3-D technology pushes online retailing into a whole new dimension
By Kurt Peters
When Vermont-based cataloger The Orvis Co. wanted to try out 3-D technology, it wasn’t sure what results it would achieve. And so it took a cautious approach and had modest expectations. “Our approach was: Let’s not hurt our business,” says John Rogers, Orvis’s director of e-commerce marketing.
Orvis applied 3-D technology to 100 items starting in late October, primarily fishing reels and vests. Not only did the 3-D rendering not hurt Orivs’s business, but it helped enough that the company is now expanding use of the technology to other products on its web site. Orvis will soon be showing luggage, clothing and other items using the 3-D and zoom technology from PointCloud Inc., provider of the 3-D technology for the reels and vests.
Clearly, Orvis is hoping to get a boost in sales when other products are displayed in 3-D. Rogers won’t give specifics; sales boosts, he says, “were all over the place.” The best products achieved increases of 60-70%. “You won’t see that lift across the board,” he cautions. But he adds: “We wouldn’t be going forward if we were not seeing something good.”
Orvis is part of a trend toward rich media in all aspects of Internet retailing. From e-mails that incorporate HTML graphics and videos to web sites such as Orvis, gifts.com, Eddie Bauer and eLuxury.com that are using 3-D images, retailers are finding that richer media produce greater sales. Some observers estimate the rich-media market is $2 billion a year now and will reach $12 billion in 2005. “There is a huge opportunity for 3-D technology in both business-to-business and business-to-consumer,” says Paul Ritter, managing director of retail e-commerce consultants Strategic Research Advisors. “One of the primary challenges of the Internet-based business models has been overcoming the lack of tactile experience that consumers get when they are in a store and can actually see, touch and feel the products.”
Still aborning
A measure of the size of the market and the enthusiasm with which some retailers will adopt 3-D comes from the experience of 3-D vendor Scene7 Inc. Scene7 started life as furniture e-retailer GoodHome.com. It developed technology to allow shoppers to view furniture in 3-D. When other retailers asked GoodHome if the company would license the technology—and the prospect of profits as an e-retailer grew even more illusive—GoodHome exited the e-retailing of furniture and entered the selling of 3-D technology.
Last year, GoodHome joined a market of 3-D vendors that includes PointCould, Rich FX Inc., Kaon Interactive Inc., Viewpoint Corp., Virtue 3D, and My Virtual Model Inc. Furthermore, Macromedia Inc. and Adobe Systems Inc. are offering updated programs that run 3-D. And Intel’s new P4 processor chip incorporates advanced 3-D functionality.
But 3-D is still in its infancy. While some of the leaders in e-retailing, such as Lands’ End, Victoria’s Secret and Dell Computers are using some form of 3-D, only a tiny fraction of web sites employ 3-D imaging and even those sites display a small portion of their products in 3-D.
When it comes to 3-D, some experts are cautioning retailers not to fall into the trap that caught them in the early days of the Internet: Just because you can do it, doesn’t mean you should. “Web site design is similar to fixtures in stores,” says Jim Dion, president of Chicago-based retail consultants Dionco Inc. “Some fixtures you have to have to enhance the merchandise and others just get in the way.” Used injudiciously, 3-D can just get in the way, Dion says. “There’s not a tremendous number of products that require 3-D,” he says.
But there certainly are products that lend themselves to 3-D. “3-D makes sense if you have an extremely specialized product, with a high retail value, that aficionados are interested in and about which they want to know everything they can,” Dion says. In that case, “3-D can tip the scale. The consumer gets a high degree of comfort that it’s the product they’re looking for.”
$200 reels and pendants
Orvis’s fishing reels and vests fit those criteria. In the case of the reels, some of which go for over $200, Orvis is selling to aficionados. For instance, Orvis sells a Battenkill large-arbor reel, in which the diameter of the turn mechanism is bigger than on other reels, meaning a fisherman pulls in much more line with each turn of the crank. With a 3-D view of the Battenkill reel, the customer can look at the side of the reel to inspect the large arbor. He can look at the drag mechanism, flip the reel to see where the line goes in and zoom in to view construction details of the handle. “Being able to view this in 3-D helps the customer answer the question: Do I make the investment in a large-arbor reel?” Rogers says.
Similarly, gifts.com, operated by The Reader’s Digest Association Inc., had huge success with a $200 pendant it was selling for Mothers Day. Gifts.com turned to Rich FX to create not only 3-D views of the pendant, but also a scenario that presented the pendant in a little story about mothers and children (see box). “We were looking for some sort of technology that could relay a sense of emotion,” says Dan McManus, vice president of marketing and business development for gifts.com.
What the industry refers to as 3-D isn’t precisely 3-D. The source photos for 3-D images come from traditional 2-D photographers. When they are taking product pictures for a catalog, photographers take numerous photos that the retailer can use for 3-D purposes. The photographer sends the photos in an electronic format to the 3-D processor, which then processes the photos to create a 3-D-like image by displaying numerous views of the product.
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.”
kurt@verticalwebmedia.com
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.”
Since it was selling the pendant specifically for Mothers Day, gifts.com set out to create an emotional experience. A brainstorming session came up with the idea of creating a story around the pendant. RichFX created the 3-D image and the video story that went with it. “There is much more to a product than the product itself,” says John Mellor, vice president, product management with RichFX. “There’s the ambience and the experience of the product.”
Reader’s Digest will start using 3-D technology with its goodcatalog.com operation in September. It will display virtual rooms in different decors, such as Asian or African. “We are moving from one product to an entire environment,” McManus says.
With its success, gifts.com believes it has blazed a trail for the e-retailing industry. “It’s a breakthrough for us and for the industry,” McManus says.
