How is AR being used in consumer shopping? Who’s doing What so far? 

ARtillery Intelligence’s latest report looks at how AR is evolving as a consumer shopping tool. What’s the size of the opportunity and what do today’s market signals indicate? Preview the report below, subscribe to access it in full, or purchase a la carte.


Executive Summary

There are several forms of monetization that will develop for augmented reality (AR). In past reports, we’ve examined opportunities for its role in advertising (consumer-facing) and industrial productivity (enterprise-facing). The ROI case continues to strengthen in these and other AR applications.

One particularly promising area of AR will be its role in influencing and fulfilling consumer purchases. Extending from (but different than) AR advertising, AR commerce involves graphical overlays that inform consumers and demonstrate product attributes in physical retail or e-commerce contexts.

For example, AR-pioneering retailers like Walmart let consumers activate product details in store aisles by pointing their smartphones at those items. Employing computer vision and object recognition from product databases, this empowers shoppers and breeds customer loyalty.

Tech giants like Google and Amazon have done similar. By pointing your phone at items in the real world, informational overlays can be triggered to contextualize items. Moreover, transactional calls to action are included to capture consumers’ wallets during these high-intent “visual-searches.”

This makes AR commerce a key part of the future of these tech giants’ user experiences – mapping closely to their core businesses in areas like search and e-commerce. It therefore holds a great deal of priority and investment – both of which will accelerate this sub-sector of AR in the near term.

Beyond visual search (pointing your phone at items to contextualize or buy), AR commerce can work in the reverse manner. In other words, “product visualization” is a key AR commerce modality in which consumers can digitally place 3D product mockups in their surroundings to see how/if they fit.

As you can imagine, this use case maps particularly well to home goods, or large and bulky items that require a more informed purchase in terms of fit and style. For that reason, furniture players like Wayfair and IKEA have invested in such AR features, as have auto manufacturers like BMW.

Add all of these factors together and AR commerce will be one of the most tangible and revenue-generating “flavors” of AR that develop in the near term. ARtillery Intelligence projects that $6.1 billion in annual transaction value (value of goods purchased) will flow through AR interfaces by 2022.

Beyond near-term benefits and monetization, mobile AR commerce developments will also serve a longer-term end: AR glasses. The tactics, business models and consumer acclimation that happen around smartphones will seed next decade’s glasses-based AR commerce – the real endgame.



Price: $499 (w/ analyst briefing) $299 (w/o briefing)

This report is available by subscribing to ARtillery PRO, or purchasing a la carte. You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have. It can also be purchased without a briefing for $299.

 


Excerpt: Augmented Shopping

Many questions surround the sometimes-overhyped augmented reality (AR) sector. The biggest is how it will make money. There are several answers to that question including enterprise productivity, AR advertising, gaming (e.g. in-app purchases) and others we’ve examined in past reports.

But the area of AR monetization that’s perhaps most logical – and already underway – is commerce. This is the segment of AR in which graphical overlays are presented to inform consumers during their shopping processes. It provides contextual product information to inform and incentivize purchases.

This will represent an increasingly impactful technology for consumer spending. ARtillery Intelligence projects that $6.1 billion in annual transaction value will flow through AR interfaces by 2022. This means AR will be used somewhere in the consumer shopping journey for that volume of transactions.

There are two main ways that this is materializing. The first is visual search, in which the smartphone camera (along with computer vision and machine learning) helps identify physical products. The second is visualization, in which items are virtually placed in one’s space to better understand them.

We’ll dive deep on each of these in the coming pages, starting with visual search.

Using AR to Search

Visual search is one way that AR commerce will materialize. Also known as “search what you see,” it employs the increasingly powerful smartphone camera (and someday, glasses) to contextualize physical-world items. This includes identifying information and, importantly, transactional functionality.

For example, Google Lens is a product we’ve examined in past reports (and deeper below) that lets users point their phones at items to retrieve information, or to buy them. Its use cases and product categories include everything from general interest search (dogs, flowers) to commercial (products).

ARtillery Intelligence’s consumer survey data with Thrive Analytics indicates visual search’s potential. (see below). One third of AR users see it as a valuable shopping utility. This is mostly in the context of in-store retail engagements, while visual search can also be used in remote e-commerce.

In fact, visual search is subdivided by these two categories – retail and e-commerce. The former happens within store aisles (through a retailer’s app) while the latter can happen anywhere (through apps like Google Lens or Amazon’s AR View). Retail is where the opportunity is developing first.

Retail AR: Best of Both Worlds

As we’ve examined in the past, e-commerce represents a small share of retail spending. Of the $3.7 trillion spent in the U.S., about $3.4 trillion is in physical stores. But to be fair, online and mobile media increasingly drive and influence that offline spending, to the tune of about $1.7 trillion.

That’s where AR and visual search will come in. They’re well-suited for qualifying products through informational overlays. Holding up your phone is more intuitive than typing words into Google or Amazon in a store aisle. And camera affinity is strong among buying-empowered millennials. Continue reading…


Video Companion


Price: $499 (w/ analyst briefing) $299 (w/o briefing)

This report is available by subscribing to ARtillery PRO, or purchasing a la carte. You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have. It can also be purchased without a briefing for $299.

 


Methodology

This report highlights ARtillery’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 2.5 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

    


Disclosure and Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers. It doesn’t perform paid services or consulting for such companies, thus mitigating bias — real or perceived — in market sizing and industry revenue projections. Disclosure and ethics policy can be seen in full here.


Subscribe to access report, or purchase a la carte.

Price: $499 (w/ analyst briefing) $299 (w/o briefing)

This report is available by subscribing to ARtillery PRO, or purchasing a la carte. You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have. It can also be purchased without a briefing for $299.