The New E-Commerce Experiences Driving Results
It’s been said that the e-commerce growth we’ve seen since March 2020 would’ve taken years to achieve if COVID-19, the global pandemic forcing people around the world to stay home, had not accelerated trends. Indeed the events of the second quarter of the year have changed e-commerce dramatically.
Throughout the 2010s, there was experimentation with digital tools aimed at helping establish apparel fit before buying (“fit tech”), providing augmented reality (AR) try-ons, offering social shopping experiences and more. While getting fit right on the first try was an important endeavor toward lowering online return rates and increasing profitability, in-store returns were always easy enough for many customers. AR felt like a nice-to-have but not-completely-trusted proxy for real life. And social shopping never really took off in the United States.
But as consumers have had more time at home to spend on social media and e-commerce penetration as a percent of retail spend has grown from 11% in 2019 to 15% this year as stores have been closed, the stakes feel higher for new or underutilized e-commerce tools that previously may have been managed on the periphery of the core as “innovation projects.” Now, they’re becoming just another cost of doing business for retailers and brands that need to sell more and connect more without the benefit of their primary brick-and-mortar channel. And they’re solidifying themselves as basic expectations among shoppers whose needs can no longer be met in stores.
First, anyone who’s traveled, especially to Asia, in the past decade has wondered why QR codes aren’t the norm in North America. The obvious use for them will be as a sanitary, touchless payment option in retail stores. But for e-commerce, think about their value as a vehicle for enhanced product information, as 1-800-Flowers recently did in connection with a unique bouquet collaboration with Jason Wu. This is one way to make more special e-commerce deliveries stand out from what now feels like a daily deluge of household staples arriving in nondescript boxes.
QR codes also can play an important role in jumpstarting AR experiences on which consumers need or want to rely more heavily now. Jon Cheney, Founder/CEO of Seek, an AR software company he says has grown 300% since March. Further, Cheney cites a 600% increase in AR usage on Seek’s clients’ websites in the same period, with furniture retailers, including Overstock, leading the way. It’s no wonder: In one recent furniture pilot Seek ran, session length when AR was used was 26 minutes (vs. 9 minutes for the control group) and order size was $1900 (vs. $1200). Conversion increased by 100%. Cheney sees AR impact for the furniture and appliances sector growing as AR wearable devices become mainstream, at which point retailers without AR selling tools will be left behind.
"The pandemic and the concurrent shift to digital has made Seek busier than ever because brands are understanding the best way to see an item online is through augmented reality. Seek's customer data shows conversion rates are increasing anywhere from 10% to as much as 200%, product returns are dropping by 25% and time to make buying decisions has been cut in half,” says Cheney.
The opportunity extends to shoes and, soon for Seek, jewelry: Cheney revealed this week that his company is weeks away from releasing a web-based ring try-on tool, “an industry first that will allow jewelry companies to offer ring try-ons directly from their mobile browser by training the camera to recognize a customer’s hand and then be able to recognize which finger she or he wants the ring to go on.” Rings are just one example and, “bringing these technologies directly to the web [across product categories] will be game-changing,” states Cheney.
Leyla Foschi, Social Lead at digital marketing agency PMG, attributes some of the growth in AR usage not just to consumer needs, but as a way to fill time. She explains, “Snapchat reported that time spent with their AR lenses was up 25% [since stay-at-home practices began]. AR has been around for a long while, but COVID-19 has accelerated its adoption. Now, users and brands are much more comfortable with the technology. Brands who widely adopt AR first will be at the forefront of a tightened purchase path.”
Since last October, beauty brand Smashbox has been on a mission to reach and engage the next generation of consumers in the camera, and has partnered with AR platform Camera IQ to bring AR experiences to life across social and video chat platforms. “As consumers adjusted to life at home, the use case for AR has accelerated beyond a fun and lighthearted way to connect with friends. It is now fully ingrained in both our personal and professional lives,” says Samantha Citro Alexander, Smashbox’s Director of Consumer Engagement & Integrated Marketing for North America. “And as online shopping has accelerated, it has also become an essential tool for try-on and product discovery,” she went on to say.
As a case in point, Smashbox’s “Halo” AR experience (launched in late February to promote their new Halo Fresh Perfecting Powder and Halo Highlighting Duo) has reached over 4,320 minutes, or 3 full days, of play time. More importantly, the percent of users who engaged with the AR functionality after viewing Smashbox’ Instagram story and has nearly quadrupled since January. Based on these self-reported metrics, the brand feels the media value of AR has proven, time and again, to outperform.
Despite increased engagement with AR, the experience may impact the path to purchase without removing the need to touch and feel merchandise. Michelle Collins, Founder/President of [a] Non-Agency, observes, “The trouble with these [fashion try-on] AR apps are that they fail to factor in weight and comfort… the AR experience helps refine the choice, but will require actual product trial.” However, these tools may reduce the extent to which retailers are shipping options that are unlikely to drive conversion or are more likely to result in a return.
On the other hand, Oshiya Savur, VP of U.S. Marketing and Education at Revlon, who points out how COVID-19 has accelerated several underlying trends, says, regarding beauty, “So far online channels have largely been replenishment occasions or pure discovery for reviews and claims. Quite honestly, trial and consumer engagement have been hard to drive. However, with acceleration of purchases being made online, we find that trial occasions are also happening online. In the case of beauty categories, where shade match to skin tone is critical, we have seen a rise of AR adoption both at the retailer level and consumer level.”
When it comes to virtual reality (VR), Collins is more optimistic about retailers using virtual store visits to identify needed business changes than about their driving conversion among customers. “Virtual visits to stores seem less likely to support buying, but do seem effective in supporting the planning experience. [VR] is an effective tool for replacing the complicated floor plans [in] large-scale hospitality and retail environments,” she says.
But some companies see new consumer-facing use cases for VR. One of those is Beautyque NYC, which had planned to open a physical location this summer providing a selection of wellness brands with exposure, product displays, marketing and events. Instead, the nascent company pivoted and created what it claims is the first 3D virtual in-store experience in its industry in May 2020. “Instead of developing another regular e-commerce website, which sounded boring, we decided to push the technology and create the closest possible experience to a physical store, giving the consumer the sensations of being in a real store,” explains Sonia Khemiri, Beautyque NYC Co-founder.
The company reports strong interest from brands, naming Rejucream as an example of an early stage brand that’s signed on and AmazingCosmetics as a more established player now on board. According to Beautyque NYC, both brands are looking for some sort of customer engagement; Rejucream to gain traction and awareness and AmazingCosmetics to expand into a new community and be part of an innovative retail initiative.
Emily Rudman, Founder of beauty brand Emilie Heathe, thinks the multi-brand digital concept model makes sense when the fee to participate is relatively low in proportion to the sales potential, which brands typically keep. She’s grateful for those “using this time to be creative about their selling and retail strategy, knowing they’re at times supporting new or small businesses.”
Rudman, Rejucream and AmazingCosmetics aren’t the only ones intrigued by a virtual storefront: In late April, VR e-commerce startup Obsess reported a 300% increase in inbound inquiries in the prior four weeks, compared with an average month in early 2019.
“As more people move online, [retailers and brands] need to think about how they can leverage their infrastructure,” says Melissa Jackson-Parsey, Chief Strategy Officer of B-Reel, which developed an immersive “Digital Boutique” for Hublot pre-pandemic that’s now expected to represent 10-15% of the watch company’s U.S. sales this year and may expand to other markets. The goal, Jackson continues, is to, “create experiences online that are as differentiated as those found in-store... The definition of e-commerce, and its place as part of a brand’s omnichannel offering has to evolve. From templated, transactional experiences, e-commerce has the potential to become as delightful and additive to the brand as in-store experiences once were, and perhaps even better.”
While true, certain sectors, including watches, jewelry and wine, historically have been slower to embrace digital. Laetitia Hirschy, Founder/CEO of Kaaviar PR, a luxury marketing and communications firm, says, “Luxury brands are still trying to avoid a cash-for-goods transaction and retain a more special experience but, with almost all shopping now taking place online, they‘ve had to adapt. Simply offering a luxury good online without the guidance of a knowledgeable sales advisor throughout the purchase experience can be insufficient to justify spending thousands of dollars with just a click.”
To create socially distanced paths to purchase, Hirschy says many luxury brands have “finally” added a chat function or 1:1 video appointments on their websites and that doing so can help generate up to $100,000 per week in revenue. “The key to success is being available when the customer reaches out, usually spontaneously,” Hirschy concludes. Savur, who talks about recently-accelerated trends, validates this: “In luxury categories which are high touch and high service, we are seeing brands offering virtual consultations on their owned channels, through their trained staff, to their consumers.”
This doesn’t need to mean reinventing the wheel nor adopting slick new technology: Some companies are simply doubling down on what they were already doing with existing digital tools. Helen Aboah, CEO of UrbanZen, A Philosophy of Living By Donna Karan, that sells apparel, footwear, jewelry, artisanal products and home furnishings, said the closure of stores quickly meant 1:1 Zoom and FaceTime customer appointments and extended hours for e-commerce live chats with store associates for questions regarding fit, size and personal styling.
“We offer consultations and sales appointments with our retail specialists that can be booked online or over the phone. We continued to provide the personal experience customers know us for through our digital channels and that required meeting our customer where and how they are most comfortable during quarantine, at home,” Aboah continued, before adding, “Our wellness lifestyle programming which was happening in our retail stores are now being offered digitally through Instagram and on our e-commerce site. The response has been incredible; we have seen record level engagement on Instagram and e-commerce sales.”
Still, not every experience featuring humans can - or should - be 1:1. Sayur, of Revlon, points out, “While in China, livestreaming is already driving a lot of commerce, we are finding tech innovation in this space in the U.S. There is still a ways to go in terms of adoption by retailers but we do expect that this will be the new wave of creating engagement online.”
L’Oréal Group brands including Urban Decay, Lancôme, NYX Cosmetics and It Cosmetics have been offering shoppable livestreams on their brand sites in North America during the pandemic. Among Estee Lauder’s brands, Bobbi Brown, Clinique and Kiehl’s first hosted these events after the quarantine began in March. But while China has Tmall to host livestreaming events, the U.S. lacks a comparable platform since Instagram Live still isn’t shoppable. So while business results are difficult to quantify, international evidence combined with recent adoption suggests there’s reason for optimism.
The power of QR codes, AR, VR, video chat and livestreaming isn’t just the number of people engaging with these right now. Deloitte’s back-to-college survey, released today, reports that 10% of consumers plan to use emerging technology more as part of their upcoming shopping journeys than in the past. While that may not sound like much, Rod Sides, Vice Chairman, Deloitte LLP, and U.S. Retail, Wholesale and Distribution Leader, provides the context that historically almost no one has said they planned to do so. Similarly, 29% of back-to-school shoppers surveyed said they’ll use at least one new technology in 2020, which he points out is double last year’s rate.
Beyond all of the benefits discussed above, Sides links emerging technology to the trend toward frictionless commerce, asserting that, “Convenience continues to rise in its importance relative to price and product.” For retailer and brands, including those approaching Deloitte for consulting services, the discussion extends to the bottom line and “how you use new tools to bend the cost curve permanently,” says Side.
Whether it’s leveraging marketing expenses with AR tools that go viral, using AR to convert more and reduce returns, deepening engagement to sell more via VR, developing fruitful long-term relationships by connecting 1:1 or livestreaming to connect with the masses, there’s more consumer openness and more business need than ever before for new e-commerce experiences. Sides concludes, “Retailers that can stay nimble and react quickly to changing needs amid the challenges of COVID-19, will likely be the ones that will have an opportunity to appeal shoppers this season."
This article was originally published by Forbes on 7/8/20.