Online shopping is dominating the world of retail but there is still one part of the process where customers falter – the all-important checkout.
At this point, many customers change their minds and fail to convert their interest into a purchase.
It's a decision that undermines all the investment the retailer has made in the e-commerce system, while the customer has wasted a significant amount of time on a journey they do not complete.
There are many reasons for poor conversion but a common one is the gap between what the customer is seeing online and the reality of owning the product.
People buying a sofa, for example, may think that it would look good in their home but have a nagging doubt that prevents the final click on 'buy'.
For these customers, the online experience is not quite real enough to give them full confidence in their purchase.
A technology that could bridge this gap between the online and offline worlds is augmented reality (AR), and its potential is explored in Making Omni-channel an Augmented Reality: The Current and Future State of the Art, a new paper by Mathew Chylinski, a senior lecturer in the school of marketing at UNSW Business School, and a team of international colleagues.
The study is the first to fully map AR through the customer experience – from problem recognition to purchase – across online and offline channels.
Smooth out obstacles
Although AR is in its early stages, Chylinski and his co-authors find the technology offers "myriad opportunities" to provide customers with a seamless journey that smooths out obstacles through "embedded, embodied and extended customer experiences".
"There is a very large push from the technology side towards AR and many businesses think that this is a new approach to engaging customers," says Chylinski.
"But from the customer perspective, I think there is a process of learning and adapting and at this stage there is no huge uptake, even though there is a lot being done and invested in the technology."
'Because you can produce these virtual images embedded in a physical context it is a natural connection'
– MATHEW CHYLINSKI
One brake on the adoption of AR has been some early and well publicised misfires. Google Glass, for example, promised so much in 2013 but is now the subject of case studies for failure, with analysts citing privacy concerns, poor marketing and a basic dearth of use cases.
Google hasn't had many failures, but people who paid US$1500 for this product are commonly known as "glassholes".
But while Google Glass is being reinvented in industrial applications on the heads of factory workers, other AR developers are putting investment into marketing solutions but are releasing their new applications with a little more caution.
"We see this with a lot of companies wanting to invest in the technology but they don't have a very clear idea of how it is going to affect their marketing strategy," says Chylinski.
These efforts have so far failed to impress customers who no longer complete their buying journey exclusively through one channel, but who expect firms to integrate online and offline experiences into a seamless omni-channel.
Embedded digital content
The research paper shows the present gap between business investment and the consumers' experience.
Chylinski and his colleagues quote the Temkin Group, which found that 54% of UK customers were disappointed with their most recent buying experiences, both online and offline.
Going back to the sofa example, many customers are dissatisfied when they discover that a sofa which looked good online does not actually suit the décor in their homes.
But when they are in-store, they miss the abundance of product information they can find online and which helps inform their purchase.
Undermining the customer experience, says Chylinski, is the failure of many B2C businesses to successfully link their online and offline channels.
According to a survey by DigitalBridge, customers say they are more likely to purchase when firms offer AR applications but a majority (51%) say that retailers are failing to take full advantage of the technology.
There are some innovative developments, however, and some global brands have already rolled out impressive AR examples that show the way forward through embedding digital content such as product information, images and animations into a customer's physical environment.
'Ultimately, I see technology developing to a point where AR has merged with our perception of physical reality'
– MATHEW CHYLINSKI
Furniture and homewares giant IKEA, for example, has a solution to the sofa dilemma. IKEA has launched an app called Place, based on Apple technology that enables customers to insert and then share any product into any space using a smartphone.
Customers can scroll through the IKEA sofa catalogue and virtually insert them into spaces in their homes. Everything is in 3D and to scale so customers can understand if the items will fit the room.
If customers are undertaking a more extensive home renovation, they can also use the AR app from paint company Dulux to envisage different colours on their walls.
Cosmetics brand L'Oréal purchased virtual reality app developer ModiFace in March of 2018, and has rolled out an app where customers are able to virtually try on make-up, integrating the sensory experience of trying on a physical product into the online experience.
Realistic and compelling
In a similar example, European eyewear company Mister Spex has an AR app where buyers can try on virtual sunglasses.
Still in fashion, Nike's in-store customiser enables shoppers to virtually design a pair of shoes, combining customisation and social connectivity.
The advantage of these examples, says Chylinski, is that they link the online and offline environments in a seamless way.
"AR transcends both the online and the offline," he says.
"Because you can produce these virtual images embedded in a physical context it is a natural connection."
In their research paper, the co-authors attribute AR's success to a concept called situated cognition, a theory that explains how people naturally engage in information processing and decision-making.
AR, Chylinski says, drives situated cognition in that it makes the customer experience more realistic and compelling.
That moment of doubt at the online checkout, when the customer steps back from the buying experience to reconsider, is less likely to occur in a situation in which they are embedded.
AR is also more effective than fully immersing customers in synthetic environments through virtual reality technology, because AR supplements reality rather than replacing it.
"It is the perfect lynchpin between the online and offline worlds and provides a natural application for a situated cognition perspective," says Chylinski.
While many of the present examples are in the online world, AR is also likely to soon find its way into the physical store.
"When they compete against a big online retailer like Amazon, physical retailers are disadvantaged because they have to keep smaller assortments in-store than are available in an online catalogue," says Chylinski.
"But AR has the ability to bring that processing power into the physical store. You might be able to point your device and look at a shelf of products and search according to some criteria, such as looking for low-sugar products on the breakfast cereal shelf.
"AR can add information to products, such as displaying ratings and reviews, and enhance the physical objects with additional information."
For retailers, customer engagement is critical, and AR presents as a key technology to drive engagement and transform customer experience.
Although it is still at an early stage, adoption is likely to gather momentum in the remaining years of this decade and arrive at a point that today seems like the stuff of science fiction.
"Ultimately, I see technology developing to a point where AR has merged with our perception of physical reality," says Chylinski