Considering the recent evolution of online shopping, one would think that the sector has peaked . However, the newest technological advancements allow retailers to enhance customer journeys and increase customer engagement even further. This new era of shopping is led by VR and AR which are becoming the new staples of ecommerce services. In this article, we explore the benefits of virtual stores, the most interesting use cases, and their future outlook.
What is a virtual store?
A virtual store is an ecommerce experience powered by VR and AR technologies. It can be a virtual reality retail store or a mobile augmented reality app that allows customers to see how a sofa would fit in a room. A virtual store is a novel way of closing the gap between the physical world and the online realm while providing customers with personalized and satisfying experiences.
While it’s quite logical to attribute the increasing popularity of virtual stores to the complications caused by the pandemic, technology has emerged as an alternative tool for addressing the most basic customer needs.
In a nutshell, the majority of consumers want to be confident in their product choice, that the price is right, and that the product is easy to buy. Virtual stores can cater to all these needs by allowing consumers to virtually try products and instantly access information about them while also providing highly engaging and immersive shopping experiences.
How virtual stores can make a difference
Recent McKinsey research reveals that consumers who shop almost exclusively online find virtual shopping experiences very attractive. This implies that VR and AR are key technologies that can attract these digitally and tech-savvy consumers and enhance brand loyalty among them. However, there are many more advantages that virtual stores can bring to their adopters.
Drive more sales
By enabling customers to see how products look on them or in their apartment, companies can drive more sales.
Improve customer engagement
With captivating experiences provided by virtual stores, retailers can increase engagement and establish meaningful emotional connections with their customers.
Streamline marketing research
Virtual stores enable companies to conduct marketing research and test different store layouts and concepts using significantly fewer resources.
Enable virtual store exploration
Virtual stores enable customers to shop anywhere by exploring virtual replicas of brick-and-mortar stores or branded imaginary worlds.
Deliver more personalized experiences
Virtual stores enable retailers to analyze customer shopping behavior in great detail and create highly personalized experiences.
Enable virtual try-ons
While ecommerce technology has its numerous merits, it still doesn’t allow customers to try on and touch products before buying them. Companies have been trying to overcome this limitation in various ways, but all the influencer partnerships, generous return policies, and product videos are still not enough. In the meantime, immersive technologies like VR and AR can close the gap between physical and digital and significantly increase consumer confidence in their purchasing decisions.
With AR, consumers can see how a product will look on them or in their environment. For example, the Nike Fit app allows users to accurately determine their shoe size by pointing a smartphone camera at their feet. Nike reveals that this AR feature significantly increases the likelihood of purchase because consumers are confident that they’ve selected the right size.
By making online products “tangible,” brands enhance and improve buyer confidence and, in turn, reduce returns. Customers are more likely to click "add to cart," resulting in an increase in purchases.
In 2020, Gucci partnered with a Belarusian start-up, Wannaby to create AR versions of its entire footwear collection and allow shoppers to try on shoes using the Gucci mobile app. In the course of their partnership, the companies went beyond the initial project scope and designed a pair of shoes that can be bought and worn only digitally. After the purchase, the neon-colored Gucci shoes can also be worn by users of the virtual reality platform VRChat and Roblox. The ever-increasing attention of these big brands towards online game platforms like this isn’t surprising, since more and more Gen Z consumers are purchasing digital items in video games.
What is more, instead of trying to visualize how a piece of furniture will look in their living room, customers can check for themselves if it is aesthetically pleasing using AR. Given that furniture products are often big-ticket items, customers need to be sure that they are making the right purchase.
Pinterest has recently announced partnerships with a number of US furniture retailers and home decor stores to allow customers to virtually place items in chosen environments. With AR, more than 80 thousand shoppable Pins can now be viewed in consumers’ living spaces directly via the Pinterest app. The company has also discovered that customers who used the ‘Try On’ feature are five times more likely to purchase.
Dyson, a British technology company mostly known for its vacuum cleaners, now provides customers an opportunity to interact with its products in virtual reality. For example, customers can virtually clean the floor with Dyson’s newest cordless vacuum or see what hairstyle they can get using their hairdryer.
Interestingly, Dyson reveals they have been using VR to develop new products for years, and it’s only logical to now supply this technology for customers, enabling them to test and try products in a new and engaging way. Moreover, in their virtual store, Dyson uses actual design data, making sure that virtual representations accurately reflect real product dimensions.
It’s worth noting that since users can’t physically touch products in these VR-enabled virtual stores, retailers should at least enable them to view a virtual hand that interacts with the environment. According to a recent study published by the Journal of Marketing Research, users are much more likely to make purchasing decisions in virtual stores if they can see a virtual hand touching the product, like in the image from Dyson VR Demo provided above. The observation of a hand in the virtual store, also known as vicarious touch, fosters the feeling of product ownership in a user and increases the likelihood of a purchase.
Allow customers to virtually browse stores
In the last few decades, cross-channel retail has been gaining traction. Being used to the benefits of online shopping, most consumers now expect instant access to product information in brick-and-mortar stores as well. According to The future of shopping by McKinsey, the ability to instantly access all relevant product information and assess product suitability can significantly encourage customers to come back to a particular virtual store. For this, virtual stores can combine conventional physical shopping experiences with online shopping features, including fast access to product information, detailed search, comparison capabilities, and personalized suggestions provided by machine learning-based recommendation systems.
For example, as soon as shoppers enter some Lacoste stores, they can scan trigger images on the floor and see color and style options, prices, and other information about a particular sneaker model. Next, consumers can virtually try on the sneakers, take a snapshot of themselves, and share it with friends and family to get their opinion.
Wrangler’s dedicated website allows customers to access a 3D rendering of their flagship physical stores and explore and purchase products. Users can ‘walk’ around the store by clicking arrows similar to Google’s Street View Map and obtain product information by selecting respective icons.
Consumers sometimes feel that a traditional ecommerce store doesn't quite provide everything they're looking for. In these cases, they ordinarily have no option but to visit a real store. But with virtual stores, consumers save time and hassle, and can digitally access an in-store experience from the comfort of home.
In 2021, the brand Charlotte Tilbury decided to step up their game and allow customers to explore its virtual stores in VR together with friends and family. This way, the company addresses customers’ need for one of the most common modern social activities – group shopping. The technology allows customers to talk to one another and share advice, just as they would in the real world.
Interestingly enough, instead of trying to resemble some of its physical locations, Charlotte Tilbury decided to place a virtual store in an imaginary world. This design choice was expected to arouse interest among the younger generation and drive customer engagement.
Strengthen customer relationships
A virtual branded experience is becoming an increasingly popular way for companies to build stronger connections with customers. Immersive shopping can evoke much stronger emotions from customers than common online shopping, allowing companies to improve customer retention and increase customer lifetime value.
For example, Nike launched a fashion show inside the immensely popular multiplayer game Roblox. Inside NIKELAND, a bespoke world that resembles a real-life Nike headquarters in the Roblox universe, players can dress their characters in digital Nike products. By expanding into the Roblox universe, Nike aimed to establish an emotional connection with a younger audience, who have a high chance of converting to loyal customers when they grow up.
Conduct better marketing research
Besides improving brand loyalty, VR can also be extremely beneficial for conducting various marketing research activities. Conventional retail research methods are notoriously expensive, as they require products and a store layout to be physically rearranged. Given that VR allows for creating almost unlimited variations of physical space, retailers can experiment with different concepts to understand what store design and product layout drive more conversions in real life.
For example, Kellogg, the world’s leading cereal company, teamed up with Accenture and Qualcomm to conduct VR-based market research. Having research participants wear a VR headset embedded with eye-tracking tech, Kellogg determined the best product placement and assortment for its new product Pop-Tarts Bites. Initially, based on conventional online surveys, Kellogg concluded that consumers expect to find new products on higher shelves. However, VR-based testing produced slightly different results, which the company decided to rely on. Eventually, Kellogg reported an 18% increase in sales of Pop-Tarts Bites during testing, which indicates that VR-driven marketing research can provide more accurate results.
Collect more customer data
One of the most critical yet not very obvious advantages of virtual stores is significantly enhanced opportunities for customer data collection. Unlike physical stores, the virtual alternatives allow retailers to gather detailed data about the entire customer journey, including what products the customer tried on, which virtual store areas attracted them the most, and how he or she reacted to a product recommendation.
While similar customer data analytics features can be found in ecommerce solutions, virtual stores can enable retailers to create very detailed customer profiles. For example, the newest VR technologies allow tracking eye movement and hand gestures and can prove helpful for determining what exactly triggers purchasing decisions. Some VR devices can also track heart rate and body temperature, which can be used by companies to gauge consumers’ emotions regarding a particular product. Having properly analyzed all these metrics, retailers can develop more effective marketing strategies and provide customers with hyper-personalized experiences.
AR/VR technologies provide customers with an engaging and interactive experience, resulting in a memorable encounter, a happy sale, and increased possibilities of customers returning.
Compared to standard ecommerce practices, virtual stores provide a more natural shopping experience. Whether partial immersion using AR or an expansion to a fully virtual world with VR, virtual stores can significantly improve customer engagement and brand reputation, enable hyper-personalization, and allow for advanced marketing and research activities.
While some companies may struggle to justify investments in what feels like an immature technology, virtual shopping is highly likely to become one of the main buying channels for consumers. The aforementioned use cases demonstrate that both consumers and businesses are ready for the new era of shopping.
Given that both VR and AR are quite complex technologies, we advise companies to start exploring virtual shopping possibilities as early as possible to build the necessary knowledge base and become market leaders. Here we can draw a parallel with the ecommerce boom in the ’00s. Those companies that were reluctant to embrace the new technologies were swiftly bypassed by their more nimble and forward-minded counterparts.