In its second-largest acquisition, Amazon buys the company for $970 million.
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With most 3-D systems, a consumer needs no plug-ins or special technology. Kaon, for instance, dropped its plug-in technology in favor of using Java. By contrast, Viewpoint’s 3-D system requires a plug-in. Viewpoint believes the plug-in system gives a better experience to the user because it allows Viewpoint greater flexibility in creating images and it allows the web site to keep file sizes small. Furthermore, Viewpoint is concerned about reports that Microsoft Explorer version 6 will not support Java, the application that many 3-D images are written in. Other 3-D vendors say Java is too widely used for Microsoft to stop supporting it. Microsoft itself says it’s too early to comment on what Explorer 6 will or will not support.
A big drawbacks to plug-ins is that consumers don’t like to download applications from the Internet. Viewpoint is hoping to overcome that wariness with an agreement under which AOL will distribute Viewpoint’s plug-ins starting in September. Furthermore, Adobe will include the Viewpoint plug-in with its suite of products. In addition, Computer Associates, Nvidia Corp., manufacturers of 3-D graphics processors, and Excite@Home will distribute the plug-in.
Another concern is that not enough consumers have broadband access to support easy 3-D viewing. Most of the 3-D vendors claim to employ compression technology that makes the bandwidth issue moot.
PointCloud operates its 3-D system in an ASP mode. It delivers images to the consumer as a pop-up window. Viewpoint’s images appear in a box as part of the screen. Many vendors have designed their software so the viewer sees a preliminary image while the 3-D image is loading to prevent bail-outs before the loading is complete.
Because it operates in an ASP mode, PointCloud charges retailers a monthly subscription fee for maintenance of the file and delivery of the images to the consumer. That fee ranges from $25 per image per month down to $8.50, depending on volume. In addition, the retailer pays $45 to $90 per product to create the image. With Viewpoint, retailers pay production costs of the image, starting at about $200 per image, then they license the software to host the images on their own site. Licenses start at $10,000 for limited products per site and could reach $200,000 for a full site, says Chris Johnston, vice president of product marketing. Kaon charges $600 per image and allows free use of its Java-based viewer.
Rich FX says it differs from others in the market in that it offers highly compressed streaming media while others are offering progressive downloads of individual images. As a result, viewers of the Rich FX technology start to see the 3-D experience immediately, while viewers of others’ technology are seeing a placeholder while the image starts to download. Producing a Rich FX 3-D image with the supporting scenario such as that used by gifts.com costs $15,000 to $40,000.
When 2 = 3
Cost is in fact an important consideration these days, with all the pressure on dot-com retail operations to reach profitability. Given that 3-D has been used on a significant number of products for less than a year, there’s not a lot of ROI data to report. Both PointCloud and Viewpoint are working on ROI models. “There’s no blanket answer for ROI,” Johnston says. “You have to look at how much sales will go up, how much returns will go down, what your customer service costs will be. Then there are the unknowns. If customers are looking at a backpack in 3-D and can see exactly where the water bottle or the cell phone goes, will they be more likely to make a purchase? That’s where the fuzzy math comes in.”
Production costs, however, are part of any product presentation-2-D or 3-D-so some advocates argue there is little additional cost to creating a 3-D image. In fact, some say, the cost of producing 3-D may not be any more than 2-D. “With 2-D there’s a lot of set-up. You have to pay attention to the background, you have to have the proper lighting. But with 3-D it’s the total opposite,” says Jeff Luber, vice president of operations of Kaon. “You want the flattest lighting and no background. So the cost comes out a wash.”
Another important consideration is that 3-D allows retailers to merchandise their products more effectively, says John Mellor, vice president of product management for Rich FX. Rich FX has created gift boutiques for NiemanMarcus.com that replicate the experience of walking through a store. “Retailers know whether to place the high-priced shoe in the window or by the entrance and what to place next to the shoe,” Mellor says.
Because there are so many ways to present products, some say there is no limit to the products that can be presented in 3-D. “Virtually all tangible products can be captured in 3-D,” Luber says. For that reason, he argues the 3-D market is as big as every product for sale at a retail site. “How many 2-D digital images are there? How many SKUs are there?” he asks. “That’s how big the market is. It’s immense.”
How 3-D generated quick returns for gifts.com
The stunning success that gifts.com experienced when it deployed 3-D to sell a Mothers Day pendant is sure to grab the attention of the e-retailing industry. Using the tried-and-true direct marketing method of splitting a prospect list into A and B lists, gifts.com, a division of The Reader’s Digest Association Inc., proved to its satisfaction that the investment in 3-D and the story that went with the 3-D presentation was worth it.
Gifts.com promoted the Loving Family Pendant to customers with two different e-mail offers-one that included a link to the 3-D rendering with story and another that included a link to a 2-D representation. Customers who viewed the 3-D image were three times more likely to buy than customers who viewed the 2-D version. Gifts.com calculates it earned $2.77 on every $1 it invested in the Rich FX presentation. “We were hoping to get the results we did, but usually that doesn’t happen,” says Dan McManus, vice president of marketing and business development for gifts.com. “But in this case it worked.”