Role of Augmented Reality (AR) Technology in Enhancing Customer Engagement and Sales

Author: Timur Egorov

By 2026, according to experts forecasts the global augmented reality (AR)-based software and devices market could reach 88.4 billion. This is a huge growth, considering that in 2022 the same figure was equal to 40 billion dollars.

The symbiosis of e-commerce and AR play a significant role in this outcome, allowing marketplaces to engage shoppers even more effectively.

The GIF below shows one of the simplest implementations of augmented reality in an e-commerce site’s user interface – a shoe-fitting tool.

How else is AR being applied in e-commerce? What areas of application of this technology in commerce can be discovered in the near future? How is AR changing the e-commerce industry? However, before answering these questions, it would not be out of place to say what AR is.

Augmented reality in the e-commerce context of interest to us is an IT technology that offers online shoppers an immersive consumer experience on e-commerce websites, by adding digital objects to physical reality.

Role of Augmented Reality (AR) Technology in Enhancing Customer Engagement and Sales

How exactly does AR apply to e-commerce?

Augmented reality technology has revolutionized online commerce by blurring the line between the digital and physical worlds. AR has become an indispensable element of direct marketing.

According to data revealed by Statista, up to 40% of Polish residents and up to 37% of Americans have expressed a desire to use augmented reality tools when shopping online.

Combined with Google Consumer AR Survey data, which suggests that overall, globally, 66% of people are interested in using AR as an assistant when making online shopping choices.

Another statistical report suggests that approximately 57% of online and mobile marketplace users would prefer to buy from a brand that offered AR tools for selection. To date, there are several specific uses of augmented reality on e-commerce marketplaces:

1. virtual try-on: the buyer can use the camera of his cell phone to “try on” the product or accessory he likes. There are services with which even cosmetics can be tried in this way.

The buyer can, thanks to such tools, get the same complete idea of whether clothes, shoes, or lipstick fit him as if he were buying them in an offline store;

2. 3D product visualization: shoppers can see the product of interest in 3D. The three-dimensional model of the product can be rotated, and brought closer, to better understand the properties of the product on which it is based.

This way of presenting information in marketplace cards is much more informative than classic 2D images. It is believed that conversion of 3D product models is 40% higher than user interaction with a 2D picture;

3. Virtual interior design: the point of this tool is to see how a certain interior or furniture element will look in some, real-life room.

In the future, AR will complement VR – virtual reality – in e-commerce. The difference is that VR does not complement reality, but creates a complete illusion of another reality.

Such as with virtual reality helmets, which already exist in the gaming industry. The success of AR in e-commerce will pave the way for the emergence of VR tools, the introduction of which is still limited, as it requires complex additional equipment, which the average customer will not use.

Benefits of AR in e-commerce

Augmented reality has transformed e-commerce. The application of AR in e-commerce promises many benefits.

In general, the presence of augmented reality-based tools in interfaces improves the quality of the customer’s interaction with the online platform. This result is the result of a number of specific benefits:

1. Increased engagement and sales growth: to confirm this, it is enough to recall the already mentioned study: 57% of customers are more likely to make a purchase if a brand is presented with AR tools.

It’s worth adding that according to the same study, potential customers with AR apps spend 20.7% more time on marketplaces than those who don’t try such functionality. On average, they browse 1.28 times more products than customers not trying AR;

2. Market and profit growth: the AR market itself is growing rapidly. By the end of 2023, cumulative profits from the use of the technology in mobile are forecasted to grow to $21.03 billion dollars.

This growth of developments in the field of augmented reality owes just to e-commerce, because the boom of its use in games has long gone, and applications on AR for tech support and remote consulting, as a rule, are very special and could not give such a big growth to the AR market;

3. Engagement of old and new consumers: there are expert measurements on this too. According to one study of Snapchat, this social media outlet is actively investing in AR and seeking to validate its benefits – 92% of Generation Z Snapchat users are willing to use AR tools in e-commerce;

4. Increased satisfaction with the process and outcome of online shopping: augmented reality allows potential buyers to visualize items in real time.

This makes it easier to select items such as clothing, cosmetics, furniture, and all other products where its suitability is based on the item being a certain size, fitting with something, or having an expected style.

The ability to virtually try before buying reduces many of the moments of uncertainty that previously held back sales growth. The customer is empowered to make a purchase with confidence.

The use of AR in e-commerce increases CRO – conversion rates

The impact of AR tools has a number of direct and indirect implications from a marketing perspective. In particular, the performance on a metric such as Conversion Rate Optimisation improves. Here are some facts on the topic:

Increasing conversion rates on e-commerce resources: according to experts at Marketing Dive, the introduction of augmented reality technology-based tools in user interfaces (UIs) provides a nearly 30% increase in sales.

Spotify recently conducted a similar examination, but this time the findings on sales growth were even more impressive. Spotify turned out that using content with AR leads to a 94% increase in conversions;

Return on investment (ROI): every large and small e-commerce marketplace wants to ensure that the investment made in creating AR interfaces pays off.

There is evidence that the British marketplace DFC, which sells furniture by introducing AR functionality into the cards of 10,000 of its products, obtained a 112% increase in conversions on the sites.

The ROI was 22 times greater than the original project using immersive technology. Representatives called their project “the largest on the web of what has been created at the intersection of AR and e-commerce before.”;

Real cases of successful projects: American cosmetics marketplace Sephora launched an interesting AR tool for cosmetics selection called the Virtual Artist tool.

The growth in the number of conversions, which the company recorded and reported to the general public, amounted to 11.4%;

Increased use of AR by shoppers themselves: more than 32% of global shoppers now use augmented reality tools when shopping.

Experts predict an increase in the availability of devices that support this technology. All indications are that 32% – is not the limit and this number will increase in the very near future.

AR is a new technology that has the potential to improve the conversion rate of e-commerce sites. As the technology offers unprecedented interactivity, the user is more involved in the selection and purchase process than ever before.

Challenges of AR application on e-commerce sites

The introduction of augmented reality into e-commerce presents a number of challenges and reasons for commerce to think.

The challenges range from technical issues to issues related to the shopper’s experience of interacting with the platform and security considerations.

Technical issues:

1. Hardware capabilities: It is necessary to make sure that new AR tools on websites are compatible with various devices: personal computers, and mobile devices of various kinds.

How positive the experience of interacting with AR will depend on the presence of a camera on the device, the quality of the image, sufficient power of the device’s processor, and the compatibility of the functionality with the most common accessories specifically adapted for AR, such as HoloLens or MagicLeap from Microsoft.

2. Frameworks used: For AR development for e-commerce needs, rarely all technical solutions are created from scratch. Usually, a ready-made library is chosen, in which some of the problems have already been solved. If you do everything from scratch, the cost of development can be exorbitant.

Thus, it becomes important to choose the right framework for development. Each has its own strengths, weaknesses, and features.

Today, the common choice of developers is ARKit for iOS, ARCore for Android, and Unity3D in other cases. In fashion and cosmetics is indeed a highly-demanded WANNA API, the startup has been recently bought by Farfetch.

3. 3D modeling and rendering: If we are talking about products presented on websites in the form of a 3D model that can be “spun”, it is necessary to create high-quality 3D sculpting models.

The quality of interaction with AR tools depends on it. Usually, marketplace development teams use 3D editors like Blender, Maya, or ZBrush for this purpose. However, careful attention to features such as file size, quality balance, and download speed is required.

4. UI/UX design: Important is how the AR interface is presented on the electronic trading platform. The interface should be intuitive to understand.

This is especially important in terms of attracting people who have not had any experience with augmented reality before. If instructions are needed, they should be very simple and easy to understand.

5. Server capacity: 3D models and other files needed for AR interfaces can be very heavy on e-commerce sites’ data storage. Careful thought must be given to their storage, whether you intend to keep the data in the cloud or edge computing.

Challenges related to other aspects:

1. Behavioural factors and user expectations: Retailers need to determine what exactly customers expect. It is known that from 15 to 30% of customers return purchased goods to online marketplaces because they do not have enough information about the product when choosing it.

AR can help add the missing context, but how exactly such a tool should be created depends on the specific buyer, the specifics of the product, and the specifics of its application.

2. Awareness of AR needs to be maintained: Creating an augmented reality tool on a website or portal requires keeping track of the trends that exist for this technology.

If you don’t do this, you won’t be able to change your AR infrastructure in time to respond to new trends.

AR and e-commerce: fashion or long-term trend?

Judging by the rapid pace, confirmed by concrete measurements of the market situation, judging by the huge profits, which are recorded after the introduction of AR-tools e-commerce sites, augmented reality on online shopping sites cannot be considered a fashion.

On the contrary, there has been a fundamental shift in retail, all the consequences of which are yet to be realized. Augmented reality is opening up new ways to increase conversion rates (CRO).

It presents an immersive, interactive, and personalized shopping experience to shoppers on marketplaces. Under the influence of new technologies, the expectations of consumers themselves are changing, which opens a new page in the history of competition and the development of e-commerce platforms.

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