Augmented reality: companies failing to keep up with consumer appetite

Shoppers who can try out a product using AR are more likely to buy it, study finds

Interacting with products that have AR experiences leads to a 94 per cent higher purchase conversion rate, the study from Snapchat and Ipsos showed. Chris Whiteoak / The National

Consumers in the UAE are significantly outpacing companies when it comes to interest in using augmented reality experiences, showing how the technology has been able to influence purchase decisions, a study from Snapchat has found.

Around 85 per cent of consumers in the Emirates are interested in using AR to interact with a product before buying, and 70 per cent said shopping is their main reason for using AR, the Snap-owned photo-sharing platform said in the report, which was made in co-operation with Paris-based research firm Ipsos.

Compared to companies, consumer interest leads by a wide margin across the board in major categories, including navigation, product information, education and travel, it showed.

However, most companies that have used AR reaped the benefits: more than three quarters said their brand awareness improved after implementing AR, the report said.

"Our digital world is designed for discovery. Consumers are accustomed to sifting through messages, notifications and ads from multiple channels to engage with brands at speed. It’s no longer enough just to have great content," the report said.

"The challenge for brands? To break through the noise and establish their presence in this loud environment."

Companies are increasingly considering integrating AR into their product pitches as it has the potential to provide a more accurate experience of their products, immersing would-be buyers into their environment without the need to be physically present.

It is part of the so-called experiential e-commerce, in which products are promoted using augmented and mixed realities, along with associated hardware such as headsets and wireless controllers.

The biggest companies are getting increasingly involved in the sector. Amazon, the world's largest online marketplace, already has a service called AR View, which lets customers view products in 3D and even position certain products such as furniture in their homes before purchase.

Meta Platforms, the company formerly known as Facebook, is promoting the metaverse, while iPhone-maker Apple is rumoured to be preparing to launch its own AR glasses.

In the UAE, Magnati, the payments business unit of First Abu Dhabi Bank, in June unveiled a new metaverse platform, Magnati-MetaV, which aims to offer consumers access to the growing experiential e-commerce segment and boost retailer revenue.

The global AR market was valued at $25.33 billion in 2021 and is projected to grow at a compound annual rate of more than 40 per cent from 2022 to 2030, according to Grand View Research.

AR in shopping, in particular, has gained ground: while 88 per cent of brands agree that AR expands the range of clothing and footwear that customers can "try on easily", 72 per cent of consumers said AR makes the shopping experience "easier".

"AR helps consumers feel confident about their purchases. It allows them to visualise, share and gather feedback before making decisions," the report said.

For businesses, AR can potentially drive revenue: interacting with products that have AR experiences leads to a 94 per cent higher purchase conversion rate, while 84 per cent of brands who use AR said it helps drive sales, acquire new customers and drive performance metrics, it said.

The technology's effects also extend beyond sales. About three quarters of brands who use AR said it boosts customer loyalty, while 96 per cent of consumers claim they would be "interested" in using any post-purchase AR experiences, the report showed.

The study also revealed that AR can become a factor in promoting sustainability in retail, as being able to try on products virtually will most likely reduce product returns, compared to a non-AR experience that puts consumers at risk of "guessing" with their choices.

"This means more accurate choices and less returns — helping brands to save money and reduce their environmental impact," it said.