Therefore, these projections may not be a bellwether for sustained success firms face a clear risk of building AR solutions that customers will not embrace. Furthermore, compound annual growth rates for AR are estimated primarily using device types and industry segmentation, rather than specific online customer needs (e.g., visualization of offerings) and concerns (e.g., privacy). Customers expect AR to deliver experiential benefits while also reducing their decision-making uncertainty (Dacko 2016), but most extant research into AR is limited to a focus on generic technology acceptance models (e.g., Rese et al. However, due to inflated expectations there are concerns about the business reality of these market projections (Gartner 2015).
Such an advanced frontline interface can improve service quality and offer customers more effective, enjoyable online shopping (Huang and Liao 2015).Ī recent industry report forecasts that investments in AR-enabled service augmentation will exceed $2.5 billion in 2018 (ABI Research 2013). 2017), set to enhance online service experiences through a more intuitive, context-sensitive interface that aligns with the ways customers naturally process information. From a service augmentation perspective, AR is a “smart” technology (Marinova et al.
Thus AR helps customers see how products fit them personally or in their environments, while still maintaining the convenience of online purchasing. With AR, customers can dynamically engage with goods and services, for example by virtually placing an IKEA sofa in a real-time view of their living room, changing the Dulux color of their wallpaper, or trying on the latest style of sunglasses, clothing, or makeup in a virtual mirror. Apple refers to AR as a core technology and actively pursues an AR-related acquisition strategy. 2001).Īccording to Apple CEO Tim Cook, AR-based experiences allow for “a more productive conversation” (CNBC 2016). 2013) that contextualize products by embedding virtual content into the customer’s physical environment, interactively and in real-time (Azuma et al. To simulate aspects of service that normally are reserved for in-store shopping experiences, they leverage augmented reality (AR) applications (Brynjolfsson et al. To enhance customer affinity for online offerings and facilitate online decision making, many firms (e.g., IKEA, L’Oreal, De Beers, Westpac, UPS, American Apparel, Volvo, Marriott) have adopted a strategy of service augmentation, focusing not on the core product but on the interaction between customers and the organizational frontline (Grönroos 1990). Such a strategy must acknowledge that many online customers find it hard to visualize how products fit into their personal environments or get a feel for a service experience (Cadirci and Kose 2016). As online shopping is considered to be a service experience (e.g., Dabholkar and Bagozzi 2002), developing an innovative, distinctive service strategy to tackle these challenges is crucial for driving firm value (Dotzel et al. Virtual shopping cart abandonment and product return rates continue to rise, partly because of the limited service scope of online retailers (Janakiraman et al. Customer satisfaction with-and trust in-privacy safeguards remains low, as do conversion rates (McDowell et al. With the steadily increasing prevalence of online business, firms face formidable challenges with regard to providing compelling customer experiences at the online organizational frontline.