Amazon Follows Alibaba’s Lead Into VR Shopping

Amazon Follows Alibaba’s Lead Into VR Shopping

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Last year, Amazon.com (NASDAQ: AMZN) posted a job opening for a senior software development manager to “lead the development of a completely new VR shopping experience at Amazon.” The company wanted the platform to “revolutionize online shopping for millions of customers worldwide,” but didn’t reveal any additional details.

Amazon recently took two more significant steps into the VR market. First, it partnered with HTC to sell the Taiwanese electronics company’s Viveport VR apps through its online store. Those apps were previously only available on HTC’s own Viveport store and Valve’s Steam VR store. Second, Amazon opened 10 VR shopping kiosks across India to promote Prime Day.

A woman uses a virtual reality headset.

Image source: Getty Images.

Amazon’s “Experience Zone” kiosks were located in popular shopping areas like the City Walk in Delhi and Inorbit Mall in Mumbai. The setup, which used Facebook‘s Oculus Rift headset and Touch controllers, let shoppers inspect products and interact with them. Shoppers could also fit clothing and accessories on a 360-degree hologram. As for video content, the headsets offered previews of seven new Amazon Prime Video titles that are debuting in India.

Following Alibaba’s lead

Amazon’s strategy seems innovative, but Chinese e-commerce giant Alibaba (NYSE: BABA) did something similar in late 2016 before Singles Day, the biggest shopping day of the year. Alibaba launched a VR shopping app called Buy+ for smartphone-based headsets.

Shoppers could buy products in a virtual mall by gazing at them and nodding their heads. About eight million people downloaded Buy+ in the first week, but the app didn’t gain much momentum afterwards, probably because it was easier to simply buy products on Alibaba’s mobile apps and websites.

Alibaba’s experiment indicated that VR shopping was not yet practical, but that didn’t stop Walmart from acquiring VR start-up Spatialand earlier this year. Walmart didn’t reveal much about its VR ambitions, but Recode claims that Spatialand could “transform the shopping experience” across its websites and stores.

What’s Amazon up to?

Amazon’s moves indicate that it’s aware that VR remains a niche market, and that VR shopping represents an even smaller slice of that pie. Otherwise, it would have simply copied Alibaba and launched a VR shopping app for smartphone-based headsets.

However, Amazon’s moves also highlight some other big priorities for the company. First, India remains a major growth market for Amazon, thanks to rising income levels and internet penetration rates. Morgan Stanley expects over 50% of India’s internet users to buy products online by 2026, compared to just 14% in 2016.

A shopping cart icon on a smartphone app, with a real shopping cart in the background.

Image source: Getty Images.

Amazon tried to buy Flipkart, India’s top e-commerce player, until it was outbid by Walmart earlier this year. Amazon remains a close second to Flipkart in India, but Walmart’s support could make it much tougher for the e-commerce leader to keep pace.

But launching flashy VR kiosks to promote its Prime Day deals was one way to counter Flipkart and develop additional buzz around the Amazon brand. The company could launch additional kiosks in other markets, including the U.S.

Launching Viveport apps in its own store could also strengthen its live-streaming platform Twitch. Some Twitch streamers already broadcast their VR gaming experiences (in third-person views), so it could only be a matter of time before viewers can watch their first-person streams with their own VR headsets.

Are more next-gen shopping experiences coming?

Amazon will probably introduce more next-gen shopping experiences soon. It already uses Apple‘s ARKit software development kit for AR (augmented reality) apps, and it recently added a new feature to its iOS app that lets shoppers virtually place objects in their homes. It also acquired Body Labs, which provides a 3D body-scanning technology that can let shoppers “try on” virtual clothes.

Amazon has plenty of ways to expand a VR/AR ecosystem. It could add dedicated VR features to its main app for smartphone headset users. It could launch its own low-end headsets at paper-thin margins, as it does with its Kindle devices, to lock in users. It could add AR features to camera-enabled devices like the Echo Look, or promote VR games and experiences to its audience of 15 million daily active viewers on Twitch.

None of those efforts will move the needle for Amazon anytime soon. But they could help it stay at the forefront of the AR/VR market, which is expected to a nearly $100 billion market over the next five years, according to research firm Markets and Markets.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun owns shares of Amazon and Apple. The Motley Fool owns shares of and recommends Amazon, Apple, and Facebook. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

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