Nars Cosmetics partnered with Facebook for its first 360-degree video. Shoppers can watch from the middle of the room, flipping through screens that capture portions of NARS Lead Makeup Stylist Janice Daoud’s application.
Julia Sloan, vice president of global communications and fashion relations at NARS Cosmetics told Forbes that while Facebook 360 video may not be the future of beauty videos, Nars is seeing a shift in how customers experiencing media and it is moving as quickly as possible to meet the needs of the customers.
Chinese marketplace Alibaba announced its own virtual reality research lab, GnomeMagic Lab. The company invested in augmented reality company Magic Leap, and has worked with 360 degree panoramic video for Youku Tudou, the Chinese video site that Alibaba invested in and is in the process of acquiring.
TechCrunch reported that GnomeMagic Lab will work with existing businesses with a view to integrate virtual reality into the shopping experience. GnomeMagic will also look to other options like video with Youku Tudou and entertainment via Alibaba Pictures.
Zhao Haiping, former Facebook engineer and member of Alibaba’s GnomeMagic Lab, told TechCrunch that virtual reality could enable customers to shop virtually on New York’s Fifth Avenue right from the comforts of their own home. Alibaba wants to help merchants use virtual reality on their own sites and has created visual for hundreds of its products.
eBay also jumped into the virtual reality game in May, when it launched its first virtual reality department store, partnering with Australian retailer Myer.
Using iOS and Android devices, the app can be downloaded working with goggles like Samsung’s Gear VR. Several shopping categories are shown to customers like women’s clothing, electronics and other categories.
Mashable reported that users are able to select areas of interest and the experience is created around those choices a user makes. Ebay also made it possible that users will have “ebay sight search” where instead of using handheld controls, users are only using sight, where customers are using their gaze for a number of seconds.
Items are added into a basket in the same way, however users are supposed to remove the headset to make the purchase in the eBay app.
Virtual Reality Commerce
Could it be that virtual reality will become another channel where retailers are engaging with consumers? This could very well be a possibility.
Payscout’s Brown his company views virtual reality as the next major advertising channel. Payscout is developing an app that will enable a retailer to sell in virtual reality without having to make the significant investment required to create virtual reality content. The merchant will just have to make a media buy and then offer the most logical product to that buying audience.
“Virtual reality commerce will evolve in different ways than ecommerce did, primarily because it uses a different set of parameters and production requirements,” said Brown. “The sophisticated interface will appeal to retailers that offer products which show well in the three-dimensional environment or are popular enough to capture on-demand engagement.”
Brown said virtual reality has the potential to transcend the omnichannel retail experience to combine several points of omnichannel commerce. It can simulate the brick-and-mortar experience, in some cases the augmented reality can make it more appealing, and replace the desktop ecommerce experience, as 2D ecommerce can easily be simulated in virtual reality.
“Virtual reality already uses a mobile device and can connect to a live person via the virtual reality headset to simulate the telephone experience,” said Brown.
Brown said a recent analyst report from Citigroup suggests virtual and augmented reality will become a $674 billion market by 2025. He said this is an enormous opportunity for forward-thinking entrepreneurs to engage their customers on an interactive level that will completely change the way we shop today.
“The market projections for virtual reality, which are based in part on the amount of investment capital and the number of mergers and acquisitions in the virtual reality space, indicate virtual reality is the future of ecommerce,” said Brown. “The ways to utilize virtual reality technology are limitless in scope, from gaming and entertainment to industrial or medical applications, from ecommerce and CNP transactions to virtual boardroom meetings to a fully immersive shopping experience.”
Brown said virtual reality is the next payments frontier. He said at Payscout, they think it will revolutionize the payments industry in a way unseen since the birth of ecommerce.
What Will Virtual Reality Setup Cost Retailers?
While the app Payscout is developing will enable a retailer to sell in virtual reality without having to make the significant investment, setting up virtual reality can cost a pretty penny for retailers. Plus, the question remains whether it is worth it and what is the actual cost in producing virtual reality?
Brown said as with any production, like a website build or commercial, it depends. Initial figures to produce virtual reality content can be as high as $100,000 per minute.
“We believe the cost of virtual reality production will be shared among content creators, merchants, and audiences around the world,” said Brown. “We have developed a payment gateway application that enables a consumer to complete a virtual reality commerce transaction and are developing an entertainment/advertising partnership model that will give retailers a way to utilize virtual realiy commerce without having to completely design a new interface.”