UK firm's virtual reality tech proven key to cutting billion pound cost of online returns
Independent research has revealed virtual reality technology developed by UK firm Metail can have a significant impact in cutting the £20bn* cost of UK online returns.
The research, conducted by Professor Santiago Gallino of Dartmouth’s Tuck School of Business and Professor Antonio Moreno of Northwestern’s Kellogg School of Management, is the first to study the impact of virtual reality technology on online sales as well as returns.
Metail’s award-winning technology allows an online shopper to create a MeModel, a unique 3D online model based on their individual measurements, hairstyle and colour and skin tone, that can try on clothes virtually.
To conduct the ground breaking research into virtual fitting room technologies, the American academics worked with Latin America’s largest online retailer to analyse more than 400,000 online shopping transactions in one study and the behaviour of 1.85m Metail users in a second study.
The research, which revealed virtual technology has a significant impact on sales, order size, returns and web visits, offers hope to UK online retailers still counting the billion pound cost of Christmas and Black Friday returns.
Key findings from the research:
• Significant increase in orders placed by customers with access to Metail’s virtual reality technology: 8.4% uplift in conversion
• Significant increase in the actual order amount by customers with access to Metail’s technology: 22% increase in basket
• Significant reduction in returns from customers with access to Metail’s technology: 5.1% reduction in returns
Furthermore, customers using Metail technology were less like to engage in costly “home try-on” behaviour and more likely to purchase more expensive products as their confidence in online shopping increases. In addition, the virtual reality technology proved invaluable for helping online shoppers choose between competing items.
Professor Santiago Gallino, Tuck School of Business, Dartmouth, said: “Our research into virtual fitting rooms was not a lab experiment where you make subjects pretend they are buying. The study was implemented at an actual retailer and using real customer transactions we found the technology not only increased sales, it also reduced returns. Quite simply by helping a customer find a better fit, technology like Metail’s reduces customer returns. For clothing retailers in general, and online retailers in particular, that is a very big deal.”
Tom Adeyoola, CEO and founder of Metail, said: “We have always seen the positive financial results experienced by retailers and brands when they use Metail’s virtual technology to improve customer experience. However, having the independent validation from both the Kellogg School of Management and the Tuck School of Business adds scientific authority to this. Having their own virtual body, the MeModel, enables consumers to discover items, create their own outfits and shop with the confidence that items will both suit them and fit them. This is good for customers and retailers. This is the future of online shopping.”
Since it was founded in 2008, Metail has raised $20 million in funding and has secured a range of high profile clients in the UK including House of Holland, Little Mistress and Glamour UK and expanded to India, Brazil and Singapore. The award-winning company has grown to more than 60 employees and is delivering world first innovative solutions to global clients and customers.
Professor Santiago Gallino and Professor Antonio Moreno research, entitled The Value of Fit Information in Online Retail: Evidence from a Randomized Field Experiment, is available on the Social Science Research Network and will be published in the journal “Manufacturing and Service Operations Management” later this year.
To collect the data Professor Santiago Gallino and Professor Antonio Moreno conducted two field experiments on customers of Latin America’s largest online retailer.
Study one focused on the impact of virtual fitting room tools on sales and returns. 80% of customers were given access to Metail’s technology with the remaining 20% assigned to the control group. During this study data from 436,109 transactions was collected in a 59-day period from 23 August 2013 to 21 October 2013.
Study two was to gain a better understanding of the first study and allowed the academics to observe how customers behaved with different product categories and for different product characteristics, including price and number of sizes in which the item is available. 50% of customers were randomly assigned to the treatment group and given access to Metail’s technology. During the two months the experiment was conducted (3 June 2014 to 4 August 2014) 1.85m users were given access to Metail technology.
From August 2014 to September 2015, Professor Santiago Gallino and Professor Antonio Moreno analysed the data from the two field studies. The final research was completed in September 2015 and will be published in the journal “Manufacturing and Service Operations Management” in 2016.
Metail is a British company developing an immersive ‘try it on’ online shopping experience which enables consumers to create a bespoke 3D model of themselves. The technology aims to increase consumer confidence in buying clothing online through an engaging and delightful product. Metail’s technology can be incorporated into any ecommerce platform and the company’s operations are able to photograph and digitise over 200 garments a day facilitating work with mass market high volume retailers. After entering a few simple measurements consumers can generate a MeModel, which is 9296% accurate to their specific size. Established by Cambridge graduate Tom Adeyoola, Metail has raised over $20 million in funding and officially launched with its first customer – Clothing at Tesco – in February 2012. The company has since developed an international client base, spanning abof.com in India, Evans in the UK and US, House of Holland and Little Mistress in the UK and Dafiti in Brazil, whereby a comprehensive AB test showed the Metail experience increasing sales over a two-month period. For full details, visit: http://metail.com/dafiticasestudy/.
Metail works successfully with a global portfolio of clients, where the Metail Experience has proven to keep consumers engaged for up to 3x times longer. Metail engaged users also return to partner websites up to 2.5 times more regularly and are spending up to six times more on site.
For more information about Metail see http://metail.com/metailhistoryandfacts/
* Financial Times, January 27th 2016. Refers to estimated cost of UK online returns. Source: Clear Returns.