VR & e-commerce: the big opportunity

Dan Grech is an Email Marketing Manager for a global luxury fashion retailer.

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Opinions are his own and do not reflect employers or affiliates.

Whilst MWC2016 is underway in Barcelona, the hot topic is VR. As Facebook's Mark Zuckerberg mused at the Samsung launch on Sunday: "I used to sit in my middle school math class, write code in my notebook and sketch images of a world where you could not only navigate to a 2D website, but transport yourself to a completely different place in reality".

VR will go through the same first generation product phase that wearables saw - over-promising and under-delivering. However, this doesn't mean that execs, especially in tech and retail, aren't starting to have some underlying thoughts about how they will foray into this space.

Whilst we don't need to brace for any overnight mass-adoptions of headsets, at least in 2016, I think it's worth starting to think about the areas that VR can add value to the many '2D websites' out there.

Whilst the creative minds in software are developing their bets already, I've been thinking for a couple of years about the areas that VR would benefit eCommerce, fashion retail in particular. This is an industry that has seen steady growth (approx 17 per cent YOY) since 2007 and a seismic shift from desktop to mobile and apps supporting that growth. This has enabled customers and brand advocates to be closer to their retailers of choice inventories than ever before.

It's challenging to think about how VR can simplify a purchase journey more than a well designed app does. There's definitely some improvements to a customer's decision-making processes. That said, I think even if the experience of browsing virtual stores was perfected as close as possible to the 'real thing' it's unlikely that a virtual store would achieve physical stores' conversion rates (approx. 20-40 per cent). It would be higher than online average (1-3 per cent), but this could be partly or fully for the same reason mobile apps enjoy a higher conversion rate - the visitor accessing an app (or VR store) is likely to be a higher quality visitor than a standard website one.

To me, the first core value will be beneficial to profitability rather than revenue.

Returns Rates

Returns rate are a big problem area. I've known them to average as high as 60 per cent for some e-commerce fashion retailers, although high quality imagery and video catwalks are the new standard, it's my opinion that there's still the majority of the problem to address. I've known of 'High Returners' automated emails to top culprits (whose return rates are 85 per cent plus) politely addressing the situation as well as surveying them on their satisfaction but that's to little affect. This can come across as a little passive aggressive but the value was in the survey responses.

The general consensus for customer returns were two reasons:

1) The inconsistency of how clothing sizes fit

2) Colours and shades looking different in person

There's a clear opportunity for VR headsets, and this is where I'm placing my bet, to be the platform for virtual changing rooms.

Some efforts were made in (my least favourite space) augmented reality but nobody has pulled off anything to note. Other retailers have been developing branded body scanning apps but no launches so far. 3D-A-PORTER is one, but has no known association to the YOOX NET-A-PORTER Group...

Shoefitr seems to have done well, reportedly reducing a US shoe retailer's returns rate by 23 per cent. But for most retailers who have a diverse product offering this requires investing time and money to only solve a fraction of the problem.

Fits.me (pictured) has tried to solve it with its Virtual Fitting Room. It was acquired last year by Rakuten, which I'm unsure to consider as a good or bad place to be in-light of announcing closure of operations in three APAC countries. Visiting a few of the listed sites that host their technology the option to use it isn't particularly clear, suggesting that it's not hugely effective. The experience was simplified to entering some height/weight information, all-in-all five metrics that don't seem wholly representational to the uniqueness of each body type or skin tone etc. It doesn't know enough about me to display exactly how something will look and usability is too flat.

The solution needs to be a full visual experience of my full body and face in front of a set of mirrors with exceptional detail. Anything short of this will be underwhelming and the user will not choose this over buying three sizes of the same product before returning two (or all).

What will the challenges be?

1) The environment - Creating an experience that the customer is comfortable with. It's a big head start that the user won't have to remove or apply any clothing, but visually there needs to be a lot of user testing across a range of demographics.

2) Mapping body types - The experience needs to be as simple as uploading a full body photo and, if necessary, answering a couple of preference questions.

3) Mapping products - Shooting and processing product imagery in a way that can show every angle clearly as the user looks in a virtual mirror will be the trickiest feature to develop. The more resources a retailer has to invest into this to get their catalogue live, the less likely they will be to trial the service.

What's the problem worth?

Halving the reported average returns rate of 40 per cent (although I'd known it to be as higher) in an industry that is driving trillions in annual revenue is highly valuable. Although some attempts have moved the needle slightly, I don't think the problem can be solved by the means of desktop or mobile. As VR headsets proliferate in the next two years we will see an answer soon.

What do you think?

Whether you work in e-commerce or you're an online shopper (or both) - where do you think VR will create the most value for you? Comment below, I'd love to hear more thoughts about this - or be told where I'm wrong.

Dan Grech

Dan Grech is a Marketing Consultant with a background in Fashion & eCommerce


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