Three ways augmented reality affects consumer psychology

There is no denying the appeal of shopping online. The ability to sift through thousands of items and ship them to your home with just a click of a button is easy and convenient. But there is a reason many people still prefer to shop in-store. According to a 2021 report on the state of consumer behavior, 33% of respondents prefer shopping at physical stores because they like to view, touch and interact with physical products. The tangible experience of touching the fabric of a couch, holding a handbag or seeing the scale of a chair in the context of a room is lost when shopping online. The offline experience allows for a more informed buying decision. 

Compare this to the experience of shopping for the same item on an ecommerce marketplace. While it may be easier to shop for a new rug from the comfort of your living room, the tactile, contextual experience that many people prefer is lost. This experience gap between online and in-store shopping is a tradeoff consumers make for the sake of convenience. 

Augmented reality (AR) superimposes the digital world into our physical reality. When implemented in the retail shopping experience, this technology reduces the friction and bridges the digital and physical experience gap by providing consumers the contextual overlay they need to make more informed buying decisions that benefit both themselves and the retailers. 

How AR augments the retail experience 

At its core, AR changes our view of our physical world by overlaying computer-generated information on top of our physical space. This technology is incredibly powerful in an ecommerce setting where physical context is extremely important, providing consumers true utilitarian value. 

What do I mean by context? Consider you’re interested in buying a new couch. There are multiple factors to consider when buying new furniture. Will the couch fit in my space? Will the color complement the other decor in my room? Does a particular couch configuration work with the layout of my space? Whether you are looking at the couch in a physical furniture shop or in a picture on an online marketplace, you still have to use your imagination to decide if it is the right fit for your needs. Both of these experiences are missing the most important context that consumers are looking for — how will this actually work in my home? 

By using AR, an online shopper could select the couch they are interested in, quickly scan their room with their phone’s camera and visually “drop” a life-sized couch in their room. This photorealism allows them to see how the light dynamically reflects off the surface of the couch’s cushions, zoom in on the wrinkles of the leather and get a real-life feel for how the furniture fits in their actual real life.

For the first time, the immersive AR experience surpasses the physical by offering the contextuality that consumers need. They can see the end outcome of the purchase decision before even making the decision — the experience of seeing the couch in the context of their space is transformed — giving them more confidence in their decision. 

AR and its effects on consumer psychology

AR is not taking a share of the digital pie as we know it today, but instead increasing the overall size of the pie. There are 100 million consumers shopping with AR online and in stores today. This powerful technology fundamentally changes consumer psychology in three distinct ways: changing the ecommerce model from a push to a pull experience, giving consumers new confidence in their purchases; driving conversion by giving consumers visual context before buying; and giving consumers a new way of experiencing in-person shopping. 

1. Push vs. pull experience

Today’s Web2 is push-oriented. Each website or consolidated platform dictates the standard consumer experience. Many shopping experiences today begin through a traditional advertisement — a one-way push from the advertiser through an advertising platform to the consumer, in an attempt to draw people to their website or product.

Interactive AR encourages product discovery, where users can pull the product and the features that are most relevant for them and their lifestyle, rather than the most important product information being dictated and pushed on the consumer by the brand. This gives users a far more personalized, richer consumer experience based on their intent, creating a more emotional connection with the product itself. All the while, allowing brands to better understand user behavior and preferences to create bespoke intent-based customer journeys. 

Imagine being able to mix and match different products, such as a couch, a table, a lamp from different brands and viewing them in the context of your living room from your phone. You decide what feature is most important for you — such as the color, shape, size. This frictionless pull experience puts the power back into the hands of the consumer. It creates more informed shoppers who make better buying decisions, while simultaneously benefiting the brands. AR allows for a more decentralized experience where consumers have control and the web comes to their context. 

2. Visual context increases conversion

Ecommerce sales continue to grow year over year. In 2021, ecommerce accounted for 19.6% of global retail sales. This rate is expected to grow to 25% of total retail sales by 2025. While it is an impressive growth story, that still means almost 80% of all retail sales take place in a physical store. And there is a reason for that; people want to experience the product. In the example of buying a couch, that means touching the fabric, sitting on the cushions to test its comfort and gaining a sense of its scale — all things you cannot do when you are buying a couch in a traditional 2D online experience. This visual context matters.

AR gives consumers the opportunity to have a richer visual experience while simultaneously gaining the context they need to make a more informed decision. According to Snap and Deloitte Snap Consumer AR Global Report, interacting with products that have AR experiences leads to a 94% higher conversion rate. We see in our own data that the use of AR increases retail conversion rate by 3.5x. It is much easier to pay hundreds of dollars or more for a new sofa when you know it both fits in your home’s style and physical space. With AR, ecommerce shopping feels less risky and could increase its slice of the total e-retail pie far beyond 20%. 

3. Taking the AR experience in-store

As this frictionless shopping experience becomes more ubiquitous online, consumers will take this online experience to the offline decision-making process. Consider if you could create a 3D scan of your room using your smartphone’s camera. This would allow you to carry your home wherever you go. When you visit a brick-and-mortar store, you can use your phone to visually experience how an item will exist in your home, even when you’re away from it. 

This allows you to get the touch-and-feel experience of a store, while also getting the context of how an item you can touch in the store would actually look and feel in your real-life space via the 3D model. The combination of AR in the offline experience gives consumers the confidence they want when making big purchasing decisions, even when it happens offline. 

This next ecommerce wave will be consumer-led

In the early days of the internet, the first digital version of a magazine was essentially a photocopy of each page of the magazine, uploaded to a webpage. Publishers were operating within the confines that they understood: the physical 8.5 x 11-inch book. Soon they realized that the technology of the internet — hyperlinks, multimedia, embedded videos and more — gave them a new freedom to re-create the experience of a physical magazine in the online medium. 

That is the same kind of seismic shift this technology will bring to visual discovery. In this new wave of ecommerce technology, consumers hold the power. The next generation of consumers are tech-savvy and grew up in the age of selfies and camera technology. For this segment, the camera is essentially their home screen.

Gen Z, the global demographic born between 1996 and 2010, represents about 30% of the global population. This segment of the population is a leading indicator of where the digital ecosystem will be 10 years down the road. And they are demanding AR. 92% of Gen Z consumers want to use AR tools for ecommerce. Consumers — specifically those in the younger generations — will rewrite the traditional customer journey and reimagine it with the new capabilities that AR presents. It will be up to the brands to adapt and adopt this new technology and its long-term utilitarian value in order to keep up.

Sravanth Aluru is CEO of Avataar.