China is one of more than 30 countries to which Newegg plans to expand its marketplace in 2017.
Web-only retailers introduce augmented reality to break down the touch-and-feel barrier.
It's been the insurmountable barrier for Internet retailers: They cannot let shoppers touch and feel a camera or a coffeemaker, or try on a necklace or dress. This has given physical stores a significant edge.
But now a web-only retailer like overstockArt.com can offer a shopper something he can't get in a store: He can see how a painting for sale on the site will look on his wall at home. That bit of magic is accomplished through an up-and-coming technology called augmented reality, one that has the potential to change the face of online and mobile commerce.
In the case of overstockArt.com, the shopper opens the app, selects a painting, then selects View in Room. This opens up the camera within the app. The painting is displayed over what can be seen through the camera. The shopper points the smartphone at a wall in his home and lines up the painting where he wants it hung, then he snaps a picture. Now he can see exactly how that painting will look in his home. And he can share that picture and ask for the opinions of friends and family through the site's Facebook and e-mail integrations.
OverstockArt.com launched its mobile shopping app with augmented reality in June 2011. It credits the technology in part for pushing m-commerce to account for 10% of its total sales in 2011, more than making back the $5,000 it invested in creating the augmented reality app. And it reports a significant jump in mobile sales for 2012 so far. Comparing the second half of 2010, when the retailer's m-commerce site was up and running but the app did not exist, to the second half of 2011, combining both the m-commerce site and the app, the m-commerce conversion rate jumped 100%.
"People in our industry always talk of decor and art as not yet mature online; they talk about the downside, that you can't touch it and see it firsthand," says Amitai Sasson, vice president of marketing and development at overstockArt.com. "Now, here is the upside: With mobile commerce technology we can offer shoppers the opportunity to see art on their own walls, and that is something they can't see in their local gallery."
Other major e-commerce players are experimenting with augmented reality. EBay Inc.'s fashion app allows customers to virtually try on clothes. With Amazon.com Inc.'s Amazon Flow app, a shopper just points the smartphone camera at a book or DVD and up on the screen, hovering over the product, pops Amazon's price and customer reviews. This is enough to make a store retailer green with envy—and quite irritated if that augmented reality scan in its store leads to an Amazon sale.
This new technology merges the physical and digital worlds, using a smartphone's camera to see the world through its lens as a merchant displays on top of that view digital data or imagery. It can be a small project, like that of overstockArt.com, or it can be a large project, as it was at web-only jeweler Ice, which spent hundreds of thousands of dollars on its augmented reality app. Either way, merchants will find hurdles they must jump, some technological and some in design.
They also must identify the best uses of augmented reality, and not let the technology obscure business goals. Only 1% of U.S. adults have used an augmented reality app, a Forrester Research Inc. study finds. But 11% of high school and college students have used one, according to a Youth Pulse Inc. survey. This could mean that the whiz-bang nature of augmented reality appeals more to younger consumers who are comfortable trying out new technology.
But the wow factor is not the point, says Julie A. Ask, vice president and principal analyst at Forrester Research Inc.
"Augmented reality works really well when it is treated as a means to an end, a tactic or tool that can help simplify access to or consumption of information," Ask says. "Companies that embed the technology as part of the purchase flow have the right idea because this technology is where the world is headed."
She also encourages retailers to consider how augmented reality can be used for all kinds of products, not just those that consumers want to try on or visualize in their homes. "Take the Amazon Flow app, where you point the camera and the price and consumer ratings pop up," she says. "It's about overlay of information on top of something."
But augmented reality certainly shines as a way to let online shoppers see how something would fit on them, as Ice is offering with its mobile app that allows shoppers to try on rings and bracelets.
A shopper selects Try On Jewelry on the home screen. The app displays a screen with simple instructions on how to use the system. Then the shopper finds a ring or bracelet she likes and on the product page selects Try It On. She presses Camera and the app shows the camera display with the ring or bracelet hovering in the middle. While focusing her smartphone camera on her finger or wrist, she uses the app to line up a chosen ring or bracelet on the image of her finger or wrist, then snaps a picture.
Then she can pinch and zoom and swipe until the product is just the right size and in just the right place. She then snaps a final picture, which she can share with friends through Facebook, Twitter or e-mail.