Nextech AR has announced it is integrating Microsoft Azure across its virtual experience platforms and applications.
Nextech AR provides a wide range of augmented reality (AR) and virtual experience technologies (VXT). Augmented reality has become an increasingly important technology, especially for marketers and e-commerce, allowing individuals to visualize how something will look.
Similarly, VXT has experienced major growth, in large part as a result of the pandemic. Virtual experiences have supplanted in-person meetings for everything from work meetings to major industry conventions.
Integrating Azure will allow Nextech AR to better scale its offerings, for both virtual and hybrid events.
“We pride ourselves in offering truly scalable events and services for today’s digital age. With our existing data center, making quick changes to event size and scale was an involved process that required hardware changes and sometimes took weeks,” said Mark Pace, CTO, Virtual Experience Platform at NexTech AR, “By migrating our platforms onto Microsoft Azure, we can scale events at the cloud level, with the push of a button, enabling us to elevate our event and customer experiences simultaneously. Azure is a trusted, industry-leading solution with game-changing potential for the event and experience creation industry. Our customers have come to rely on our growing portfolio of products to provide next-level tools and services which makes cloud-computing integration a perfect addition.”
“Azure, Microsoft’s cloud and edge computing platform is the gold standard and positions us perfectly for large enterprise customers who are looking for a convenient and reliable cloud-based computing platform. We see this as a major building block which is crucial to our business model as we look to expand the footprint of our virtual events and experiences,” said Evan Gappelberg, CEO of Nextech AR. He continues, “In 2020 we worked with notable organizations including Amazon, Northwell Health, Dell, Bell Canada, Grundfos, UNESCO, Restaurants Canada and Carnegie Mellon University to create virtual experiences and tools. In 2021 we now have the ability to offer Microsoft Azure to new and existing partners which will be instrumental to our growth as we look to build on our new client wins with new product offerings, and first-class customer service.”
Nextech AR’s announcement is a big win for Microsoft, as it continues to battle for dominance in the cloud market.
Verizon has announced it is partnering with Unity to help drive 5G-powered digital experiences and mobile edge computing (MEC).
5G is the next generation of wireless technology that promises revolutionary speeds, opening up a whole new world of digital possibilities. Augmented reality (AR), virtual reality (VR), gaming, autonomous driving and much more all benefit from the speeds 5G can provide. Edge computing and MEC is another area where 5G can make a big difference, allowing data to be processed faster at or near the point of collection.
Verizon has been investing heavily in its 5G network. Until recently, it had primarily focused on the fastest variety of 5G, the high-band mmWave, which Verizon calls Ultra Wideband. The company has also spent big at the FCC auction for coveted mid-band spectrum, often considered the sweet spot for 5G, offering a good combination of speed and coverage.
Unity, on the other hand, is the maker of the popular Unity game engine, as well as the creator of the popular Fortnite game. Unity’s engine is also one of the leading VR platforms. This portfolio makes Unity a natural choice for Verizon to partner with to provide 5G content.
“We are entering an era of technology-led disruption where 5G and MEC will not only transform the full enterprise lifecycle, it will change the way consumers experience gaming and entertainment,” said Tami Erwin, CEO of Verizon Business. “Every business is accelerating the shift to digital for their employees, supply chain or end-customer experience. So whether you’re an enterprise reimaging how you do business using predictive real time insights, computer vision, machine learning and artificial intelligence, or a mobile gamer who simply wants to download the hottest new game in seconds and enjoy data intensive, multiplayer games conventionally reserved for consoles, the future is happening right now.”
“We know the world is demanding high-speed, AAA content, whether it’s an educational augmented reality application or a robot running a simulation of a digital twin,” said Ryan Peterson, VP, Solutions, at Unity. “5G is the key piece for us to facilitate these real-time 3D experiences broadly and to better meet the demands of the real-time economy.”
This partnership further illustrates the emphasis wireless companies are placing on providing content that aligns with their core business. In October, T-Mobile announced TVision, its foray into streaming TV. Similarly, AT&T has its own streaming service. In an industry known for its churn — where customers switch from one company to another — providing high-quality digital experiences may play a big role in increasing brand loyalty.
The coronavirus pandemic may be keeping people at home, but Verizon is bringing the Indy 500 right to them.
Verizon, the Indianapolis Motor Speedway (IMS) and NBC Sports have teamed up to provide a front-row experience to fans. A high-definition, 360-degree camera will be placed in the infield and take advantage of Verizon’s 5G Ultra Wideband service, as well as augmented reality (AR).
In addition to being streamed via Verizon’s BlueJeans platform, AR will allow fans to watch the race on their smartphones, choosing the perspective that best suits them. They will even be able to tour the garages and see the drivers.
“Thanks to Verizon, fans around the globe will be given unprecedented digital access to the biggest personalities and the most exciting behind-the-scenes action of this year’s Indianapolis 500,” said Jonathan Gibson, Executive Vice President, Penske Corporation. “From 5G powered Race Day footage to a public drivers meeting on an innovative platform like BlueJeans, we’re excited to team up with Verizon for an epic Race Weekend.”
This is just the latest example of what can be accomplished when combining 5G with other innovative technologies, such as AR.
Verizon Business and the Pacific Northwest National Laboratory (PNNL) are teaming up to deliver 5G applications.
The PNNL tackles some of the world’s biggest challenges, including energy efficiency, scientific discovery and national security. To aid in that goal, Verizon will be deploying its 5G Ultra Wideband at the PNNL’s Richmond, Washington facility. Together, the organizations will develop 5G applications for use in everything, ranging from first responders to chemistry to earth sciences research.
Verizon’s 5G Ultra Wideband promises speeds measured in gigabits rather than megabits, along with sub-millisecond lag. That performance will open a world of new possibilities for PNNL, as it researches artificial intelligence, machine learning, AR/VR and more.
“With Verizon, we plan to explore how cybersecurity will underpin 5G for critical infrastructure and how 5G will drive transformation in the protection of endpoint devices, advancement of artificial intelligence, the science behind autonomous systems and related internet of things applications,” said Scott Godwin, general manager of Corporate Partnerships & Alliances at PNNL. “This partnership fits squarely with PNNL’s commitment to explore the capability of new science and technology to further safety and security worldwide.”
“Our 5G Ultra Wideband network is built to support transformational innovations and solutions across all industries,” said Tami Erwin, CEO of Verizon Business. “There’s no doubt 5G’s increased data bandwidth and super-low lag will help play a critical role in evolving response connectivity and mission operations for first responders. We’ve seen exciting use cases come out of our 5G First Responder Lab and are thrilled to see the new applications that will arise from our work with PNNL.”
Robin Hood is about to come to life as Sherwood Forest becomes the world’s first 5G Connected Forest.
A £10m project has been approved to use a combination of 5G, virtual and augmented reality to create an immersive experience in Sherwood Forest. The investment consists of £5 million from the government, matched by a consortium led by Nottinghamshire County Council.
The technology will be used for both tourism and environmental needs, with Robin Hood brought “to life at the Sherwood Forest Visitor Centre via an incredible 3D/4D virtual reality experience.” Meanwhile, the technology will also be used to power robots and drones to help monitor the health of the forest while minimizing environmental impact.
“Nottinghamshire is once again at the forefront of latest technology, bringing together some of the best academic minds, 3D creators and experts in 5G,” said Nottinghamshire County Council leader, Councillor Kay Cutts.
“This will be the world’s first testing, of 5G, in a forest. It will bring the stories associated with Robin Hood and our ancient woodland to life in a new way.
“Together with our partners, we will create a virtual reality experience for visitors to Sherwood Forest to attract even more families and visitors to Nottinghamshire from across the UK and overseas, bringing benefits to local businesses and our economy.”
While the concept is interesting, this announcement seems to fit into the “just because it can be done, doesn’t mean it should be” category. In an era when experts are encouraging people to unplug and enjoy nature, it seems odd to be going to this length to wire nature. There’s something equally disturbing about seeing children in the forest with VR gear strapped to their heads.
The opening statement of the Nottinghamshire County Council’s announcement says “visitors to the Sherwood Forest Country Park will be able to get a 3D experience of the forest like never before.”
This writer, for one, has always been under the impression that “a 3D experience of the forest” could be achieved by simply taking a walk in one.
Watching sports may never be the same if a demo by telecommunications company Optus is any indication.
ZDNet is reporting on a demonstration Optus put on at its headquarters in Sydney, in partnership with mixed reality firm Unbnd, combining the power of mixed reality and 5G. Mixed reality (MR) is the term that covers both augmented reality (AR) and virtual reality (VR).
According to ZDNet, in the presentation Optus and Unbnd demonstrated “a 360-degree ‘virtual theatre’ that allows viewers to experience National Basketball Association (NBA) content in either 2D or 3D, such as live games and replays, while also providing access to additional mixed reality information like scores and statistics, as well as the ability to buy NBA products such as basketball jerseys.”
The technology could eventually allow viewers to watch and essentially ‘participate’ in sports that would otherwise be too dangerous for the average person. As an example, according to ZDNet, the demo “showcased an immersive sportscar racing experience which was streamed to a 5G-capable handset. In that mixed-reality experience, viewers could see three 4K video streams concurrently — ranging from driver POV streams to the main race coverage — in addition to real-time statistics such as the positions of race cars on the track map and the speed of each driver that are tracked by Internet of Things sensors.”
Optus and Unbnd’s demo is an amazing example of what’s yet to come as 5G is paired with other revolutionary technologies, such as MR.
At an event in Ireland, where he was presented with an award to recognize “the company’s contribution to FDI in Ireland,” CEO Tim Cook took the opportunity to share his vision of augmented reality’s (AR) future, according to Silicon Republic.
“I’m excited about AR,” said Cook. “My view is it’s the next big thing, and it will pervade our entire lives.”
One significant area where AR differs from virtual reality (VR) is the potential for human interaction. VR tends to segregate individuals in their own virtual environment. Any interaction with other humans depends on them having access to VR equipment and being part of the same virtual environment. AR, on the other hand, is not as exclusionary.
“I think it’s something that doesn’t isolate people,” Cook continued. “We can use it to enhance our discussion, not substitute it for human connection, which I’ve always deeply worried about in some of the other technologies.”
Cook also sees the technology being used to help people perform hands-on tasks, especially ones they may not be familiar with. He used the example of changing the oil on a vehicle as the kind of task AR could help with.
Apple has made no secret of their faith in AR, even over its more buzz-generating sibling VR. The company has integrated AR into its visitor experience at the Apple Park, and both iPhones and iPads currently support AR. Cook’s comments give a small glimpse into why the company is so bullish about the tech.
According to a press release, Verizon and Snap, Inc., the creator of Snapchat, have teamed up to create new augmented reality (AR) tools and experiences.
The deal gives Snap access to 5G test equipment in Verizon’s labs, which the company can use to create and test boundary-pushing AR experiences that take full advantage of 5G speeds. Snap will also have its software preloaded on some Verizon 5G phones. This will likely lead to a large influx of new customers for Snap, and help it cement its spot in the AR race. Verizon, in turn, will have premium sponsorship placements in Snap Originals.
“5G will change the way people live, work and play and we’re partnering with leading companies like Snap Inc. to create unique experiences and new offerings,” said Frank Boulben, Senior Vice President of Marketing & Products, Verizon Consumer Group. “Our strategy is to partner with the best brands to ensure our customers have exclusive access to cutting edge technology and services. Our 5G Ultra Wideband technology should change the way mobile users forever experience places and events, evolving the way they see the world.”
“Major advances in high-bandwidth experiences are fueling the future of augmented reality,” said Jared Grusd, Chief Strategy Officer, Snap Inc. “We are thrilled to partner with Verizon to move the industry forward through the development of creative and innovative 5G experiences on Snapchat.”
Snap will also benefit from the many live events Verizon sponsors and hosts, providing AR experiences and introducing countless event-goers to the benefits of AR. Verizon alluded to the possibility by highlighting the potential “opportunities to experience live events in new ways through Snapchat.”
This new partnership highlights the importance of the technology to old and new companies alike.
The co-founder & CEO of augmented reality platform company Blippar, Ambarish Mitra, told an audience at the Web Summit in Lisbon, Portugal that within 5-7 years AR will be as ubiquitous as the Internet itself.
When you see the world with your eyes and through the eyes of a camera and something is recognized for the camera and you see some content that appears in the field of view, that is augmented reality. It is the enhancement of reality. Do not confuse it with virtual reality. Virtual reality has almost nothing to do with your immediate reality, it’s almost like escaping from reality.
It’s important to note why this industry is really relevant. Computers themselves are continuously evolving. You can see in the very early days it was all about the touchpad and the keyboard and it wasn’t a very natural behavior. Then the whole AI wave came along. What’s the role of AI? Besides artificial intelligence, I always call it IA, which is intelligent assistance. It’s here to serve us. We are not here to serve the AI.
Then touch, which is a very human function, touch computing came into play. In 2010 we saw the first birth of natural language processing. We humans talk and we want the computers to talk back at us. Then the final frontier which is vision. Vision is very important because vision is a large part of what makes us human. A lot of our cognition growing up comes from this sense which we call eyesight. Computers will one day, and beginning to already, will see and understand the world. Computer vision is very relevant.
AI and AR are Deeply Linked
We are already starting to see how computers are beginning to understand. It’s a very important branch of artificial intelligence and in a way augmented reality and AI has been positioned as very separate industries, but they’re very deeply linked. Augmented reality cannot scale until computers understand reality. It’s not just about gimmicky dinosaurs walking down a path. At one point we will see almost the entire Internet transform into an AR medium where everything in the field of view could come to life. It’s very relevant. You may not realize that even though the history of the Internet has been very words driven where you type some words and you get a response, but there are so many so many things in your everyday life which you cannot describe with words.
The next generation of computing is massively going to be vision based. AR promises to be a very lucrative industry because it is connected to the world we see and also a lot more possibilities with devices. Almost everybody has some form of an AR device because you have a camera on your phone. VR is an incredible and equally promising industry but still is a slightly niche utility because of how it moves you away from scaling or moving around the wider world.
This is the famous Gartner hype cycle which it has been applied to augmented reality as well. We started Blippar literally when it was in the very very earth early stages innovation trigger. We’ve actually been through the whole peak of inflicted expectations. We’ve raised a bunch of money and now it’s reaching a point where AR is under the scrutiny of whether it is going to deliver on its true potential.
AR Will Be as Ubiquitous as the Internet
The timing is great, five of the world’s biggest companies, not just in tech but the most valuable companies have invested in augmented reality. We are predicting that from five to seven years down the line it is really ready to be comparable and as ubiquitous as the Internet is today.
Facebook has launched an ad-based platform on AR. Snapchat has the famous face filters and of course, now Google with ARCore and Apple with ARKit are supporting the medium and making their phones compatible with it. So we believe AR is already having a positive impact.
About Blippar
Blippar is a seven-year-old British company operating out of Silicon Valley, New York, and London. Our mission was to create this ubiquitous AR platform which works on any camera device and brings the world to life. It’s been incredible the last two years with several large players coming into AR. It’s really validated the space.
Adobe’s Scott Belsky says that augmented reality will be as big or bigger than the Web itself. “Augmented reality, to me, is the next major medium,” says Belsky. “I actually would go on the record saying that I think someday AR will be as big, if not bigger, than the Web because it will literally be everywhere.”
Scott Belsky was recently interviewed on CXOTalk with Michael Krigsman about AI and AR and how it will impact the customer experience (video below):
The Age of Artificial Intelligence
This is probably the most exciting part of my job is thinking about these future mediums. Everyone is going to have to take them into consideration. If those terms sounded new to any of your viewers, it’s a problem, and for a few reasons.
On the AI side, every company has a lot of data on its customers that they need to use to make the customer experience better. Customers are going to stop being forgiving of presumptuous defaults that don’t work for them, of questions that they should know the answer to already.
In the Age of AI, Customers Will Expect Personalization
Customers are going to expect a personalized experience because we’re in the age of AI. That starts with instrumenting your services and products to start collecting the right data. Then it means hiring a team that can understand and starts to extrapolate some lessons from that data. Then it also means designing products to take it into account, which is personalization.
It’s a real vector of the future. I think that companies are going to start competing on the data that they have to enable a better customer experience for their customers. I think that every company, especially big ones if they don’t start to leverage their understanding of their customers, they will be trampled by those that can. We can talk more about that.
Augmented Reality Will Be Bigger than the Web
Augmented reality, to me, is the next major medium. I actually would go on the record saying that I think someday AR will be as big, if not bigger, than the Web because it will literally be everywhere. It will be a layer on everything we see. We will walk down the street, and we will know who we know was everywhere and what their ratings were. Yelp will come alive to us, right? Directions will be transformed. There will be LinkedIn bubbles over everyone’s heads. You’ll have this amazing amount of knowledge and insight about everyone in every room you enter.
Then, if you take those glasses off or whatever you’re looking through, you’ll feel somewhat dumb. You’re like be like, “Oh, my goodness. I don’t know my connections to anyone around here. I don’t know. There’s nothing left for me here. There are no remnants from when I was here last and my old notes.” You’ll want to put it back on. That is this future world.
At Adobe, we think about the fact that that world will be very dry if it isn’t rich with creativity and content. That’s why we’re very focused on the future of augmented reality from the creative tooling and marketing analytics perspective.
Expectation That We Can Talk to Any App or Device
Let’s talk about Voice for a moment. I think we’re going to have an expectation that we can talk to any application or device that is in our lives and ask simple questions and get very, very quick answers. Look no further than anyone who has young kids. They can’t necessarily navigate to a song on Spotify on a phone or whatever, but they can ask for the song from Alexa, and they can use that all day. It’s very, very, very powerful. [There’s] a lot of design implications for voice interfaces as well, and that’s why these new mediums are super exciting, ripe with challenges, but everyone has to start thinking about them.
Facebook has launched new tools in their analytics suite to help businesses using their platform to better convert visitors into customers or subscribers. At F8, Facebook’s developer conference, the company announced Journeys from Facebook Analytics that anonymously aggregates data from visitors to inform businesses on patterns that lead (or don’t lead) to sales and conversions.
“For example, you may find the people most likely to convert first browse your website on mobile before ultimately making a purchase on desktop,” Facebook noted. “Or maybe, the people who interact with your business on Messenger ultimately spend more in your mobile app. You can then use these insights to optimize your marketing strategy and grow your business.”
To make it work a business would simply add custom parameters to their events in Facebook Analytics enabling them to automatically receive key user insights. One of the ways to do this is via funnel conversion insights, which will provide key data on where in the process visitors tend to convert or go away.
VR Now Available for Brands Using Facebook Messenger
Since Facebook’s opened the Messenger Platform in 2016 to businesses and developers it has become a critical customer interaction tool for many brands. Facebook noted at F8 that there are over 8 billion messages exchanged between people and businesses each month on the platform. That is 4x more than last year and signifies widespread adoption of Messenger by businesses of all sizes including some of the largest brands.
At F8 Facebook announced that the Messenger Platform now includes the ability for brands to integrate custom uses of augmented reality into their Messenger experience. “With this launch, businesses large and small can leverage the Camera Effects Platform to easily integrate AR into their Messenger experience, bringing the virtual and physical worlds one step closer together,” says David Marcus, VP of Messaging Products at Facebook. “So, when a person interacts with your business in Messenger, you can prompt them to open the camera, which will be pre-populated with filters and AR effects that are specific to your brand. From there, people can share the image or video to their story or in a group or one-to conversation or they can simply save it to their camera roll.”
The value for marketers is that they can incorporate better visualizations of their products. This is especially important to brands that have products that customers feel more comfortable buying after touching, seeing up close or trying on, such as apparel. Facebook announced that ASUS,Kia, Nike, and Sephora will be including AR effects in their Messenger experience soon.
If you are interested in using these new AR effecting in Messenger you can sign up for their waitlist.
Facebook Enters the Dating Business
Also at F8, Mark Zuckerberg announced “Dating,” a new service by Facebook. It will let users create a second profile that is specifically for the purpose of introductions to others that they might want to date or hook up with. The key here is that your friends on Facebook won’t be able to see your other profile and they also will not show up as potential matches. This will hopefully eliminate the awkward situation where somebody uses their Facebook friendship as a vehicle to hitting on another person, which in the past often led to unfriending.
Facebook’s dating algorithm will use various signals to determine potential matches including if two people are attending the same Event or are a member of the same Group. You can assume that your bio info, likes and geography will play leading roles in making potential romantic matchups as well.
Not everyone is impressed by Facebook’s foray into dating:
Tonight at 11/10c, Facebook is getting into the dating game…minus the hookups. pic.twitter.com/Bqaa3BlJAO
Mark Zuckerberg says that virtual reality will be the most social platform that ever existed. Zuckerberg hosted an in-person Q&A in Rome, Italy Friday when he focused in on virtual reality when asked if Facebook change our lives as much as Pokemon Go. “The real reason I came to Rome was to find some rare Pokemon,” Zuckerberg replied. “In all seriousness, I think that virtual reality and augmented reality are going to be the most social platform that has ever existed.”
Last year Facebook paid $2 billion for crowd-funded Oculus Rift in order to enter the space running. “Oculus’s mission is to enable you to experience the impossible,” proclaimed Zuckerberg when announcing this acquisition. “Their technology opens up the possibility of completely new kinds of experiences.”
Clearly, Zuckerberg sees VR as a huge boon for social but even more for advertising where it is believed to have great potential. According to research by Digi-Capital augmented reality and Virtual Reality are predicted to be a $150 billion industry by 2020. That’s why so many companies are focusing on VR and AR including Google.
“This is why advertisers are so interested in VR,” said Aaron Luber who is in charge of Google and YouTube partnerships. “Emotion sells products much more than utility and that reality positions Virtual Reality as a game changer in the advertising industry.”
Facebook recently bought another small VR startup called Two Big Ears, which helps bring an immersive audio experience into VR and AR. Facebook is calling it the Facebook 360 Spatial Workstation which can be downloaded for free.
“If you think about the history of computing every 10 or 15 years a big new computing platform comes along,” Zuckerberg added. “We had desktop computers, then browsers and the internet, now we have mobile phones and each one is better than the one before it, but what we have now is not the end of the line. We are going to get to a point in 5-10 years that we are all using augmented or virtual reality.”
Zuckerberg explained how virtual reality makes you feel like you are really there or “present” as he put it. “If you look at a photo or a video on a screen, TV, computer or phone and you are trying to get your mind set in this perspective as if you were there,” he said. “You see the photo and you are trying to imagine what it’s like to be there. Virtual reality is different, because it’s programmed to work exactly the way that your brain does. When you look at it you feel like you are in that place, like you are present and you are trying to convince yourself that you aren’t actually there because if you look around what you are seeing feels like the real world.”
He sees a future that is vastly improved socially because VR will make the social experience feel like reality. “You can imagine in the future you are going to feel like you are right there with another person who couldn’t actually be with you,” says Zuckerberg. “I think about my family when I’m not there such as my daughter who is in California right now. I miss her and to really feel like I am there right now would be a really powerful experience that I would want to have.”
He noted the differences between virtual reality where you feel completely immersed and augmented reality where you are adding virtual elements onto the world. Zuckerberg predicts that AR will come to mobile phones first “before we get some kind of smart glasses that overlay stuff on the world.” He says that we going to see more apps like Pokemon Go and that Facebook itself tested a form of AR with its Masquerade Filter that was test launched at the Olympics in Brazil and in Canada, where people could support their country by putting face paint on.
“I feel there are going to be a bunch of tools like that overlay real things from the world on top of your experience and help you share things that we are going to see soon,” says Zuckerberg.
“We believe retail is at a tipping point,” said Robert Peck of SunTrust Robinson Humphrey in a note to clients. “E-Retailers are leveraging new capabilities in old business models to expand existing and new markets like apparel, grocery and personal care, where e-Commerce had only limited penetration till now.” According to BusinessInsider, Peck calls it “E-commerce 2.0.”
Shopping online is growing fast, but still only represents a fraction of total shopping dollars, just under 8%, according to US Census data.
As of the first quarter 2016, the total amount of retail spending online (ecommerce) was $92.8 billion, which was only 7.8% of all retail sales. Ecommerce is in its infancy, which means that there are huge opportunities ahead, not just for the types of Amazon, but for small merchants and startups as well.
Worldwide retail sales, including in-store and internet purchases, surpassed $22 trillion in 2015, up 5.6% from 2014, according to a study by eMarketer. They say that retail ecommerce sales, those purchased over the internet, will make up 7.4% of the total retail market worldwide, or $1.671 trillion. By 2019, that share will jump to $3.578 trillion, yet retail ecommerce will still only account for 12.8% of all retail purchases.
Even though the internet and technology is the source of major disruption for retailers, brick and mortar is alive and well for the foreseeable future.
The study says that retail ecommerce sales are accelerating faster than previously anticipated and will jump 25.1% year on year in 2015. “Online sales growth will outpace brick-and-mortar sales growth by a more than 3-to-1 margin over our forecast period,” the report predicts.
Amazon Reshaping Ecommerce
Amazon recently passed Facebook to become the the fourth-largest US company based on stock market value. By 2020 analysts Rob Sanderson, Managing Director, Senior Research Analyst at MKM Partners, predicts that Amazon will be the largest US company by 2020.
“Amazon has a significant position in two of the largest secular growth opportunities there are,” Sanderson told Barron’s recently. What he was referring to were online retail and cloud computing.
As I said during my keynote @SohnConf, $AMZN is the most durable business in the world. $3T here we come…ps, you’re welcome.
Venture capitalist and part owner of the Golden State Warriors Chamath Palihapitiya of Social Capital said to a crowd at the Sohn Investment Conference recently that Amazon will be a $3 trillion dollar company within 10 years, almost ten times more than its current $366 billion market cap.
“Consider Amazon’s potential in retailing, said a Barron’s post. “It holds a 35% to 40% share of U.S. e-commerce, on its way to 50% by 2018, according to estimates from Doug Anmuth at JPMorgan published last month. And e-commerce is just 11% to 12% of U.S. retail, not counting gas, food and cars, on its way to more than 30% eventually, and 14% by 2018, according to Anmuth. In other words, Amazon is securing a quickly growing slice of a quickly growing pie.”
Internet Is Crushing Department Stores
There is one simple truth, internet retail is booming while brick & mortar department stores are in a free fall. The chart below from Standard Chartered Research tells the story
“U.S. private consumption has shown ongoing resilience,” says a note from Standard Chartered Plc via Bloomberg, “but this macro story masks sizeable divergence at the micro level, and this explains the wide interpretation of ‘how’s the U.S. consumer doing?’ The micro story is characterized by a parabolic rise in internet sales at the expense of ‘bricks and mortar’ stores, particularly department stores.”
The above stat isn’t as bad as you think considering that every department store also has an online presence and are working hard grow that aspect of their business. But even with that department stores are struggling online. “Digital sales continued strong, still growing double digits, but it too grew less rapidly than anticipated,” said Macy’s Chief Financial Officer Karen Hoguet during their May earnings call (PDF).
Internet business guru and financial analyst Robert Peck sees a shift in online shopping toward specialty boutiques and well run mom & pop stores. He says that as the internet generation grew up they don’t have reservations against online shopping like their parents did.
Presumably, one of the main drivers of online shoppers to Amazon was a belief that you wouldn’t get ripped off or have your credit card info passed around. This fear has dissipated over time but is completely non-existent with those that grew up with the internet.
Online Retail Will Diminish Need for Offline Stores
The Ovis report sees an “increasingly fragmented physical footprint,” with branded products moving to the internet. “Demand for large-footprint physical retail space will continue to fall,” says the report.
“Physical retail will still exist, but it will need a good reason to exist.” according to Dunkin’ Brands quoted in the Ovis report. The report portends that most new retail businesses will start online and later add some physical retail for showcasing products. They note that this is already the case in furniture. Retail will only play a supporting role in the future with new online retail stores in order to add trust with customers.
Existing pure-play online retailers will also continue to create physical locations, primarily to “enhance fulfillment and customer service.” They believe that much of this will take the form of the “click-and-collect models” which are common with UK retailers. “The UK today is the most advanced market for click-and-collect models, examples of which include ASOS and Boots, and eBay and Argos, a partnership that started in the UK and has been extended to Ireland,” says the report.
Click and collect is where the shopping is done online, but the items are physically picked up by the consumer at a fulfillment center or a retailer. Walmart in the US is one of the largest retailers offering this service.
According to the 2016 eCommerce Trends Report by Absolunete, an eCommerce agency based in Canada, depending on the types of products sold and the retailer’s network of physical stores, the proportion of consumers who prefer to pick up their purchase in store can reach up to 40%.
“Better still: offering customers the option to “Purchase & Pick-Up” often increases the average purchase value,” says the Absolunete report. “That’s right: 7% of customers who pick up their purchase in-store increase their spending while they’re on site (7% as measured in net sales). In Canada, where the prohibitive cost of residential shipping is an important challenge (the opposite is true in the U.S., where residential shipping is extremely inexpensive.), Purchase & Pick-Up becomes a win-win proposition!”
Absolunete says that “Purchase & Pick-Up” has advantages to the retailer:
Increasing net sales once the consumers is at the store picking up their online order.
Increasing conversion rates by making it easy for consumers to get their merchandise.
Decreasing return due to in-store exchange options.
Decreasing shipping costs and thereby increasing profit margins.
“We expect further partnerships to be made in order to allow Internet-based retailers to build up physical collection points,” states the Ovis report. “We also foresee noncompeting physical retailers collaborating to allow the collection of each other’s products in each other’s stores. This will allow them to maintain a virtual geographic presence despite the need to reduce their own physical store networks.”
From a showroom perspective, Amazon Books is a good example, where it has physical samples of not just popular books but all of Amazon’s products such as the Kindle, Echo and Kindle Fire tablets.
“The already blurred lines between physical-heritage retailers and Internet-heritage retailers will have been eradicated by 2026,” predicts the Ovis report. “The former will continue to reduce the amount of physical space they hold, switching their investment emphases online, while the latter will invest further in establishing physical presences to support the showcasing of brand and private-label products. While the large pure-play Internet retail brands will survive, the term pure play will be rendered obsolete.”
In-Store Digital
The Absolunete report predicts the rise of what it calls “in-store digital”, where consumers make online purchases while inside the physical store. Technology will be used to improve the customer experience and to make it a personal by “integrated gathering that allows retailers to better understand customers and customer behavior.”
The report suggest that it is increasingly common to see in-store advertising screens and tablets, enabling the consumer to search for products and to make online purchases while in the store, presumably of products that aren’t available in the store itself. “Going forward, customization tools and possibilities will go even further to improve customer experience. Paper posters and printed displays, for example, are being replaced by connected kiosks and displays which allow real-time, contextually-relevant messages to be displayed.”
Absolunete one interesting example by Rebecca Minkoff, partnering with Magento and eBay to create a Smart Dressing Room. They say that the system tracks what customers try on at the store and the sizes tried and what they buy and don’t buy. The store uses this data to send updates to the shopper if an item tried on is now available in her size or color. There are many more customization option being experimented with that may be available in the future. They say, “Think of it as cookies (like in your browser) that follow you around in the real world.”
“Engagement with the technology in Minkoff stores has been greater than expected,” said David Geisinger, who was previously eBay’s head of retail and mobile innovation but now is with Magento Commerce. “Engagement is on the customer’s terms, which I think is key, because it’s not intrusive.”
Technology is the Driving Force
eBay is in full preparation for the next commerce revolution and believes the heart of it is technological advancements coming together to reshape online selling. eBay CEO Devin Wenig believes that it is these innovations that will create an enormous opportunity for companies that are prepared to take advantage of them. And eBay is battle ready to just that, for years now seeing itself as both a great technology company… and a great ecommerce company too.
“We have seen the pace of tech innovation advance significantly — in artificial intelligence, cloud computing and virtual reality, all of which have the potential to reshape global technology dramatically in the next few years,” commented Wenig in a company announcement last week. “We are building eBay to be a vibrant and dynamic global technology leader for years to come, and we are starting to see results.”
“Everything we’ve done so far has been about positioning eBay for a future we can see advancing quickly towards us, in which innovations in technology platforms have the power to dramatically reshape the commerce experience,” Wenig says.
“We are entering what we call the Age of Everywhere — the profusion of cloud-connected devices that will bring the Internet to you, globalize the market, and make things faster and more on-demand,” said Wenig.
A report by Ovum, The Future of E-commerce: The Road to 2026 (PDF), predicts that over the next ten years instant gratification, powered by technology, will be a driving force in ecommerce. The report concludes that online retail today is “largely driven by price and convenience”, but by 2026 consumer expectations of the “ecommerce experience” will change dramatically.
“The desire for instant access and fast turnaround, 24/7, will be the norm by 2026, driven in particular by millennials (born approximately 1980–95) and also by Generation Z consumers (born
approximately 1996–2010),” the report says. “Generation Z are digital natives to the power of 10, with technology use their second nature. These generations are constantly connected and inhabit an online environment where events happen in real time without them having to wait, and where social media enables them to dictate terms.”
By 2026 the report predicts that consumer expectations will force online retailers to vastly improve customer support, will have to live up to expectations on the goods or services being delivered and shoppers will expect free delivery anytime and anywhere.
“Smartphone penetration is reaching new heights around the globe, and we are fast approaching the point where being an internet user means being a smartphone user,” commented Felim McGrath, who is the Trends Manager at GlobalWebIndex, in a blog post presenting the report. “This means that mobiles have the potential to become essential online commerce devices.”
McGrath backed up his comment with examples of how in Asia people are just as likely to shop online with their smartphones as they are a desktop computer. “Last month, close to half of South Koreans used their mobile to shop online,” he said. “And in China, mobile commerce has become the norm, with consumers now almost as likely to complete a purchase online via their mobile as via a laptop/PC.”
McGrath says that even though most consumers in Europe and North America are not mobile shoppers at these levels yet, it’s only a matter of time before they are.
The Ovis Report thinks that the trend toward more powerful smartphones with larger screens will help drive ecommerce and that retailers are optimizine the shopping experience for mobile. “Together, these developments are turning the smartphone into a platform that can support the whole shopping journey, from product search and discovery, to comparisons, recommendations,
and payments,” says the report.
The report notes that Android will continue to dominate iOS and that competition for payment systems won’t just be between Apple and Android, but will include multiple payments sytems on the the Android platform.
Social Media is a Key Driver of Ecommerce
Felim McGrath also believes that social media will be a driving force encouraging online shopping. He says that one third of the world’s population is now on social media, which is up an astounding 10% over last year.
“With such a significant amount of online time devoted to social media, there’s clear potential not only for advertising and marketing via social networks, but also for directly monetising users via ‘social commerce’,” said McGrath. “The last year has seen some of the world’s biggest social networks, like Facebook, Twitter, YouTube, Instagram and Pinterest, testing or introducing integrated commerce options, acting as the middle-men between buyers and brands. The networks themselves have a clear interest in pushing this trend, both to increase engagement with their platforms and to open up healthy new revenue streams.”
The research from GWI shows that consumers are now becoming brand aware because of social media and are also using it to research products. McGrath sees this as an important step to using social to complete purchases. “Social commerce has a bright future,” says McGrath.
The Ovum report also predicts that the need for people to document their experiences on social media will motivate retailers to “increasingly align not only their brands but also the
shopping experience itself to this consumer desire for encounters worth sharing.”
“This can already be seen with the emerging trend for integrating social media with in-store retail, with the aim of creating socially driven shopping experiences,” the report notes. “In 2015, Victoria’s Secret encouraged shoppers to take selfies in front of displays and show them to sales assistants in return for a free gift – and hopefully share their selfies/experiences with friends.”
“Any doubters about social media’s powerful role in converting prospects into customers need to immediately re-evaluate their position,” notes the Absolunete report. “Like, now. Though their pure conversion rates are lower than those of organic results or Email, they are powerful tools that promote brand loyalty and are a great way to share the brand’s values. Through community-logic, social media is a valuable resource to convert curious prospects into new customers.”
According to Absolunete, with good social media management online stores can generate results that are sometimes superior to search marketing strategies such as Google Adwords. Social platforms such as Pinterest, Facebook and Twitter are working to enhance their value to online retailers by adding functionalities that will guide the shopper towards a products pages with goal to convert their users into online retail customers.
“You may have noticed more and more “direct purchase” options popping up on social media platforms like Twitter, Instagram, Pinterest and most notably Facebook, which is responsible for 64% of social sales worldwide,” noted the report. “Retailers need to move quickly to capitalize on this; once the big, established eCommerce players will have fully implemented these tools, it’s going to be a lot harder – and more expensive – to stand out.”
On Instagram, for instance, you can now go directly from a picture to a product page which are being used by brands such as Banana Republic via StylePick. What’s more, celebrity endorsers are now being used by brands in this process leveraging their huge numbers of followers to create commerce.
93% of Pinterest users have bought something online in the last 6 months, according to Absolunete. They also note that Pinterest is the source of 16% of all social sales, with their “Rich Pins” allowing retailers to fully integrate online stores and automatically synchronizing product pages with the products “Pin”. J. Crew, Gap and Nordstrom all utilize this effective Pinterest ecommerce motivator.
Ecommerce while Messaging
Another emerging trend is the integration of ecommerce into messaging apps, which is already happening in Asia. McGrath notes that Line and WeChat have already integrated multiple commerce features and other “opportunities for monetization.” He believes this revenue opportunity is the “inspiration” behind Facebook’s move to make Messenger a separate app and their motivation to focus on messaging so aggressively. Indeed they are very focused on messaging, having paid $22 billion for WhatsApp in 2014, a startup that only had revenues $10.2 million in the year before its acquisition.
Again, Asia shows the way forward here. Messaging apps like Line and WeChat have pushed beyond simple chat apps to integrate a broad range of commerce options and opportunities for monetization, forming the clear inspiration for Facebook’s recent development of Messenger Platform. All these developments mean that social commerce has a bright future.
Artificial intelligence also plays a role in messaging. “During this time, we’ve seen artificial intelligence reach an inflection point,” Wenig said. “This innovation is already beginning to take hold of the messaging space with the arrival of conversational assistants. Artificial intelligence has the potential to bring an era of deep personalization to the commerce space.
VR, AR and Wearable Devices
“Due to the proliferation of wearable devices and technology, smart TVs, connected cars and household appliances, beacons, and other technologies, the consumer journey in 2026 will increasingly look like a pretzel that twists, turns and loops back on itself,” noted the Ovum study. “Consumers can start and end their shopping experiences on a mobile platform, in store or online. It is a fluid movement that by 2026 will be even harder for retailers to keep up with or predict because it will include a growing number of devices and touchpoints.
It is key for retailers to not only keep track of consumers across many devices and touchpoints, but to also accurately measure where sales are coming from. This will require retailers and their advertising partners to build to significantly improve ad tracking technology.
One of the key drivers of wearable technology is virtual reality and augmented reality. “Virtual and augmented reality will be the next platform revolution,” says Wenig. “This is already prevalent in the gaming world, but it has the potential to be far more disruptive.”
The Ovum report predicts that by 2026 consumers will expect a more “real” shopping experience which will mean an integration of augmented reality into online stores. Consumers will expect an an “event experience” that will rival walking into a brick and mortar store.
“This will translate into interactive, highly engaging online and real-world retail environments where augmented reality (AR) plays a key role,” the report says. “The provision of distinct and tangible shopping experiences, online and real-world, will become a key means to enhance and differentiate a brand’s value proposition.”
One of the key drivers for augmented reality being used by online stores is increasing the conversion rate. Generally, retailers do much better when a consumer walks into their physical store locations compared with internet shopping, because there is no human connection.
Epson’s Moverio smart glasses are one solution for retailers, where an online shopper can click the the “GoInStore” button and a sales associate at the physical store will walk the customer through high value products with wearing the smart glasses. Clicking the button initiates a two way voice call and a one way video stream of whatever the sales person is looking at.
Luxury car dealer Amari in the UK uses the glasses to show off their extremely expensive cars to online prospects. “Our sales team know every single detail of these cars, even to the level of knowing the tyre pressures,” said Sheikh Amari, CEO of Amari SuperCars in an Internet Retailing post. “This knowledge is difficult to bring across online and we have been looking for ways to bring our expertise into the online environment.”
“This new technology enables our customers to travel to our showroom in real-time and experience the cars remotely – giving us a competitive edge and the ability to close sales quicker, providing our customers a totally unique, convenient and trusted car buying experience,” said Amari. “Our customers – who include investors and collectors – are very busy people, based all around the world, who typically know what they want but often have to rely solely on the pictures that are on the website.”
As the wearable computing industry begins to ramp up this year, Google and other companies already have their sights set on connected eyewear. Devices such as Google Glass are expected to make up a large part of the consumer device market in the coming decade, but the technology could also prove very useful to the enterprise sector as well.
Market research firm Gartner this week suggested that augmented reality (AR) technology could soon become an important tool for businesses. The implication is that businesses could use AR tech to improve internal communication and collaboration while also speeding up workflows and training.
AR technology could enable businesses to create enhanced spaces, where their physical infrastructure is combined with a layer of the virtual. The applications for AR could be used to supplement employees’ environmental awareness, as well as provide instant access to information for quicker decision-making. In other words, AR could potentially make nearly everything in a business context more efficient.
“Augmented reality is the real-time use of information in the form of text, graphics, audio and other virtual enhancements integrated with real-world objects,” said Tuong Huy Nguyen, principal research analyst at Gartner. “AR leverages and optimizes the use of other technologies such as mobility, location, 3D content management and imaging and recognition. It is especially useful in the mobile environment because it enhances the user’s senses via digital instruments to allow faster responses or decision-making.”
Though AR could potentially have office applications, Gartner believes that the most useful applications for AR technology will come for workers who are more often away from desks, or those that need two hands to work. Surgeons and hospitals in general are an obvious target market for AR, and Google Glass has already been used during at least one surgery. Workers who are often without quick access to information, or who are unable to collaborate in person may also benefit heavily from the technology.
It was revealed last month that Google would be inviting developers to two separate hackathons to work on the future of Glass. These events wouldn’t be open to the public, and the attending developers can’t say anything about what they saw or heard. That being said, Google was kind enough to share some details from the event.
A couple weeks ago, we held two hackathons for a small group of lucky developers from among those who signed up for the Glass Explorer Program at Google I/O 2012. We called these events the Glass Foundry. In San Francisco and New York, the selected Glass Explorers were able to spend two days with Glass and the API we’ve developed. They formed teams and built over 80 new ways to use Glass. Everyone who demoed received a special edition glass bar identifying them as a “Pioneer” of this next generation of computing. Eight hard-working teams won the grand prize: Google will pick up the cost of their Glass Explorer Edition.
The Glass Foundry was a great opportunity to get our engineers working next to developers on Glass and the API. We discovered that we all shared a passion for the future of wearable technology, and the feedback we received is already helping us improve the platform. The whole event was deeply rewarding for our team and the participants seemed to have a great time, too. We hope to have more Glass Foundries in the future.
Although the details of the API are still confidential, we did want to share the photos in the attached album. If you'd like to know more about developing for Glass and you'll be at SXSW this year, we recommend you attend Building New Experiences with Glass (http://goo.gl/pLoUu) with +Timothy Jordan on Monday, March 11th at 5pm in Ballroom A of the Austin Convention Center.
AR Will Be as Ubiquitous as the Internet 
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