The rise of augmented reality (or “AR”) appears to be a pivotal development in the digital commerce landscape.

AR, though not entirely a new concept, unlocks unprecedented interactive experiences for consumers, transforming the traditional retail model. AR is particularly useful in mitigating the inherent uncertainties of online shopping.

It elevates the online shopping experience from a guesswork-based model to a highly visual and interactive one. That could open doors to really elevate the customer experience and deepen relationships with buyers. But, as we’ll see, it could present a couple of problems, too.

AR Could Revolutionize eCommerce

The significance of augmented reality was further highlighted during the pandemic. It provided an almost tactile shopping experience without necessitating physical store visits.

To illustrate, let's consider a customer looking to buy a couch online. While photos and measurements provide some information, augmented reality lets customers virtually position the couch in their space, previewing its aesthetics and compatibility. This allows for a much more dynamic experience and more informed decision making.

Besides furniture, augmented reality can be used for virtual apparel try-ons, cosmetic testing, personalizing promotional offers, and exploring different lighting and design options. As the technology grows more refined, AR may optimize operations to the point that it reduces the need for physical retail spaces entirely.

Augmented Reality & Payment Reversals

All things considered, this powerful tool could transform the digital shopping arena. It may even soothe some sore spots in the payments space, like reducing refunds and chargeback issuances.

ReBound reports that despite online retail purchases falling by 11.5%, returns were 26% higher in 2022 than the previous year in the UK. Chargebacks further exacerbate this problem, with each dispute costing significantly more than a refund request. Disputed transactions are more damaging as they lead to loss of sales revenue, overhead costs, and even merchandise.

In 2020, the reasons for eCommerce refunds primarily included discrepancies in item descriptions (64%) and dissatisfaction upon receiving the item (37%). Deploying AR technology could significantly alleviate these problems, as it helps customers make more informed decisions.

AR adoption has demonstrated increased consumer confidence, translating to fewer returns. A recent survey indicated that two-thirds of consumers using AR were less likely to return their purchase. As reasons for returns often overlap with reasons for chargebacks, we can extrapolate that AR could significantly mitigate chargebacks, too.

The potential savings from reduced chargebacks could be enormous. For example, Build.com reported a 22% lower return rate among augmented reality users in 2018. This is a trend that could save billions of dollars in the eCommerce sector if replicated more widely.

Potential AR Challenges

As we’ve seen, there’s a lot to be gained by embracing augmented reality. Nevertheless, AR adoption is not without challenges.

The technology must deliver accurate and reliable results. Otherwise, it could backfire, leading to more returns and chargebacks. If that couch we mentioned earlier does not reflect the impression that an AR tool gave to customers, for instance, they may respond with refunds or even chargebacks.

Furthermore, AR's dependency on user data raises serious cybersecurity concerns. Unauthorized access to AR data, which often includes biometric details, could potentially compromise user accounts and lead to unauthorized transactions.

We must tread carefully while exploring AR applications. Crucially, retailers need to devise robust safeguards to mitigate potential vulnerabilities.

Adoption is Coming, but it’s a Slow Process

I am confident that AR is not a fleeting trend. Rather, it’s an integral part of the impending evolution of digital commerce.

However, the journey toward widespread AR adoption may be complex. It will require seamless and user-friendly integration that many eCommerce retailers simply haven't mastered just yet. 

The customer experience must be hassle-free, instant, and intuitive. If we cannot provide it, the customer will simply move on to a retailer who can. Thus, the future of eCommerce rests heavily on mastering this art of technological integration.