Consumers in China have demonstrated an increasing interest in experiencing VR and AR technology, not only in gaming and entertainment, but in retail as well. The industry is booming with help, in part, from the Chinese government and major tech and e-commerce firms.
In 2016, the market for the VR and AR sector in China reached 865 million, according to a report released by Fung Business Intelligence in September that year. The sector is expected to grow to 8.5 billion by 2020.
In China’s five-year-plan (its 13th), the Chinese national government has designated the technology as one of the development priorities. The government's support has also spurred a load of VR and AR initiatives by leading tech companies including Alibaba, JD.com, Tencent and Baidu.
Alibaba, for example, released a VR shopping product named "Buy+" in 2016. The product allows consumers to browse items and try them on through a virtual interface simply by wearing a VR headset.
The process is similar to the experience one might have in a real shopping mall right down to payment: shoppers can add items they like to a cart and directly purchase them with Alipay.
JD.com, also seeing a future in the technology, formed a VR and AR alliance with over 30 domestic companies. Tencent, for its part, has worked on developing a VR social networking platform.
In the luxury retail sector, there’s huge potential for VR and AR to transform the consumers' digital shopping experiences in China and further aid the brands' online sales. Chinese consumers are known to be very tech-savvy and keen on trying new technologies. Fung Business Intelligence believes that VR content development is the key differentiator for brands to win Chinese consumers’ hearts in the future.
The following are three ways that technology can make a difference in China:
The virtual fitting room is a timely solution that online retailers can offer buyers to eliminate the hassle of coming to a store or having to change out of their clothes. Customers need only input information like photos and body measurements to have virtual models try on different items for them.
The benefits of the virtual fitting room also reflect its ability to collect consumers' personal data, which can be used in the later stages of the shopping experience such as analyzing their preferences and generating customized products and services for them.
Even though the idea of the virtual fitting room has existed for years, its industry-wide adoption by retail brands has just taken off in China thanks to technological breakthroughs made by e-commerce firms.
Alibaba and JD.com currently both offer this technology to brands selling on their platforms. There are more than 130 brands, including fast fashion labels Topshop and Gap, that have integrated this service on their Tmall stores, according to Fung Business Intelligence. However, luxury brands have been relatively slow to tap into this technology in China.
It has become increasingly important for luxury brands to create unique shopping experiences for Chinese consumers in order to retain their loyalty and lure sales, just the kind of experiences that VR and AR technology offer.
The technology enables brands to tell their stories while giving customers a sense of playfulness and exclusivity. For instance, South Korean beauty brand Innisfree set up an in-store VR experiential zone in one of its Shanghai stores located within the Disneyland Theme Park. The idea is to give a tour of the brand's homebase to Chinese consumers when they ride a stationary bike while wearing a VR headset.
The French fashion powerhouse Dior, which already released a VR headset in 2015, also recently tapped into the technology for a 3D holographic fashion show in Shanghai's West Bund Artistic Centre.
VR and AR can further become a powerful tool for brands to interact with consumers with their mobile social media advertising and marketing campaigns. A study by L2, the U.S.-based data intelligence firm, found that on the country's No. 1 social media platform, WeChat, traditional content, such as images, is no longer effective enough to win the attention of a brands' followers. To attract Chinese attention, brands have to produce content that is more dynamic, engaged and interactive.
Some auto brands have been leading in this field. For example, Volkswagen had a VR advertisement last year that allowed consumers wearing their headsets to ‘physically’ experience its new car models. The sport brand Nike also recently released a VR commercial with actress Zhou Dongyu, which has since gone viral.