Amazon – behind on the VR chasm?

Amazon is probably the only big tech company that hasn’t announced its place regarding virtual or augmented reality yet. Google earlier launched Google Glass and later have launched a number of hardware products – Daydream, Cardboard, Jump, etc. After acquiring Oculus in 2014, Facebook recently launched[1] Facebook Spaces to allow people to hang out in a virtual space and look at 360 degree photos and videos. Microsoft’s Hololens, HTC’s Vive, Samsung’s Gear VR, Sony’s Playstation VR are other examples of big tech companies feeling the thrust to make it big in VR/AR space. Despite that Aamzon has been quite so far about its plans. Recently, media[2] picked up on an Amazon job posting for ‘Creative Director, Virtual Reality’ which indicates towards Amazon move into the space very soon.

 

Let’s look at what $445B market cap Amazon, with over $100B+ revenues in online retail, can command leadership in various segments:

1. Videos:

Amazon has been taking on Youtube and Netflix with it’s Amazon Video product. Gradually, Amazon has entered content creation too with the launch of Amazon Video Direct[3], through which anyone can create and upload video on Amazon Videos, and earn royalties on hours of streaming. It has also launched its Video-on-Demand channel, Amazon Strike[4]. Amazon can further strengthen its presence in the space by launching VR videos – either a platform or video themselves. This will compete against Youtube that launched[5] its standalone VR[6] app in 2016, or to Netflix VR. Amazon, with the lack of its own hardware, will have to be compatible with one of the device manufacturers or launch one on its own to capture the most value. Launching a platform that allows creators to create and upload VR videos helps it crate value for them by charging its prime customers for the video streaming.

 

 

2. Fashion:

Amazon has revealed its plans to take on fashion giants with the launch of Amazon Echo Look[7], the personal style assistant, on top of its existing Alexa technology. With it, I can ask Alexa to take a photo in a particular outfit and ask for expert advice.

 

Now imagine, if Amazon extends it to the next level, where using a VR headset, I can also try different outfits and ask for expert opinion on my fashion style. This will be a much better experience than currently existing AR products like 3-D virtual fitting mirrors as shown in the videos below:

 

 

It presents a huge opportunity for Amazon to create value for fashion lovers and the brand who can reach the customer through Amazon’s platform. Value capture will be through the commission as in the current business model.

 

 

3. Home decor and furnishing:

Amazon has the potential to take on IKEA and Wayfair by launching a home décor VR platform to sell products like furniture and services (as an expansion to Amazon Home Services) like home décor and interior designing. IKEA has already tested the concept by launching pilot VR kitchen experience[8]. Similarly, Wayfair has also launched[9] a VR app whereby customers can explore, rearrange, and discover furniture from Wayfair catalog. Amazon, with much bigger size and online presence, can disrupt IKEA which has been known to be the one-stop-shop for all (economical) home décor stuff. The value created for the users is immense – it saves the trip to the physical store while purchasing furniture.

 

Similar to this, there are many other verticals where Amazon can use VR to build on its existing products. For example, it can add VR element to Amazon Go whereby a user can virtually select products and add them to the basket without having to search for items on the website. However, if it decides to play only in platform/software business, it will have to look for hardware partners. No one knows what Amazon plans for VR are. The only question is ‘Will Virtual Reality help Amazon take over the world sooner and better?’

 

Sources:

[1] http://observer.com/2017/04/facebook-spaces-altspacevr-datavized-virtual-reality/

[2] http://variety.com/2017/digital/news/amazon-vr-shopping-app-1201962695/

[3] https://techcrunch.com/2016/05/10/amazon-takes-on-youtube-with-launch-of-amazon-video-direct/

[4] https://techcrunch.com/2017/01/12/amazon-launches-the-first-of-its-own-subscription-vod-channels-anime-strike/

[5] https://techcrunch.com/2016/11/10/just-in-time-for-daydream-youtube-launches-its-standalone-vr-app/

[6] https://www.youtube.com/channel/UCzuqhhs6NWbgTzMuM09WKDQ

[7] http://time.com/4755982/amazon-echo-look-camera-release/

[8] http://www.ikea.com/us/en/about_ikea/newsitem/040516_Virtual-Reality

[9] http://investor.wayfair.com/investor-relations/press-releases/press-releases-details/2016/Wayfair-Launches-Virtual-Reality-App-to-Customize-Outdoor-Spaces-with-Furnishings-and-Dcor/default.aspx