Marketers across categories are talking about the potential for augmented reality as a critical tool in the ecommerce landscape, but while many are intrigued by the front end excitement of immersive experiences, decision makers are asking what the return on investment for augmented reality and 3D will be.
Good news for these leaders, early adopters of augmented reality in ecommerce and retail have seen impressive results in some of the most meaningful KPIs for ecommerce brands. Let’s look at how brands are measuring the success of AR and 3D in retail with three primary KPIs.
How To Measure the Effects of AR in Ecommerce
Time spent on site, or dwell time, is often referenced as a primary KPI for overall website experience, but why is time spent on site so important? The amount of time a consumer spends on a site is indicative of how useful the website and the information provided is to them. For a product page, this is closely linked to the consumer’s interest in the product, and their intent to purchase.
The basis for this connection is human psychology. Humans process visual information 60,000x faster than auditory or text information, and the more time they spend with the information, the more they retain. When consumers spend more time with a product, they are more likely to imagine themselves with the product, creating a sense of connection and ownership. That sense of ownership leads consumers to place greater value on the product, a phenomenon known as the endowment effect.
As it relates to 3D and AR, time spent is a key performance indicator not only for the value of the overall experience, but in comparison to products not enabled with an immersive component. Brands are able to track changes in dwell time, as well as where in the purchase process the greatest amount of time is spent, or where a sale is lost.
3D and AR have shown to drive longer dwell times for both advertising and web traffic. Eyewear brand Bolle saw dwell times of nearly 20 seconds with their 3D product models, and campaigns using AR drove an 85% increase in new user traffic to the brand site.
Comparing time spent on product pages enabled with augmented reality versus those that are not is a strong indicator of buyers’ level of engagement with more immersive shopping experiences.
Conversion rates are often viewed as the most important KPI for ecommerce, and for good reason. Conversion rates equal sales, and sales are the end goal of a business. But brands need to go beyond their overall product conversion rate and dig into specific drivers of variances in conversions.
There is significant data demonstrating the importance of a better customer experience for driving conversions in ecommerce; research from Adobe shows 2x the average order value for brands that focus on the customer experience. 3D and augmented reality have taken that a step farther, driving 94% more conversions on Shopify compared to product pages not enabled with immersive components. 3D/AR encourages shoppers to spend more time with the products, customizing them to their unique preferences and fueling the feeling of ownership. Furthermore, high fidelity 3D experiences increase a buyer’s confidence in the product’s appearance, empowering them to make a purchase in a short period of time.
Among brands using augmented reality for retail, some of the greatest successes have been seen in the home design and furnishing categories. Online platform, Houzz, saw users spending 2.7x the amount of time in their app with AR, and 11x from shoppers engaging with AR enabled products. Home Depot saw similar success, with a 12.5% click through rate from AR ads and shoppers converting 2-3x more when AR was activated during their shopping trip.
The amount of data being collected on the effectiveness of AR as a driver of conversions is quickly growing, but early evidence suggests a strong relationship between AR and higher sales.
There is nothing worse for an ecommerce business than dealing with returns. Not only is there a loss of a sale, but the brand now must handle (and pay for) processing the return, and determining if the item can be resold. In the event that the product cannot be resold, it is a further loss and wasted inventory. Estimates place the cost of returns for ecommerce businesses at $550 billion.
Ecommerce return rates have historically been significantly higher than brick and mortar, and online retailers are plagued by complaints that physical retail sees much less often. On average, 20% of online purchases are returned, compared to only 9% for in store purchases. For retailers offering free shipping or returns, this represents a huge draw on profitability. So why are ecommerce returns so much higher than physical retail?
Categories such as apparel are often hit by bracketing, or buying multiple sizes and only keeping the correct fit, which contributes to high returns, but one of the largest complaints by consumers when shopping online is unmet expectations in product appearance, quality or function. 22% of ecommerce buyers have returned an item because it did not look like the picture online.
High fidelity 3D and augmented reality are helping retailers address the concerns around product appearance by bringing products to life online with renderings that look as good on the screen as the product does in person. Immersive 3D and AR go beyond photorealism to allow buyers to evaluate products from all angles. For products that offer shoppers multiple options for appearance and features, 3D configuration shows exactly how their preferred options will appear in real life. When paired with AR, the experience is far more compelling than traditional photos and video, leading to more confident purchase decisions. 66% of consumers say that 3D/AR visuals would increase their confidence that they are buying the right product.
The value of 3D/AR in reducing ecommerce returns is more than just talk, however; Shopify reports that merchants see a 40% decrease in returns after deploying 3D visualization. Home retailer Build.com has seen return rates 22% lower for shoppers who use their AR product visualization as compared to those who did not use AR while shopping.
As more brands look to deploy 3D and augmented reality within their shopping experience, the $550 billion hit felt by ecommerce brands is sure to decrease. Paired with greater conversations and higher average order values, the results of 3D and AR on the success of ecommerce will be welcome across product categories.