E-commerce has revolutionized how we shop, offering convenience, and accessibility at our fingertips. However, despite user interface and user experience design advancements, online shopping still lacks the immersive elements that make in-store shopping engaging and emotionally satisfying. As e-commerce continues to grow and evolve, retailers are looking for ways to bridge the gaps.
This article explores the evolution of e-commerce, from its early days to its current state, and introduces the concept of immersive commerce – a new frontier in online shopping that leverages modern technologies to create shopping experiences that closely mimic the interactivity and engagement of in-store shopping.
This article explores the origins of immersive commerce, presents examples of early immersive commerce trends, and concludes by asserting that the shift from e-commerce to immersive commerce is already underway, potentially becoming the standard for online shopping in the coming years.
The Evolution of E-commerce: From Teleshopping to Amazon
E-commerce or online shopping has existed for over four decades. It was pioneered by English inventor Michael Aldrich in 1979 as teleshopping when he designed a system of advertising products on television and enabled viewers to place orders for the products directly through the telephone.
The first e-commerce company was the Boston Computer Exchange. The Boston Computer Exchange began in 1982 as an online market for people who wanted to sell their used computers. With the advent of the Internet in 1991, the first Internet-based online shopping company was Book Stacks Unlimited, which started in 1992 as an online bookstore, followed by Amazon in 1994. Amazon became the e-commerce leader and a key influencer in designing online shopping experiences.
The Limitations of Current E-commerce Experiences
In the last three decades of e-commerce, little has changed for the customer in the context of the online shopping experience—browse product thumbnails, read descriptions and reviews, add to the cart, go through the checkout process, and wait for the delivery.
The only changes for the customer have been improvements to the efficiency of these steps. E-commerce companies have typically improved websites and apps by updating layouts, colors, and content hierarchies to optimize the user interface and user experience (UI/UX).
Current online shopping experiences lack the level of interaction one experiences when browsing in a brick-and-mortar store. The current online buying experience is the same irrespective of the product one is buying. In comparison, when shopping in person, the experience varies based on the product; you try on clothes, shoes, and accessories, flip through a book, test drive a car, smell the tester perfume, and sit on furniture. Exploring and experiencing a product tactically makes shopping an immersive and interactive experience that sparks emotions.
According to Statista, e-commerce has more than a 20% share of the total global retail sales, and it is expected to grow at 14% CAGR by 2027. E-commerce is certainly here to stay and may eventually take over many global brick-and-mortar retail sales. For the overtake to occur, e-commerce must provide experiences that emulate in-store shopping experiences.
Immersive Commerce: Bridging the Gap Between Online and In-Store Shopping
Immersive commerce shifts the "browse, select, click to buy" process to "browse and experience to buy with hyper-personalization." Immersive commerce leverages Metaverse technologies like 3D modeling, augmented reality, virtual reality, AI, and web3 to create online shopping experiences closer to in-store shopping experiences with value adds such as hyper-personalization, gamification, and entertainment.
The Rise of Virtual Commerce: Lessons for Retailers, Early Trends, and Examples
The genesis of immersive commerce lies in the continuous rise of virtual commerce, where users on platforms like Roblox, Sandbox, Fortnite, and Upland use real money to buy virtual pieces of land, fashion accessories for avatars, and virtual collection drops from major luxury and upscale brands. Though these transactions are frequent and continuous, they do not add up to large sums of money, as the value of each transaction itself is quite insignificant. However, these microtransactions to buy virtual goods provided retailers insight into the emotional triggers that lead users to open their physical wallets to consume virtual goods.
The triggers were entertainment, socialization, games, and personalization within a simulated world that resembled the real world but with additional possibilities and adventure. Retailers using Metaverse platforms for marketing purposes realized that the emotional triggers and engagement observed in virtual commerce could be applied to create immersive online shopping experiences for real products.
Examples of virtual commerce strategies that facilitated the emergence of immersive commerce include virtual campaigns like Chipotle's Burrito Builder on Roblox. The concept of “play to earn” translated into the players earning real burritos. Forever 21 created a real clothing collection inspired by its popular virtual collection in the Metaverse, thus bridging the physical and digital divide and coining the term phygital.
Roblox is a gaming and Metaverse platform that brands like Nike, Gucci, Forever 21, and Ralph Laren have used for marketing and customer engagement. In late 2023, Roblox announced its platform's plan to offer real-world commerce, meaning brands can now sell tangible and virtual goods on Roblox. The transition from e-commerce to immersive commerce has begun and could be the next monumental shift in the global retail world in the context of customers' buying preferences.
Immersive Commerce in Action
As retailers begin to adopt immersive commerce strategies, we are seeing a range of innovative applications that showcase the potential of this new approach to online shopping. From virtual stores that replicate the in-store experience to personalized virtual fitting rooms and engaging co-creation platforms, immersive commerce is transforming the way consumers interact with brands and products in the digital space. Let's take a closer look at some of the most notable examples of immersive commerce in action.
Virtual Stores: Bringing the In-Store Experience Online
A virtual store is a 3D digital replica of a physical store. It enables the customers to virtually explore a store and its products as they would in a physical store. Along with the immersive shopping experience, virtual stores would allow brands to provide customers with added experiences centered around entertainment and personalization, enhancing the overall virtual shopping experience.
Virtual stores also enable brands to make products accessible to a broader customer base, breaking away the physical boundaries. An added benefit is that virtual stores provide brands with vast customer data to leverage regarding buying preferences and habits. Many luxury brands have set up virtual stores in the last year. In their current form, virtual stores provide an immersive experience of exploring products, but the checkout process is still carried out through web linking to the E-commerce site.
Virtual Fitting Rooms: Personalized and Convenient Shopping
Customers can create their life-size avatars or digital twins in the immersive commerce world using augmented reality, 3D technology, and AI. These avatars have the actual body proportions of the customers. These life-size avatars enable customers to try on clothes and accessories in virtual fitting rooms to check for size, fit, and appeal to their physical selves. Virtual fitting rooms enhance customer experience through personalization and positively impact the conversion and return rate of goods bought online.
Co-Creation and Collaboration: Engaging Customers in the Creative Process
Creating virtual inclusive communities of icons, creators, consumers, and collectors provides a platform for diverse groups of individuals to collaborate, design, and communicate their love for a product or brand and enable mutual benefits for the brand and its community members.
Nike pioneered this immersive commerce trend with the launch of its .SWOOSH platform in late 2022. At the launch of .SWOOSH, the General Manager of Nike Virtual Studios, Ron Faris, said, "We are shaping a marketplace of the future with an accessible platform for the web3-curious. The .SWOOSH community and Nike can create, share, and benefit in this new space."
Nike launched a co-creation contest on .SWOOSH in January 2023 called #YourForce1, where the community members were to play against creative directors. The winners got to work directly with Nike designers to design Nike's first virtual sneaker series, the Our Force 1.
Games and Entertainment: The Future of Retail Experiences
Retailers are exploring how to leverage virtual experiences in games and live virtual concerts as potential retail environments to sell tangible goods. The pioneer in this effort is Walmart. Walmart is planning to introduce the ability to purchase physical items contextually and natively in the decorating and home makeover game House Flip using a Walmart account without leaving the virtual world.
Walmart will also explore the reverse of this concept by offering free virtual items to customers who make in-store purchases of real products, thus creating a 'phygital' experience that bridges the gap between physical and digital shopping.
Other retailers are exploring the possibility of users buying tangible items at virtual events. For example, if a user attends a virtual concert, the user can order the concert’s physical merchandise.
According to Statista, the Metaverse market is expected to grow at an annual growth rate of 37.73% between 2024 and 2030, resulting in a projected market volume of USD 507.8 billion. The number of users is expected to reach 2.63 billion by 2030. The gaming market is also expected to reach approximately USD 660 billion by 2030. Given the growth statistics of the Metaverse and the gaming industry, virtual experiences like games and events could be the next big retail spots.
The Future of E-commerce: Embracing Immersive Experiences
The world of e-commerce is in a state of transformation as retailers begin to embrace immersive commerce. This new paradigm combines modern technologies like 3D modeling, augmented reality, virtual reality, AI, and web3 to create online shopping experiences that rival the interactivity and engagement of in-store shopping. This shift is being driven by the lessons learned from the rise of virtual commerce on platforms like Roblox, Sandbox, Fortnite, and Upland, where users spend real money on virtual goods, revealing valuable insights into the emotional triggers and engagement factors that drive consumer behavior.
Immersive commerce trends, such as virtual stores, virtual fitting rooms, virtual co-creation and collaboration communities, and selling through games and virtual entertainment experiences, are already demonstrating the potential of this new approach. These innovations showcase how retailers can leverage technology to provide customers with personalized, engaging, and emotionally satisfying shopping experiences that go beyond the limitations of traditional e-commerce.
The shift towards immersive commerce has significant implications for both businesses and consumers. For businesses, adopting immersive commerce strategies could lead to increased customer engagement, loyalty, sales, and access to valuable data on consumer preferences and behavior. However, it may also require significant investments in technology and infrastructure and a willingness to experiment with new and untested approaches to online retail. For consumers, immersive commerce promises more engaging, personalized, and emotionally satisfying online shopping experiences, but it may exacerbate existing concerns around privacy and data security.
With the rapid growth and development of crucial Metaverse technologies and more popular retailers in mass and niche markets experimenting with immersive commerce strategies, the transition from e-commerce to immersive commerce is underway. In the next few years, immersive commerce could be the new standard for online shopping.
