Commentary

How to measure impact of 3D, AR e-commerce

Garrett Eastham, chief data officer with Vertebrae, explains why retailers striving to get the full picture of how 3D visualization and AR can impact business must evolve metrics along with their e-commerce sites.

Photo by iStock.com

May 1, 2019

By Garrett Eastham, chief data officer, Vertebrae

Augmented reality commerce (3D & AR product experiences) can help merchants overcome e-commerce's steepest challenges—starting with the industry's high rate of returns. But to get the full picture of how 3D visualization and augmented reality can impact their businesses, merchants must evolve their metrics along with their e-commerce sites.

Returns have long dogged the e-commerce sector. While return rates for retail as a whole hover between 8 and 10%, online the number is much larger, with anywhere from 20% to 40% of e-commerce purchases being sent back.

Consumers routinely buy multiple sizes and styles with the intent to return the rejects, a practice Amazon and other major retailers have tried to combat by making returns as easy as possible. But this customer tactic is simply a practical workaround to a major gap in the online buying experience: the inability to scale, touch, and interact with items prior to purchase. E-commerce consumers want to gauge product fit, both physically and aesthetically, and to date, buying and returning items has been the best way to do that.

The advent of 3D product visualization and augmented reality may soon eliminate this purchase barrier, with mobile technology available today that enables shoppers to view 3D products from multiple angles and to virtually try items on or in their space in context.

These new tools have the potential to reverse the tide of returns — but quantifying the impact of 3D and AR e-commerce goes far beyond that single number. Augmented reality e-commerce holds the promise of driving more sustainable purchases, whose ripple effect requires merchants to adopt a nuanced approach to measuring the impact of 3D and AR initiatives.

Organizational capacity is a factor when it comes to realizing, and measuring, the potential of AR e-commerce. For some, supply chain issues may prevent ramping up sales too quickly; for others, revenue growth may be a more achievable metric to track than monitoring the impact of 3D and AR on returns occurring across multiple store locations. But in general, retailers and brands can expect the following new behavior patterns to emerge throughout the customer lifecycle:

Consideration: Category-Wide Engagement

Metrics to watch: Engagement by category and product over time, repeat visitor behavior, retargeting ad performance, customer service pre-sales costs

Today's path to purchase includes numerous diversions, rest stops, and loops as consumers encounter products online, study specs, weigh customer reviews, compare prices, save items in shopping carts, look up local store inventory, gather social proof, and otherwise take the scenic route to order completion. AR e-commerce has the potential to help shoppers make each brand interaction along the path a richer, more engaging experience that broadens awareness of the breadth and depth of the product offering.

Shoppers are eager to access research tools that provide real-life context: 57% of respondents in a Vertebrae study said they wanted help visualizing how products would look in their environments, and a quarter seek ways to virtually try on items or looks. With the help of such tools, shoppers may reject the initial products they consider. But by offering the means to evaluate products accurately, sellers can earn shoppers' trust — and with the help of retargeting and re-engagement campaigns, they can win return visits and encourage consideration of alternatives within the category.

3D and AR tools can also help balance the cost side of the consideration phase. The visual context provided by immersive e-commerce tools can instantaneously resolve uncertainties about fit, usage, and function, reducing the number of customer service calls related to product questions.

Purchase: “Qualified” sales

Metrics to watch: Conversion over time, revenue per visit, average order size, cost per acquisition

As shoppers gain more knowledge of the available products and the pros and cons of each, merchants can nudge them toward higher-priced items within the category. AR e-commerce supports such upsell efforts with tools that give shoppers a 3D view of advanced features and showcases how top-of-the-line items look in real-world context.

When shoppers place orders after an informed consideration phase, their purchases are “qualified” — meaning that their expectations are in alignment with the reality of the products they'll receive. Merchants who implement AR and 3D visualization tools on their e-commerce sites increase the chances that shoppers will make the right match for their needs.

Capturing this qualitative difference in the form of quantitative KPIs can pose a challenge. Instead of relying solely on traditional e-commerce metrics that emphasize order volume and single-session performance, merchants should develop new formulas that focus on revenue generation per customer and track purchasing behavior over time.

This might require different approaches to analysis than what is traditionally used today. Analysts will need to get creative — for example, looking at intra-day session partitioned by geography to delineate and understand the impact of deferred shipping. Analytics data may also need to be enriched with other system information, such as store geographies tied to latitude and longitude paired with store loyalty export data.

Post-purchase: Less friction, more satisfaction

Metrics to watch: Return rate, post-sale customer support costs, customer satisfaction rates, customer review content

When shoppers can examine products from multiple angles and visualize them in their own environments, they're less likely to discover unpleasant surprises when the items arrive — and to return items either to stores or through the mail. As a result, merchants who use 3D and AR e-commerce tools can gain significant cost savings in their reverse logistics operations.

In addition, merchants who help shoppers make the right product match can burnish their reputations through positive customer reviews, which can increase conversion rates by 270%, as well as word-of-mouth recommendations, and overall brand satisfaction leading to repeat business.

3D and AR tools are poised to vastly improve the online shopping experience and solve persistent e-commerce challenges, starting by lowering returns. To capture the full picture of AR e-commerce's impact, merchants should rethink their business metrics to reflect the new shopping experiences they deliver.