Shopping in another dimension

January 16, 2017 02:04 PM

Virtual reality as an online sales channel may not take off in 2017. Or in 2018. Or ever.

Wayfair Inc. knows this but the home furnishings e-retailer is investing in the bleeding-edge technology anyway. It’s a long-term investment, says Mike Festa, director of Wayfair Next, Wayfair’s research and development lab. This way, if or when the market takes off, Wayfair will already be a leader, he says.

“We’re anticipating that consumers will not adopt [virtual reality] technology for a few years, but at that point we will be well positioned to take advantage of the new platform,” Festa says.

Wayfair opened the Wayfair Next innovation lab in May and has already pumped out two virtual reality experiences for two virtual

reality headsets, created a catalogue of 10,000 products modeled in 3-D, and written an application program interface (API) for its 3-D product catalog allowing app developers to use Wayfair’s virtual reality-ready products as content in whatever virtual reality experience they create.

Wayfair isn’t the only one betting on virtual reality. Other top retailers and brands including Moosejaw, Lowe’s Cos. Inc., Hormel Foods LLC and eBay Inc. have made virtual reality investments. Since the technology is new—and the majority of virtual reality experiences available are for gaming, not shopping—retailers are trying to figure out what works best in a virtual reality application for shopping. The barriers to getting consumers to try out retailers’ virtual reality experiences are high, as consumers need both the headset, and most often an app, to try them. Still, these merchants say being among the few e-retailers to have a consumer-facing virtual reality program is helping generate brand buzz and positioning them as technology leaders. Industry watchers, however, say retailers should be cautious about investing in the technology if they don’t have a clear vision of what they want to accomplish, as virtual reality can be an expensive experiment with an unclear ROI.

The virtual-reality headset market is nascent, fragmented and each headset has its own way of working. Some headsets, such as Google’s Cardboard and its newly released Daydream Viewer, are smartphone-based, which means a consumer has to insert her smartphone into the headset for the viewer to work. Other high-end headsets, such as HTC Vive and Facebook Inc.’s Oculus Rift, do not need a smartphone to work, and consumers download apps within the headset’s app store. Research firm Juniper Research Ltd. estimates that by 2021 more than half of all virtual reality headsets in use will be smartphone based.

Once a consumer has a headset on, she can navigate the virtual reality experience in several ways depending on the device, such as with a target that follows the movement of her eyes, buttons on the side of the headset or a handheld remote. Most virtual reality experiences are app-based, meaning a consumer needs to download a specific app, either on her smartphone or within the headset, for it to work.

Unsurprisingly, consumer adoption of virtual reality technology is still miniscule. In fact, Wayfair is not actively promoting its virtual reality products because it knows most consumers would not be able to use them.

Apple and Google’s respective app stores do not have a specific virtual reality app category so tracking virtual reality app usage is difficult, says Amir Ghodrati, director of market insights at mobile app measurement firm App Annie. Instead, consumers have to search in their smartphone’s app store for specific apps they know or the phrase “virtual reality,” to find virtual reality apps that are compatible with their device.

But, there’s potential. At the end of 2016, there were 3.3 million virtual reality headsets in the United States, according to Forrester Research Inc. estimates. The research firm predicts this number will grow to 52 million headsets by 2020. If 52 million consumers, or about one in six people in the United States, have virtual reality headsets, that’s broad enough adoption to make it more meaningful for retailer investment, says Brendan Witcher, a Forrester Research principal analyst.

11.4% of U.S. online shoppers said they have used a virtual reality headset, according to an Internet Retailer online survey of 500 consumers conducted in November. 9.3% said they planned on buying a virtual reality headset within the next year.

But with such low penetration today, developing virtual reality programs shouldn’t be a priority for most retailers, Witcher says. Retailers would be better served to invest in other features, such as omnichannel capabilities and personalization, that will give them more bang for the buck, he says.

“It is too early for most retailers to be considering virtual reality for part of their strategic plan,” Witcher says. “If you haven’t gotten your buy online, pick up in store finished, get that done first.” But, he adds, retailers can still keep an eye on the buzz-worthy technology and stay abreast of what competitors are doing.

Moosejaw and Hormel, both of which debuted virtual reality experiences last year, are investing in virtual reality to attach their brands to the buzz surrounding virtual reality, and generate some of their own.

“[Hormel] always wants to take bacon to new places,” says Steven Venenga, Hormel’s vice president, marketing of grocery products. “Historically, we decided to focus on things that are cool and not kitschy.”

Virtual reality will help companies differentiate themselves and establish themselves as technology leaders, both Hormel and Moosejaw say. “One of our core values is to be notable,” says Moosejaw CEO Eoin Comerford.

Moosejaw’s virtual reality experience is a marketing tool that shows viewers its products being used in a more immersive way than watching a normal video can. The videos show 360-degree views of consumers wearing Moosejaw apparel while on outdoor adventures, such as rock climbing or skiing, and run just a couple of minutes. “The point is engagement and building that relationship with the consumers,” he says.

Moosejaw launched its virtual reality app in May, but Comerford says that may have been too soon. 

“It hasn’t achieved the traction we had hoped—to be quite frank—in terms of downloads,” he says.

“Looking back on it, we’re just too early when we launched. There are a lot of people talking about [virtual reality], but still a lot of people who have no idea what it is.”

Now, Moosejaw is focused on making the virtual reality content more accessible to consumers by featuring the 360-degree videos in ways consumers can watch them without a virtual reality headset, such as on a desktop or mobile device.

The retailer plans to continue producing the adventure videos that are virtual reality-ready and feature them on its website and on its YouTube and Facebook pages, where a consumer on a computer can use her mouse to rotate where she is looking. If she uses a smartphone, she can physically tilt the device left, right, up and down, to see all video angles.

“It’s really to get people involved in virtual reality so they can experience some of these things and to continue to position Moosejaw as a leader in new technologies,” Comerford says.

Virtual reality was not a cheap endeavor for Moosejaw. It took Moosejaw personnel five months to create the experience, and the app development and video production costs went into six figures, Comerford says. Moosejaw mitigated some of the cost by getting the outdoor brands featured in the videos to contribute. The brands paid Moosejaw an undisclosed sum to have their products featured, he says.

The rest of the money came out of Moosejaw’s brand marketing budget, Comerford says. Going forward, Comerford expects annual expenses for the virtual reality app to “carry a mid-five-figure price tag,” mostly to pay for video shoots and post-production costs.

The cost to set up a virtual reality experience can vary widely depending on the application, says Andy Harris, global solutions marketing director at software and consulting company Fifth Dimension, a division of Symphony EYC. For example, an in-store virtual reality experience that is always the same for store shoppers may cost tens of thousands of dollars. But a more complex app with custom content that involves routinely filming, editing and marketing new video can reach hundreds of thousands, Harris says. 

Retailers should only consider investing in a yet-to-be proven technology if it adds value to the shopping experience, such as making shopping easier, Forrester’s Witcher says. For purchases that consumers typically need more time to think about, such as a high price, high consideration product like furniture, virtual reality could be valuable, he says.

Home improvement retail chain Lowe’s, for example, incorporates virtual reality technology to help store shoppers design a room. A shopper works with an employee to design a room and then puts on a virtual reality headset to see how it would look. Lowe’s calls the experience “Holoroom.” A consumer, for instance, can design a kitchen with buttercup yellow walls, blue pearl granite countertops, and white cabinets and see how it all looks together using Holoroom, which Lowe’s first began testing in 2014. Being able to see how the finished renovation will look makes consumers more comfortable and more likely to proceed with the project, a spokeswoman says.

Virtual reality technology does get a consumer closer to that tactile experience of physical shopping, although it doesn’t completely close the gap of touching a product in store, Witcher says.

Wayfair’s IdeaSpace app for Google’s Daydream viewer comes close. The app aims to inspire consumers and let them see how Wayfair’s home furnishings products look together. Consumers can travel to 10 rooms, including living rooms, a kitchen and a lounging area, and view 75 Wayfair products in IdeaSpace. Consumers can access details about the products and add items to their carts if they also are signed into the Wayfair shopping app. The IdeaSpace app is engineered to communicate with the Wayfair shopping app. A consumer who adds items to her IdeaSpace cart can complete the purchase in the Wayfair shopping app.

Wayfair is measuring IdeaSpace’s success by tracking the amount of time consumers spend in a room, the number of products they look for more information on and if they add them to their cart.

Online marketplace eBay also gives consumers a closer look at the products they want to buy in the virtual reality app it launched in May for Australian consumers. Consumers can shop for more than 12,500 products from department store Myer on eBay Australia, and more than 100 of the products are available to view in 3-D, meaning a consumer can see the shirt she is looking at from different angles.

“We can see the potential transformative effects that virtual reality could have on retail and also know that consumers are particularly keen to be a part of this technological journey,” says Steve Brennen, senior director of marketing and innovation at eBay. He says tens of thousands of virtual reality headsets sold on eBay in the first six months of 2016.

More than 117,000 consumers downloaded eBay’s virtual reality app and thousands of consumers have shopped with it, Brennen says. The average time per virtual reality session was 4 minutes and 31 seconds, and electronics was the most engaged with category, followed by homeware and kids, he says.

EBay surveyed 5,000 consumers—who received a free eBay-branded Google Cardboard virtual reality headset from the marketplace to try the app—about the experience. Afterward, 62% of them said they were more likely to consider eBay the next time they shop online, and 70% of them said they could imagine themselves shopping in virtual reality in the future.

Virtual reality is new for both consumers and developers. What shopping will eventually look like in virtual reality is likely not what shopping in virtual reality looks like today. But the only way to get to that point is for the innovators to start innovating. While some cool marketing and product discovery virtual reality experiences exist today, no retailer has cracked how to actually checkout with a headset on—yet.

Virtual reality is bacon me crazy

Hormel Foods LLC launched virtual reality marketing videos for its bacon products at the end of October, in a campaign dubbed The Black Market. With it, a consumer uses her smartphone and a Google Cardboard virtual reality viewer to watch the bacon adventures, add the bacon to her cart and ultimately check out after removing her smartphone from the headset.

Since I didn’t need a fancy virtual reality headset—Google Cardboard viewers cost $20 —nor an app to try it out, I decided to see how slick the bacon virtual reality experience really was.

The process was simple. I went to the website, tapped go, and inserted my smartphone into Google Cardboard. Once I rotated my device and put it in the headset, I looked through the viewer and saw the home screen of the bacon experience which, after several seconds, automatically began.  

I looked in front and behind me, and to the right and left to see the different adventures I could go on. Then my screen went dark. I forgot that I have my phone set to sleep after 30 seconds of inactivity and, since I was not tapping the screen, my phone shut off. I pulled my phone out of the viewer, tapped into my settings, changed the inactivity setting and then repeated the previous steps.

I selected an “under the sea” bacon adventure by focusing the eye tracker over the words. It brought me to a black-and-white, computer-generated world. While I could look around, the only way to move forward through the landscape was to focus my eye target on a floating diamond. I had anticipated being able to move whichever way I wanted throughout the landscape, but there was only one floating diamond and thus only one path to take.

At the end of the bacon adventure, which ran a little less than five minutes, I found a giant floating piece of bacon, which stood out because it was the only full color piece of content. However, adding the bacon to my cart was difficult. There were several navigation options floating around the bacon, such as home, exit, back and add to cart. After unsuccessfully spending about two minutes to get the eye tracker to float on the Add to Cart button, I gave up. No bacon for me.

The quality throughout the video was OK. Perhaps it was because images were computer generated and not real photography, or the fact that my smartphone’s home and back buttons were visible the entire time. Either way, I was underwhelmed by the entire experience. While it sounded like it may be the easiest way to try virtual reality out, the actual experience really wasn’t easy, nor intuitive. Several times I thought, “Am I doing this right?”

A few days later I troubleshooted the experience with my Hormel contact. I gave it another try, and this time I sat (opposed to standing), held the viewer steady with both hands (versus one hand before), and after a minute of trying, I added the bacon to my cart. From there, I took my smartphone out of the viewer and the site took me to a traditional checkout page.

Hormel created the virtual reality videos to promote its brand, connect with consumers and ultimately increase sales, says Steven Venenga, Hormel’s vice president of marketing of grocery products. So far, the consumer packaged goods company is pleased with the campaign. Hormel says “thousands” of consumers have watched the videos, which can also be viewed in a browser without Google Cardboard, and purchased bacon as a result.

As Internet Retailer’s mobile reporter, I’ve tried several virtual reality experiences with different headsets and have had a range of interesting and mediocre experiences. But I’ve yet to experience something in virtual reality that was so cool I’ve recommended it to a friend. Still, developers are just getting started and

I’m curious to see what improvements retailers will cook up next.




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