AR Impacts Local Commerce, Disrupting Home Services and Retail
AR continues to find its native footing in a race to find the first killer app that appeases the mainstream. That process is also about finding use cases that align with monetization and revenue potential, which we’re starting to see in AR advertising and commerce.
This was the topic of the latest episode of the Above the Cloud podcast (embedded below), where I got the chance to talk AR with show host, the Local Search Association‘s Charles Laughlin. Like our podcast, the show frequently explores technologies driving location-targeted media and commerce.
As we’ve examined, AR has lots of implications for local commerce. Despite the outsized attention that eCommerce gets, 90+ percent of retail spending happens locally in physical stores. AR can fit right into that common activity as an extension of smartphone-assisted shopping.
This includes lots of things we’ve been examining over the past few months, such as visual search. Led by Google Lens, it could grow into a true utility for contextualizing commerce-heavy items—everything from local storefronts to restaurant menus to shoes you see on the street.
AR also emerges at a time when the physical retail world is undergoing significant transformation. Things like Amazon Go stores and the counteractive “retail as a service” movement have raised awareness and hunger for retail evolution. So AR’s retail shopping use cases fall on fertile soil.
But retail is just one way that AR intersects with local commerce. As we discuss on the show, AR comes into play in another key local commerce category: home services. Innovators like Streem are bringing remote assistance to traditional service calls (think: busted pipe).
The vision is essentially to let homeowners be the eyes and ears of a remote pro, via their upheld smartphone. By giving pros that telepresence to diagnose that busted pipe, they can gain operational efficiencies such as scoping and pricing jobs from afar, thus reducing some of their drive time.
Our recent presence and takeaways from the AWE conference validated some of these concepts. AR is already deployed in the enterprise to boost operational efficiencies through visual overlays (think: machine maintenance), but is now also moving down-market to local service businesses, à la Streem.
But that just scratches the surface. More takeaways (courtesy of the episode show notes) can be seen below, followed by the embedded episode audio. Stay tuned for lots more narrative and multimedia as we continue to track the progress of AR as a local commerce enabler.
Five Things We Learned from this Podcast
- There are about a billion AR-ready smartphones out there in consumers’ hands today.
- ARtillery Intelligence forecasts AR revenues will reach $14 billion by 2022, from just north of a billion today. Much of the revenue today comes from micro-transactions like in-app purchases. Increasingly, SnapChat AR lenses are driving revenue growth. Mike tells us that Snap generated $236 million of the $400 million in AR lens revenue in 2018.
- Google and Apple are helping to democratize the AR world with the recent launch of their respective AR developer kits. This is making it much easier for smaller shops to build and ship AR applications.
- 5G will have a profound impact on the continued development of AR by enabling far more precise location targeting. AR can’t emerge as a breakthrough application without the precision that 5G enables.
- For small businesses, visual search will be the transformative application for local retail businesses, assuming they are stocking national consumer brands. Bespoke products (crafts, locally sourced food items, etc.) will have the same challenges they have today in enabling real-time inventory management. For service businesses, AR could enable remote service calls, allowing service businesses to guide consumers through simple repairs while saving outcalls for the most complex jobs. This has the potential to drive their efficiency and yield way up. A version of this is already happening at the enterprise level.