VR AR in building retail experiences - Connected Corners

4 ways brands could monetize their VR/AR retail solutions

This topic covers some of the key monetization models that retail brands can explore for their VR/AR powered retail experiences

Continuing from exploring some of the key applications of VR & AR tech within the retail domain; this topic aims to cover some of the key monetization models that brands can explore for their VR/AR enabled retail solutions

Value chain players across the retail industry have for long been amongst the keenest adopters of virtual technologies in developing a myriad of shopper experiences… and whilst for the most part these solutions are offered for free’ to end users; brands may also seek to monetizing them

Quick Note: Despite certain similarities inherent to the broader industry; each retail business is unique; defined by a multitude of factors (vision, geography of operation, technological capabilities, industry partnerships, et al.) and as such would have distinct requirements from VR & AR solutions

How can brands monetize their VR/AR solutions?

Akin to any other commercial initiatives, developing virtual retail solutions would too come at a cost (resources & capital) which; depending on its complexity could end up being a quite significant one for the retailer

Whilst the key reason for implementing many virtualized retail experiences may very well center around enhancing the holistic CX for shoppers & customers alike…

…retailers may also explore variety of monetization models (apt combinations thereof) to offset their costs associated with building, promoting, maintaining & iterating the underlying VR/AR ecosystem and also diversify their revenue sources

Generally speaking, there are 4 key models brands can explore to monetize their retail VR/AR solutions

  • Free-to-use model (potentially supported by other revenue sources)
  • Premium service model
  • Licensing model
  • B2B/E&G partnership model
Retail VR:AR monetization scenarios - Connected Corners

Free-to-use model

At the very least retailers could offer their VR/AR powered retail experiences completely free to the user… where they either absorb the costs in full… or alternatively… fund, subsidize &/or offset it by a range of revenue sources (or combination thereof)

Sales conversions & growth revenue

Retailers could potentially offset the costs associated with building, promoting & maintaining their free-to-use virtual retail solutions with revenue streams associated with increase in sales conversions & growth correlating to the virtual retail experience/s

Vendor marketing & Ad revenue

Retailers could fund their free-to-use VR/AR enabled retail solutions by commoditizing their virtual real estate space for merchandizing, product placement, promotions & even advertising revenue – not to dissimilar to their existing physical & online channels

Shopping data revenue

Retailers could partially/completely subsidize their free-to-use virtual retail solutions by responsibly commercializing the virtual shopping user data points (e.g. shopping behavior, preferences, et al.)amalgamating with data sets from their traditional channel (in-store/web) interactions to open up additional revenue opportunities

Premium service model

Depending on a range of factors (retailer type, product categories, industry, et al.) brands may choose to monetize some/all of their VR/AR enabled experiences as a premium service (think: membership, subscription, et al. fees)

These VR/AR experiences could include the likes of 24X7 virtual personal concierge service, VIP invitation to virtual product launches, fashion shows, art exhibitions, theatre, et al.

For VR related experiences; the brand could also include the necessary equipment to not only justify the premium pricing but also ensure better control over the virtual CX & UX aspects

Licensing model

Some retailers investing heavily into R&D of complex VR/AR/MR retail solutions may also seek to license their IP, platforms &/or the entire ecosystem (think: VR/AR-as-a-service) to others within the same industry; and possibly even across industry verticals as well

This type of (white label, off-the-shelf, turn key) VR/AR-as-a-service solution could appeal to value chain players who are interested in providing virtual retail experiences to their customers but may not have the necessary resources & capital required to develop them in-house

On the other hand; for retailers licensing their VR/AR solution; this model not only open up an additional sources of revenue but also concurrently fund their own solution as free-to-use for their customers (as above)

B2B / E&G partnership model

Retailers could explore the possibility of developing VR/AR retail experiences within a B2B / E&G partnership model where all the participating members may jointly pool in their resources to build bespoke virtual solutions to address common goals

For example; the retailer could work with relevant businesses, government bodies or even NFPs to develop & implement unique (virtual) retail experiences within aged care facilities or perhaps even bring essential (virtual) shopping services to people with limited mobility

In this type of partnership model, the retailer not only benefits from potentially sharing of resources & costs associated with developing the virtual solution but also unlock (potentially perpetual) revenue streams from ongoing provisioning of VR/AR services & support

Monetization potentials aside; retailers could also benefit by integrating data points from their shopper/customer’s VR/AR channel interactions & behavior with their existing channels (web/phone/physical) to develop a comprehensive CRM platform that could aid in hyper-personalizing the shopper’s omni-channel shopping experience

So…

Implementing any type of virtual retail experience solutions would require a level of investment in terms of resources & capital which;depending on its complexity could end up being a significant one…

…but retailers could monetize their virtual services in order to offset the costs associated with building & maintaining the solution ecosystem and also open up potential opportunities for revenue diversification and industry partnerships

Whilst retailers can build virtually limitless VR/Ar applications; there are some key considerations in ensuring mass adoption, continuous engagement and better ROI

Forthcoming topics will aim to cover some of these key factors (such as CX, UX, scalability, et al.) in more detail as well as further explore some of the challenges faced by retail value chain players in implementing VR/AR solutions

Stay tuned!