Amazon and Shopify race to bet,AR shopping is just a need or a gimmick.

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A few days ago, Amazon Fashion, the fashion retail division of Amazon, officially announced a cooperation with social platform Snap, which will provide AR filter service for thousands of glasses sold on the Amazon platform for users to try on online.

Over the past few years, AR + e-commerce has become a new trend, and more and more e-commerce platforms are participating in it. A survey conducted by Deloitte in conjunction with Snap points out that the AR shopping market could top $100 billion, with a user base of more than 100 million people. Now the world's number one e-commerce giant Amazon is leading the way down, no doubt adding another fire to AR shopping.

In 2022, Amazon and the entire e-commerce industry are not having a good time. In just the past three quarters, Amazon's net profit fell 9% year-on-year to $2.872 billion. Operating losses also reached $412 million. The international business is a considerable loss of $2.5 billion. Under heavy pressure, Amazon announced massive layoffs, and about 10,000 employees will lose their jobs.

In the cold winter, Amazon needs some new changes to revive the enthusiasm of consumers' shopping. However, is the highly anticipated AR shopping necessary or just a momentary gimmick?

Full tutorial on Amazon and Shopify for e-commerce (with advanced content)

I. Giants are scrambling to get to the meeting. AR shopping has become a new trend

The AR trial function provided by Snap is simple to operate. Users can try on different glasses by sliding left and right on their official Amazon Fashion account, and the AR 3D model will be automatically generated in the background. If there are glasses that you like, click on the link to jump directly to Amazon Fashion for settlement, making the transaction very convenient.

To promote this cooperation, Snap is giving full face, providing traffic support for Amazon. In addition to the Amazon Fashion account page, there is a filter search bar and camera page on the Snapchat APP home page to attract traffic. Not only that, but Snap will also provide Amazon with AR marketing analytics services to continuously adjust AR technology and filter functions according to users' needs.

(Image from Amazon Fashion)

The official word is that Snap's VR filter service covers thousands of glasses from Ray-Ban, Maui Jims, Oakley and other significant brands sold on the Amazon platform. At the same time, Amazon Fashion said that Snap's service would expand to different categories in the future, including apparel, shoes and boots, and beauty.

Amazon Fashion CEO Muge Erdirik Dogan also said recently that the partnership with Snap is just beginning and that he believes the two companies will work together to provide an even better shopping experience for users.

Virtual glasses have always been a customer favourite, and we are excited to partner with Snapchat to provide fashion brands and digital consumers with more AR shopping experiences.

This is not the first time the AR + e-commerce pair has been in the public eye, and Amazon is not the only platform. Outside of Amazon, platforms such as eBay and Shopify.

Shopify's AR mall service, launched in the early years, has increased the conversion rate of customer purchases in the fashion accessories pendant category by 27%, with a maximum increase of 250% in the conversion rate of a single item. In addition, Shopify also acquired startup Primer last year to add another spark to AR shopping.

Founded in 2019, Primer has been focused on providing visual products and services for apparel brands and independent designers, which can be a perfect fit for the new trend of AR shopping. Before being acquired by Shopify, Primer's technology enabled users to build home 3D images on its ARKit platform and build home models through AR technology. After the acquisition, Shopify will undoubtedly apply the corresponding technology to its platform.

Unlike Shopify, which is strengthened by external acquisitions, Google, which has a reserve of AR technology, has recently upgraded the AR Shopping feature of Search, adding matching options.

After the upgrade, users can choose foot shades according to their skin tone and be the first to feel how the shoes look on their feet. At the same time, the platform for beauty products also provides 100 face models, including various skin tones and ethnicities, so users will always choose a suitable template for their trials.

There is always a reason for the rise of the new trend - e-commerce consumption has lost its freshness, and users need new stimuli, which is perhaps the fundamental reason for the rise of AR shopping.

II. The challenges of AR shopping: categories have limitations. Technology needs to be upgraded.

According to the estimation of ABI Research, the GMV generated by AR shopping only accounts for about 3% of the global e-commerce market by 2020. It is expected that by the end of 2022, there will be 120,000 online stores worldwide using AR technology, which is also not a high percentage.

Not only that, but the AR user profiling report jointly conducted by Deloitte and Snap also shows that there are limitations in the audience scope of AR features, mainly the post-90s and post-00s, which cannot cover the whole age group of users like live e-commerce. The report also pointed out that 75% of the surveyed users said they "don't know enough" about the AR function and are not considered loyal fans of AR.

(Image from Deloitte)

It is essential to know that Amazon joined hands with Apple Mall to launch the AR View shopping feature as early as 2017, but it has been a bumpy ride until recently, when it became the focus again. This shows that the development of AR shopping is not always smooth. The Value Institute believes that the challenges of AR shopping are twofold: one is the limited categories of application, and the other is that the technology and functions of each platform are the same and lack differentiation.

According to a survey by DigitalBridge UK, 41% of consumers are happy to visit retail stores through AR features, and 33% of consumers said AR shopping features would increase their desire to buy. However, it can be seen from the segmented data that most users will only use AR features when shopping for home (including furniture and home appliances), apparel and beauty products, which perfectly overlaps with the current experimental route of giants such as Amazon.

The data shows that 52% of consumers are willing to use the AR function to shop for apparel and shoes, 40% of users use the AR function when buying home appliances, 38% for furniture and 32% for beauty products. In addition, such as digital 3C, outdoor sports, beverage and food pendants, the willingness of users to use AR functions to assist in shopping is very low.

In the end, augmented reality is not reality, and its role and effect are limited. Like furniture, beauty and other goods that emphasize visual experience, users can certainly understand the details of goods and makeup effects through AR function. But if replaced in the food field, can we still expect AR to return consumers to taste?

The limitation of categories allows e-commerce platforms to fight with each other only in a few scenes. And the lack of a unique AR function makes this confrontation even crueller.

The underlying technology of the AR shopping guides is not complicated, mainly involving several links such as CV (computer vision technology), 3D modelling and 3D alignment, etc. Snap's AR trial service for Amazon is not too different from Jingdong's try and Tmall AR preview function.

And these underlying technologies have limited room for improvement, and the platform can only start to improve from the perspective of the virtual-real combination effect, the accuracy of 3D models and the number of models.

It should also be noted that AR technology research and development costs are not low, and e-commerce platforms or Snap and other partner organizations need to balance the relationship between costs and benefits. In the early publicity stage, Taobao and Jingdong launched AR scanning to win coupons to increase the enthusiasm of user participation. The hidden costs of such user campaigns also need to be considered.

In view of this, Amazon and the social platform Snapchat cooperation is an excellent way to share the cost, but also conducive to the platform to explore more new ways to play.

As one of the hottest social applications in North America in recent years, Snapchat is sitting on 360 million MAUs, so there is no need to worry about traffic. AR technology has also been Snapchat's main selling point. This access to Amazon's external product links does not charge fees, aiming to provide users with direct shopping access, improve user stickiness and enrich product features.

Snapchat has won longer user hours, and Amazon has gained an external traffic source and a place to experiment with AR shopping, which is desirable for both sides. Of course, if the glasses' AR filter shopping effect is ideal, in the next negotiations, Snapchat will certainly put the commercialization of AR features on the agenda.

This kind of social platform and e-commerce platform has a robust cooperation model, perhaps worth a number of domestic giants to learn from. For example, Snapchat, which has a close relationship with major e-commerce platforms, will not reject this fresh product that attracts users.

III. Write at the end

Although Bezos has retired from the world, this titanic figure of the e-commerce industry is still active in public discussion. The past predictions have become a reality one by one, which is a testament to his incredible talent and sense of foresight.

Emerging consumers have new expectations for shopping: freshness and effective interaction. The lack of trust in the seller show is an essential factor affecting the transaction.

Of course, there are imperfections in AR shopping, and major e-commerce platforms and their partners must continue to check the gaps and fill in the shortcomings. But the rise of AR shopping can undoubtedly provide consumers with a fresh experience that has disappeared for a long time. For the e-commerce industry in the winter, change comes at the right time.

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