Morgan Stanley
  • Research
  • Nov 14, 2017

Apparel eCommerce: Sizing Up Augmented Reality

For the apparel industry, Augmented Reality could be a perfect fit with eCommerce, reducing customer friction points and driving sales in all categories.

Augmented Reality—the technology which combines a user’s smartphone camera image with superimposed digital images—has the potential to revolutionize entertainment and health care among other industries. But one area that shows enormous promise is eCommerce in the apparel industry.

While the idea of using AR to virtually “try on” clothing is something that has been discussed for quite some time, the newest generations of  smartphones now have cameras capable of measuring depth perception.  These depth perception cameras can map the sizes of rooms, objects and people. Augmented reality can then be used to accurately superimpose objects in a room or clothing on a person.

This new ability could be the missing piece which will let users accurately assess size and fit.  For the apparel industry in particular, this new technology could be transformative and have the potential to dramatically boost eCommerce adoption by consumers.

A Perfect Pairing for Online Apparel

Currently, online penetration in Europe for apparel is still around 15%. In other sectors like travel, food delivery and music, penetration rates are over 50%. Alleviating concerns over sizing could improve conversion rates for online clothing shoppers, reduce friction points from consumers, and drive sales for the entire category.

Why are concerns over sizing so key?  Most surveys show that consumer concern over fit and look are the main friction point of online apparel purchases. Creation of a “killer app” which would allow buyers to use an augmented reality experience to understand size and fit could reduce that friction.

Many Happy Returns

For retailers, one of the most costly elements of online sales is the high return rate.  Another benefit of augmented reality could be a reduction in those returns, by allowing consumers to make more accurate purchases. In Europe, return rates can range from 30% for luxury purchases to 50% for mass market. 

For a retailer’s bottom line, AR offers benefits in two areas.  First, and most obvious, is a reduction in shipping costs.  Perhaps more key is increased efficiency and availability of product.  In an online purchase, an article of clothing could spend several weeks in outbound and inbound transit if the customer chooses to return it.  During this time, the retailer can’t sell it to someone else. This delay runs the risk of eating up potential seasonal buying windows and could result in an “end of season” price markdown.

This increased efficiency could boost online apparel retailer margins, or allow the retailer to cut prices or pass those savings on to consumers.

Broad Retailer Application

Finally, the possibilities for augmented reality sales exist across all price points, from “off the rack” clothing on the low end, to high-end concepts like bespoke custom-made clothing which is sized before it is manufactured.

While AR has the potential to drive sales across many categories, apparel is one of the industries where augmented reality can have the most profound implications for both consumer and retailers.

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