Virtual reality is among the most hyped technologies of the last three decades. It’s been the next big thing since I was a child. I remember excited TV reporters donning huge VR headsets to navigate blocky and pixelated landscapes as far back as the nineties. But, in the last three or four years, it looked as if the hype was becoming a reality. Companies like Facebook and Microsoft were plowing big money into VR initiatives. Silicon Valley venture capitalists wrote huge checks for VR startups. Major movie studios created VR production units. Pundits declared that we were entering the VR age and that every industry would be transformed, including eCommerce.
But the VR hype seems to have died down. Companies like Facebook’s Oculus continue to iterate on their hardware, but there’s less palpable excitement. Investment in VR startups has declined. The VR gold rush saw billions of dollars invested in startups focused on creating VR hardware and software. In 2018, Silicon Valley investment fell by 81%. Across the US, funding for augmented and virtual reality declined by 46% to $809 million. A lot of money, but a fraction of what we’d expect if VR had taken off in the way the hype suggested it might.
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VR and eCommerce
What does that mean for VR in eCommerce? There are good reasons for eCommerce retailers to be interested in virtual reality. Our brains are wired for physical environments, not product catalogs. Virtual reality holds the promise of simulated brick-and-mortar shopping experiences, with personalization that is only possible in digital environments. Studies show that virtual reality enhances brand recall and increases purchase intention compared to traditional commerce. Virtual stores are more effective in generating cognitive and conative responses ” and that’s good news for retailers.
Retailers are finding many use cases for VR technology. Tommy Hilfiger created virtual reality runway shows within their retail stores to help shoppers experience products in a new way. J.C. Penny used VR to enhance customer engagement during special events. There is interesting research showing that designing store displays via VR is far more cost-effective. However, although these examples illustrate the promise of VR, they are mainly in-store demonstrations ” the retailer built the environment and provided the hardware.
VR has made less of an impact in the home. Last year, 7 million VR headsets were sold in the US. That sounds like a lot, but it’s a fraction of phone and smart speaker sales. Between April and June last year, headset sales were down by 34% compared to the same period in the previous year. The majority of these devices are bought by gamers and used for gaming, not for shopping. Facebook is invested in its effort to put VR in a billion homes, but consumers have been slow to take the plunge with VR hardware.
VR Innovations and VR Headsets
I suspect we’ve summited the peak of the hype cycle and we’re in for a period of gradual iteration and slow adoption. VR innovation will continue to be pushed by electronics giants who see it as the next big thing. They all have active VR products and projects, from Facebook’s Oculus Go and Quest to HTC’s Vive, Samsung’s Gear VR, and Google’s inexpensive mobile VR platform, Google Cardboard.
CES 2019, which took place in January, was less fixated on virtual and augmented reality than in recent years, but many VR-related products and businesses made their debut. Unsurprisingly, businesses are focused on VR as an entertainment platform, and the most exciting new products are aimed squarely at gamers. The 3D Rudder Controller for PlayStation VR gained a lot of attention, as did Pixmax’s ultra-high-resolution headset.
As things stand, gaming and entertainment more broadly are the driving force behind virtual reality, but that is not an indication that VR won’t play a role in the future of eCommerce. When the iPhone was first introduced, it didn’t excite consumers because of its mobile shopping possibilities. But almost everyone who has a smartphone uses it to visit eCommerce stores, and mobile eCommerce is a vital source of revenue for retailers.
Online retail platforms like Magento and Shopify are working on making it easier for eCommerce retailers to build virtual reality experiences for their customers. Magento’s Innovation Labs showcased how virtual reality can enhance the shopping experience in partnership with outdoor furniture retailer Country Casual Teak. Built with WebGL and Three.js, the browser-based virtual reality experience allows customers to experience the company’s outdoor products in an immersive three-dimensional environment.
WebVR and Retailers
WebVR should be of particular interest to eCommerce retailers. An open specification, WebVR brings virtual reality to the browser and is compatible with all of the VR devices I mentioned earlier. A widely adopted browser-based standard makes it cheaper and easier for eCommerce retailers to create virtual reality experiences for customers, who can plug their headsets into a machine with a compatible browser and start shopping.
This is also the year that telecoms companies get serious about the 5G rollout. Virtual reality on mobile uses a lot of bandwidth and requires lower latencies than current mobile networks can accommodate. 5G fixes those problems, offering a huge bandwidth boost and much lower latencies, making immersive mobile VR a realistic proposition for the first time.
Virtual reality will not be a massive revenue generator for eCommerce in the next couple of years, but that doesn’t mean retailers should ignore the possibilities VR creates. Research has shown that VR-environments are more conducive to sales than traditional retail or eCommerce. The technology is evolving to meet customer expectations, and the price of VR devices is declining. It won’t be long before capable VR devices become an impulse buy rather than a substantial investment. In 2019, VR isn’t a vital channel for eCommerce retailers, but forward-looking retailers shouldn’t ignore it ” VR will almost certainly become a viable eCommerce platform in the coming years.
