Author Information : Shuai Yang, Donghua University
Guiyang Xiong (corresponding author), Syracuse University
Year of Publication : Journal of Management Information Systems (2019)
Summary of Findings : The research empirically examines the effect of virtual fitting room on product sales, post-sales customer customer satisfaction, and product returns.
Research Questions : What is the causal effect of the launch of virtual fitting rooms on online apparel retailers' sales, post-sales customer satisfaction, and product return rate?
What we know : Online retailers of apparel items traditionally rely on appealing product visualizations to stimulate purchases, including 2D promotional photos or 3D displays, both of which typically feature attractive models / body figures to showcase the ideal looks of the item. Such strategies can increase sales, since consumers often purchase an item because they like the way it looks on the model.
Recently, with the fast development of the virtual reality technology, virtual fitting room (VFR) becomes another promotional option for retailers to consider. Some studies indicate that VFR may help enhance consumer perceptions and attitudes (e.g., enjoyment and fun), which could potentially help increase sales. However, there are also concerns among online retailers about a potential decline in sales if VFR is launched. This is because VFR allows consumers to virtually try on an item before purchase and better realize how it would actually look on themselves (which typically does not look as good as on the models), thus potentially diminishing the impulse to purchase that could otherwise be stimulated by appealing promotional photos or other traditional product visualizations.
Based on the limited previous studies on VFR, it remains unclear whether, how and when VFR influences product sales. The question is of utmost importance to managers because of the considerable cost of implementing and maintaining VFR systems. Besides product purchases, post-purchase performances of the products (e.g., customer satisfaction and product return) are also direct determinants of online retailers’ profit and long-term success. However, extant research has rarely examined how the virtual reality technology influences post-purchase metrics.
Novel Findings : return rate. Our results show that the effect of VFR on sales varies significantly depending on the types of avatars (personalized versus non-personalized) and the retailer’s promotional strategy (i.e., whether VFR is deployed in isolation of or in combination with conventional visual displays such as promotional photos). The launch of personalized VFR, which is considerably more costly than non-personalized VFR, may in fact have an adverse effect on product sales if users’ self-discrepancy becomes salient. The optimal strategy for an online retailer to enhance sales is to entirely replace conventional visual displays with personalized VFR, instead of combining them. Moreover, we find that VFR can significantly increase post-purchase customer satisfaction and reduce the rate of product returns. Our findings help researchers and practitioners better understand the profit prospects of VFR and provide novel insights regarding how to configure and deliver VFR to maximize business performances.
Novel Methodology : The research is based on two large-scale field experiments with real-world transaction data and one lab experiment that aims to explore the underlying theoretical mechanisms behind the effects observed from the field.
Implications for Practice : The primary concern among online retailers considering the adoption of VFR is its cash-flow prospects, because of the considerable costs for implementing and maintaining a VFR system, especially for personalized VFR. We find that VFR can lead to a sizeable increase in sales instead of decline. In addition to sales, practitioners are also concerned about post-sales outcomes including product return and customer satisfaction, which are vital determinants of profitability and long-term success in the online retail industry. However, it is challenging for managers to identify a “perfect” strategy that benefits both sales and post-sales performances, since a strategy that boosts sales often negatively affects post-sales outcomes, or vice versa . Our findings suggest that VFR can potentially serve as an effective vehicle to benefit not only sales but also post-sales outcomes. We show that VFR significantly decreases the rate of product returns. This is important especially considering that retailers’ reverse logistics cost for product returns averages 8.1% of total sales. Moreover, we demonstrate the positive impact of VFR on post-purchase satisfaction. Because satisfaction can lead to repeat purchase, loyalty, and thus higher future sales, VFR may be beneficial to retailers’ long-term cash flows. Compared to non-personalized VFR, personalized VFR exhibits greater potentials in increasing product sales and customer satisfaction and decreasing product return rate. These positive profit prospects of VFR can help alleviate managers’ hesitation about adopting the technology.
However, practitioners should be extra careful when implementing VFR, which may produce adverse outcomes otherwise. Although personalized VFR by itself works well in increasing sales, it does not when CVD is also present. In other words, it is ineffective and even counterproductive if a retailer simultaneously employs both personalized VFR and CVD. Hence, to maximize sales, retailers should completely replace CVD with personalized VFR, instead of combining them. However, although personalized VFR and CVD do not complement each other in increasing sales, their combination is effective in further reducing product return rate. Therefore, managers should prioritize and weight their business goals when deciding whether to deploy VFR in isolation or along with other promotional component / technology on their website or mobile app. Notably, our study is among the first to provide explicit guidelines regarding how to effectively deliver VFR (i.e., avatar types; incompatibility or complementarity with alternative promotional tool) to improve product performances (i.e., sales, customer satisfaction and return rate).
Implications on Research: First, previous studies on VFR have largely focused on its main effect or mediators, and existing theories suggest competing perspectives. Hence, the sales impact of VFR is inconclusive based on the literature and can depend on the relative sizes / prominences of the competing effects. It is thus important to empirically examine the actual effect of VFR. Moreover, little is known about whether and how VFR might influence post-purchase outcomes. Our study takes one of the first steps to fill in these research gaps by unveiling the causal effects of VFR on product purchases, post-purchase satisfaction and product returns.
Second, there is very limited research on the conditional effects of VFR. In this study, we identify a novel moderator (i.e., availability of CVD) that is critical in the context of online shopping and controllable / manageable by the retailers. This finding highlights the importance of examining VFR from a contingency perspective and contributes to a more complete understanding of VFR’s impact.
Third, our study enriches the literature on self-discrepancy and highlights its relevance to the online retailing context. The self-discrepancy theory has been widely applied to various contexts in psychology research. However, previous studies on the effect of VFR have ignored it. We add new insights by unveiling its unique role in determining / mediating the effectiveness of VFR. Future research can further explore its role in related contexts.
Fourth, future research can explore additional moderators or boundary conditions for the effect of VFR, such as the point of Internet access (e.g., mobile versus desktop) and shoppers’ goals (e.g., searcher versus browser).
Finally, beyond the apparel industry, the risk-reducing and enjoyment-enhancing aspects of VFR may help increase online sales of other product categories as well (especially where customers demand more realistic shopping experiences to evaluate the product), which can be meaningful for future studies to explore.
Full Citations : Yang S, Xiong G (2019), "Try It On! Contingency Effects of Virtual Fitting Rooms", Journal of Management Information Systems, forthcoming.
Abstract : A revolutionary application of the virtual reality technology in online retailing, virtual fitting room (VFR), has attracted attention of researchers and practitioners recently. However, it remains unclear whether and how VFR influences sales and post-sales outcomes based on the limited literature, and retailers hesitate in adopting the technology due to concerns about its profit prospects. In this research, we conduct two large-scale field experiments to test the causal effects of different VFR designs, and a lab experiment to unveil the underlying theoretical mechanisms. We find that, although VFR can have a sizeable positive effect on sales, it can be counterproductive when used improperly. Specifically, personalized VFR may not increase sales if used in combination with conventional product visualizations because self-discrepancy becomes salient under this condition. Moreover, VFR significantly influences post-sales outcomes, i.e., it enhances customer satisfaction and reduces product return rate. The findings provide distinct theoretical contributions and managerial implications.
The research empirically examines the effect of virtual fitting room on product sales, post-sales customer customer satisfaction, and product returns.