The idea of virtual reality has always been mind-blowing. Put on a pair of goggles and be transported somewhere new without moving your feet. For decades, the technology wasn’t there to make this promise a reality. That’s all changed. Today, a wide range of big-name companies are experimenting with powerful new virtual reality technology to usher in a game-changing way of shopping: virtual retailing. Now this technology is coming to the automotive space – and it’s happening fast. Get ready for the next generation of car buying to hit your dealership and change the way you sell vehicles forever. So what exactly is virtual reality, how did it usher in virtual retailing, and how is it going to change our industry? Let’s dive into the details.
What is virtual reality and virtual retailing?
Virtual reality is a computer technology that replicates an environment and simulates a user’s presence in that environment. It’s the complete immersion in a new environment through a headset that is the difference between it seems like I’m there to I’m there. This isn’t augmented reality, where you see what is actually in front of you, with computer-generated graphics and copy layered in as you move around (through a modified headset or a tablet or phone). Virtual reality immerses you in a completely programmed environment where you can see, hear, feel, and interact. To put this in context, think about how you sell cars today. Your sales collateral and interactive platforms, including 360-degree spins, exist in two dimensions. For customers to have a three-dimensional experience with a car, they have to come to your showroom and have a salesperson physically show them the car. Virtual reality breaks down that barrier and allows for true three-dimensional interaction (sliding into the driver’s seat, opening the trunk, listening to the radio) between a shopper and car without having to set foot on the showroom floor. When companies use virtual reality applications to sell products and services, it becomes virtual retailing and it moves customers down the sales funnel, faster.
How did we get here?
The roots of virtual reality reach back for decades. In the 1950’s a few visionaries saw the possibilities, but the technology wasn’t there to make it happen. The idea was still worth pursuing, and many did, including the military when it developed flight simulators during WWII. As technology progressed, entertainment companies such as Atari and Sega developed home-based units, but they didn’t take off due to the high cost and crude performance. Through the 1980’s and 1990’s various companies evolved the experience, but continued to be hamstrung by a display frame rate that was nausea-inducing at best because it was so far removed from how the human eye processes information. Then in 2011, an 18-year-old kid named Palmer Luckey put the pieces together using advanced technology and created a clunky headset which eventually morphed into the Oculus Rift. Facebook saw the potential and bought his company in 2014 for $2 billion (Palmer’s net worth now exceeds $700 million). When Facebook got involved, virtual reality took off. Samsung, Google, Sony, and other big companies developed their own technology and goggles. Content providers also started popping up, including movie studios, multimedia companies, and interactive agencies.
Where is virtual reality going?
Due to better, more powerful technology available at a lower price point, virtual reality applications are rolling out rapidly. Widespread consumer adoption is also exploding thanks to adaptors for phones, cameras, and game consoles (like the PlayStation 4), and new content for movies and social media. This brings us to exciting new developments in the auto industry. The future for virtual reality and vehicles is so new all the options haven’t been explored yet, but big leaps have been made.
How will VR affect auto?
Two notable examples include Volvo and Audi. In 2014, Volvo became the first automotive brand to use virtual reality to create virtual retailing. It used Google Cardboard to turn a smartphone into a basic virtual reality headset for a fully immersive weekend getaway test drive of the new XC90, months before it arrived in the United States. Volvo produced 1,927 individually numbered cars – all of which were sold through a virtual web shop within 47 minutes. At its peak, Volvo sold seven cars a minute. The social media posts promoting the release and sale were among the most successful organic content during the campaign – they outperformed average content by an astounding 638%.
Last year, Audi introduced its VR Experience to select dealerships in growth markets. The experience features a headset that lets customers configure a virtual car and view every possible equipment combination and color on all of the brand’s models. The headsets are paired with headphones so users can hear sounds like doors closing and even the sound system. Audi dubbed the release “dealership in a briefcase,” since the system essentially offers the entire dealership experience in a device the size of a briefcase.
These two examples are just the tip of the iceberg. We predict virtual reality will eventually be used to train new dealership employees, and to break down barriers with top-funnel shoppers. Virtual reality systems will pop-up in service department waiting rooms, at malls, even airport kiosks. With applications taking off, we may soon have virtual reality commercials where viewers can immerse themselves in a test drive without ever leaving the couch. Perhaps most exciting, virtual reality will demonstrate actions that are impossible to offer in a dealership, or even on a test drive. Imagine for the first time, an avid mountain biker, surfer, or pet lover literally seeing their gear or pets going in and out of the car. It offers the opportunity to actually live with a car, as opposed to merely test-driving it.
What about virtual retailing at my dealership?
Virtual retailing is the future of how you will sell cars. The younger generation shoppers love it, and are clamoring for it. In response, hardware companies are driving hard to get the technology out there. Companies are creating content as you read this to bring virtual reality to dealerships. OEM’s are already on-board and price barriers are dropping every day. However, the benefits aren’t just for consumers. The lead generation capabilities are enormous. Users immerse themselves in a tailored experience and give feedback, essentially doing all of the pre-qualifying for you. You can get rid of ineffective interactive kiosks (why bother with a kiosk if there are physical cars all around you?) and instead offer an immersive experience. In addition, virtual retailing requires fractional real estate, your customers see more in less time, and your salespeople work more efficiently.
The next generation of car buying is coming up fast, and it’s virtual retailing. Now is the time to get on board and learn more – before your competition beats you to the punch.