The brave new world of wireless shopping8 min read . Updated: 24 Dec 2018, 12:00 PM IST
With the advent of technologies like AR and VR, the consumer shopping experience around the world is on the cusp of a revolution
In 2025, four months pregnant Aparajita is feeling peckish and stops by at a Mumbai convenience store for a mid-morning snack. She picks up a biscuit pack and taps it on her fitness band to check the ingredients and makes sure she is getting the right nutrients and that it is safe for her baby. Yuka, a France-based mobile app is already evaluating the quality of your purchases. It offers an independent evaluation of the food you buy based on three criteria of nutritional quality, presence of risk additives and biological dimension of the product.
Back home that evening, she accidentally drops her medicine bottle. She asks her artificial intelligence (AI)-powered ‘smart speaker’ to have the medicines delivered immediately. Before she is halfway done with an episode of her favourite show on Netflix, a drone delivers the medicines to her house.
Well, this is just a peek into what already is happening. Fact is, augmented reality (AR) and virtual reality (VR) will completely transform the shopping experience, replacing today’s pain points with captivating, interactive experiences that inform, entertain and save time and money. Moreover, yes, challenges of security, privacy and confidentiality will need to be addressed—not just by laws but also by a new contract between corporates and consumers. By having specific, transparent, and positive-consent based sharing of personal information with providers who have limited and contractual access to individual data, the drudgery of shopping will be replaced with high-experience, time-efficient visits to retail outlets.
Again, not all of this is in the future. Globally, smart speakers is a $4.3 billion market, expected to grow at 23% compound annual growth rate, as per data from Allied Market Research. In India, during the second quarter (July-September) of fiscal year 2019, IDC reported that shipments of smart speakers saw a 43% quarter on quarter growth. Same day delivery is, of course, mainstream; according to a Dropoff survey, in 2017, 17% of US consumers used same-day delivery, while 31% used it in 2018.
Most e-commerce players are currently piloting drone projects in controlled environments. The big challenge is regulations, as most countries require drones to be within visual line of sight (VLOS) of the drone operator. The Indian government too has taken baby steps by allowing commercial use of drones. As we move ahead, the regulatory restrictions on the role of drones will need to be further streamlined and detailed, while at the same time security and safety issues will need to be balanced since the potential of abuse is high.
Meanwhile in Surat, Neeta, 23, walks into an apparel store to buy a dress for a party she has to attend that evening. Taking out her mobile phone, she scans bar codes of the dresses she likes and sees a 3D image of herself on the mirror-screen. Just a click shows her digital avatar wearing her favourite dresses on the screen. She can turn and twirl with her 3D avatar doing the same. Finally, she selects a couple of outfits on the mobile and walks out of the shop. On her way out, she smiles at the exit mirror. Her identity is verified, payment made seamlessly and product dropped into a lockbox in her apartment lobby—the bar code on the package gave access to the delivery person to enter the lobby and access the lockbox. Neeta is all set to dazzle the crowd in her new outfit.
This picture of the future augurs well for the environment. With less packaging, less dead inventory, and replenishment-based fulfilment at home (less wastage), the carbon footprint of consumption will not grow as much as it does today.
Known as Memory Mirrors, this smart AR mirror enables customers to try on a variety of clothes in different colours, virtually, with a 360-degree experience. The same AR technology is also letting customers try on custom-fit glasses and simulate makeup products on a user’s face to show what they would look like in rea world.
Alibaba, meanwhile, has piloted smile recognition technology in KFC outlets where Alipay customers can smile to pay. Alibaba has recently collaborated with Megvii Technology Ltd on designing smart mirrors.
Changing consumption story
In 2005, the income distribution in India was quite like the Eiffel Tower—a very broad base, tapering quickly and drastically to a very thin top. In 2005, 7 in 10 households were in the “low income" group—a subsistence level of consumption where there was little discretionary spend. Today, we have progressed to the great pyramids in income distribution. We are now at a level where 6 in 10 households belong to either the middle or upper income groups, and they have steadily powered growth in consumption across all categories.
Over the next 10 odd years, we envision that the pyramid will morph again, and income distribution will take the shape of a diamond. This burgeoning expansion of the middle class will result in buoying the middle class bucket to 300 million, now accounting for over 80% of our households. Existing households becoming more prosperous will equally drive this increase in the middle class, and the creation of new, young households where youngsters will be more educated and better employed than their parents were.
This macro metamorphosis of the Eiffel Tower into a pyramid and then to a diamond will be further embellished by the internet and digital inclusion. By 2030, over 1 billion Indians will have access to the internet. As more of India is ‘connected’, more technology-savvy consumers will begin to define shopping and consumption trends. Digitally influenced purchases will become the norm; almost 40% of all purchases will be digitally influenced in the near future.
Where virtual is real
Advances in mobile telephony will present new opportunities as they run an array of offerings starting from mobile-armed sales staff to mobile-enhanced product reviews, mobile-responsive websites, and discounts on demand via apps while shopping within a store. Mobile accessories are also redefining the digital shopping experience, making it simple, fast and fun, while not requiring any physical interface.
By 2025, when 20-year-old Sunil enters a leading branded shoe store, and is unable to find the right size, he gives his measurements and the 3D printing machine starts printing out customized shoes for him. While they wait for it, he goes over to the basketball ‘stadium’ in the store to shoot some hoops.
His shoe is done in a few minutes and he decides to try it on the VR running track, also at the same outlet. After a quick round “around" the track, he is convinced that the pair is meant for him. Meanwhile, the sportswear company has registered his speed and calculated the discount based on the boy’s performance.
VR is already a reality in shopping. A US-based adventure products company is putting VR into its stores to make shopping an immersive experience in which customers form emotional connections. In some US stores, it had customers virtually travel to a national park, where they accompanied rock-climbers in a 360-degree VR experience with 3D sound. In a Korean store, it had customers shopping for winter jackets sit down on a sled and go on a virtual dog sledding experience, after which they surprised the customers by launching them straight into a real dog sledding adventure through the mall, ending in catching the jacket they had been trying on at the finish line.
Some others are using AR to let customers virtually place furniture in their homes and assess how it would look. For instance, one retailer’s app generates true-to-size reproductions of its products within the customer’s home, from a couch against the wall to see how it might fit, to a ceiling lamp for how it matches the rest of the room’s aesthetics.
Close to home, smart wearables are already seeding in India at a rapid pace. As per IDC, the second quarter of 2018 saw 1 million shipments of smart wearables, witnessing a 40% quarter on quarter growth.
In a corner of Patna, Rajesh, 45, a ride-hailing electric cab driver has just reached home to listen to his 17-year-old daughter recount how she picked up the T-shirt that her dad had promised for her birthday. At the metro station on her way back from school, she photographed a cool T-shirt ad and searched for ‘similar designs’ on a shopping site. The site, which had evolved machine learning capabilities, threw up different options. She selected a few she liked and shared on her chat group. After getting her friends’ approval, she is curious to understand the specific fit and pings customer service of the shopping site. The customer service bot answered all her questions and she placed the order, which was delivered within a few hours.
Indeed bots will play a crucial role in the future shopping experience and provide a conversational commerce service on various messaging and social media platforms that customers use daily. Social media is becoming shoppable, with some startups making any post a kick-off for a fast checkout. Meanwhile, startups like Bringhub now place the most relevant products on any given page on the web. Leveraging natural language processing and image recognition, Bringhub analyzes web pages and can pick out exactly the most relevant products to feature on a webpage based on the webpage’s content, letting retailers bring exactly the right shopping journey to the customer browsing anything anywhere on the web.
These advances are as much behavioural as they are about technology. In addition, none of these are in the ‘yet to be built’ category: each one referenced is already being tested somewhere in the world. It is only a matter of time before they become part of our retail experience too.
Nikhil Prasad Ojha is a partner in Bain & Co., and leads its strategy practice in India. Shyam Unnikrishnan is a partner in Bain & Co., and is a leader in its consumer products and retail practices.