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Off to Digital Market We Go, with InContext Solutions’ Tracey Wiedmeyer
The power of XR will never be able to destroy the good ol‘ desire to go out and shop, but that doesn’t mean that XR couldn’t be used to improve the shopping experience. Tracey Wiedmeyer and Alan discuss a few ideas, from browsing the catch of the day in a VR tropical wonderland, to using VR and AR to test out retail layouts before you build them.
Alan: Today’s guest is Tracey
Wiedmeyer. Tracey is the chief technology officer and co-founder of
InContext Solutions. They’re delivering a mixed reality platform that
is the world’s largest brands and retailers are using to streamline
their merchandising process and go to market strategy much faster.
Tracey is also the former president of the VR/AR Association chapter
in Chicago, Milwaukee and a board member for the Information Research
Technology Institute at Sam Walton College of Business. Tracey is
also a member of the Forbes Technology Council. You can learn more
about InContext Solutions at www.incontextsolutions.com. With that,
I’d love to welcome to the show: Tracey Wiedmeyer.
Tracey: Hey Alan, glad to be
here.
Alan: My pleasure. I’m so
excited. This is a show I’ve been really waiting to do because you
guys have been using virtual and augmented reality, mixed reality to
help retailers preplan their stores, because right now a retailer, if
they want to design a new store, they literally have to build a
physical store, put all the shelves and build a mock store. And
you’re doing this through virtual/augmented reality, and the metrics
that you’re able to collect, keep maps, and where people are looking
and the amount of data that you’re able to collect from users in a
digital world versus a physical world is actually really quite
amazing. So maybe you can just talk about InContext Solutions and
what you’re doing for retailers.
Tracey: Sure, yeah. There was a
lot to bite off there. I’ll break it down little by little as we go
here. So I think you mentioned creating brand new physical stores.
There’s actually more retail stores today, more brick-and-mortar
stores than there were back in 2000 when the retail apocalypse
version 1 hit the street. You know, it was the end of
brick-and-mortar, everyone has gone digital. So I think there’s a lot
of stores being added today and most stores – but whether you’re a
centre store grocery retailer or fashion or apartment store – those
stores go through a regular reset on a period of time, whether that’s
every couple of years or longer than that. I think the nuance there
is actually at the brand level, you know, especially if we focus on
centre store grocery for a little bit here. The brands are actually
working with their retail partners multiple times a year to reset the
categories that you shop. So cereal, frozen foods, healthcare, baby
foods, all that sort of stuff are constantly going through some sort
of revision period, whether it’s… the old way’s every six months,
because that’s how long it takes them, and I’ll get into that in a
little bit. But they’re trying to get you to buy or notice one or two
more products on that journey to the shelf. We’re using virtual
technology now to basically facilitate that process; everything from
a brand new store, to which products go on the shelf, and how many of
them are stacked right to left and front to back. There’s a lot of
low hanging fruit in that process, and maybe I don’t know how much,
Alan, you know about what that process looks like today, or in the
past. What I’m going to do is tell you a little bit about where we’ve
come from.
A lot of brands and retailers have what
they call mock warehouses. They physically stage all their sets, what
every category is going to look like. And then they invite their
brand. You invite your retail partners into that center, which means
you got to physically travel or fly somewhere. And then they present
what they’re thinking. What is this going to look like if it’s
springtime? Now they’re thinking about, what is the fall going to
look like? They’ll physically stock out all the merchandise and then
they have their retail partners go through and go, “well, this
looks good. Y’know, I don’t like that. Can we change this?” That
sort of thing. I think where virtual technologies really hit the mark
is that they’re doing this old, antiquated process every six months,
because it just physically takes that long to do. But if we can do
everything in virtual, and you can then introduce Xbox for retail
concepts, where you put a headset on your desktop and jump in a
virtual store together, no matter where you are in the world. Now you
can start to do that whole perpetual merchandising process much more
frequently. And that’s turned out to be a catalyst for not only doing
more than every six months, but integrating in exact feedback from
your customers, to figure out what’s going to hit the mark. Does that
resonate so far with you?
Alan: Yeah, I think to put it in
perspective, if companies are resetting every six months and going
through this process… we saw with Bell Helicopters, they designed a
helicopter and it took six years to design a helicopter. And in VR,
it took six months. Is that similar? People are being able to be more
frequent, have more data and travel less, I think is the big one as
well.
Tracey: Yeah, and they’re trying
to figure out what is going to hit that emotional note with their
customers, which means trends and interesting packaging and food
trends and merchandise, all that sort of stuff changes much more
frequently than every six months. And if they’re competing with
digital footprints, they’re A/B testing website changes, y’know,
multiple times a day. So how do you compete with that in a
brick-and-mortar world? You have to be more efficient at not only
creating innovative ideas, but then testing those with your customers
and then figure out which one is going to move the needle and rolling
that out. It could be higher sales, but it could also be less labour
involved. Even if you keep sales static, but you touch the shelf
less, there’s millions of dollars at stake.
Alan: Absolutely. One of the
things that I took from your website is a quote, it says “mixed
reality solutions can help you drive faster, smarter, more profitable
decisions at retail”. What are some of the customers that you’re
dealing with? What are some of the results that they’re seeing now,
that this technology has really unlocked?
Tracey: Yeah. So, I’ll give you
a retail example and then a brand example. On the retail side,
they’re testing every six months doing category resets and then
typically what they do is they’ll take a subset of their stores and
roll out this new innovative change to a handful of stores. In the
case that I’m going to talk about here, we did 1500 stores. A lot of
it was, I think about a third of their total store count. And what
they do is they let that idea sit and mellow for about 15 weeks and
then they gather the sales out of that subset of stores and then they
measure 15 weeks pre. So, what were the sales then? What are the
sales now? How did the tests… y’know, how did it do? And should we
roll it out to all the stores? Right? So 15 weeks is three and a half
months. We were able to do a side by side test in about seven days
with several thousand customers. And when we lined up the sales data
at the end of that 15 weeks – y’know, with the data we collected
virtually – was high-90 percent correlated.
What that means is 90, 96, 97 percent
of the time, consumers are doing the same thing in a virtual store
that they were doing in a real store because of the realism we can
achieve. The difference is, it didn’t take 15 weeks. It wasn’t
hundreds of thousand dollars just to roll it out. And you’re able to
then understand the levers we pull. Did it raise sales? Did it keep
sales static, but you touch the shelf less? Or does it just
strengthen your decision? You’ll look many times through our
platform, customers are making the decision to not do anything
because if sales stay the same, but you got to touch the shelf, why
even make the change?
Alan: Why bother? Yeah.
Tracey: Yeah.
Alan: You saved yourself
hundreds of thousands, if not millions of dollars doing a test that
you would have done and you would have maybe even decreased sales by
making those mistakes,
Tracey: Correct. Some of the
most egregious steps that we have, 85 percent of the time that
retailers are touching the shelf, there’s not a change. They just do
it because they’ve always done it that way. So you can think of the
cost and labor involved there. One other example would be on the
brand side.
Alan: What did you say, 85
percent don’t make a change?
Tracey: Yes.
Alan: Wow. So they are trying
things and 85 percent of the time it’s not making any difference.
Tracey: Yeah. Yep.
Alan: Wow.
Tracey: 85 percent of time.
Either it’s stagnant or it actually, like you said, it lowers sales.
So only in that 15 percent of the time are you actually moving the
needle.
Alan: Let’s just stop for a
second. So [chuckles] using your system, InContext Solutions, your
ShopperMX — or whatever system you’re using — a retailer with 96
percent, high-90 accuracy, can run as many tests as they want — with
very little costs associated with it, comparatively — and get the
same data as they would in months in a matter of days. That’s what
I’m hearing?
Tracey: Yes, precisely.
Alan: Why? I’m just trying to
wrap my head around why every retailer doesn’t do this now.
Tracey: That’s a great question.
I think the largest impediment we see is we’re competing with human
processes. One of the things I always tell our teams is if we were
replacing a CRM, there’s a well-defined market there. And, you know,
you’re replacing CRM. This is what you have today, this is where
you’re getting tomorrow. Maybe you’re playing on a cost level or
whatever it is. When you’re competing with human processes in an
organization that’s got 50 years of legacy workflows and processes
wrapped in their human capital. It’s a different process. I mean,
you’re looking at the hype curve where you’ve got the forward
leaners, right. And they’re already well into these technologies.
They’ve been using them for five to ten years. You’ve got people who
are starting to think about it, and what does that mean for the
organization. Then you have basically “put your head in the sand
and let me just continue to do it the way we have been doing it”.
And we all know where that path ends. That’s most of the time what we
compete with, is how do you institute some sort of organizational
change to wrap around this process to make you successful?
Alan: It’s mind-boggling,
because even companies that say we’ve got all these employees and
we’re loyal to our employees, we don’t want to put this technology in
because it’s going to replace them. The problem that I see is that if
they don’t put these technologies in place, those people are gonna be
out of a job because the whole company is gonna fold because we won’t
be able to stay competitive. If you have a large retailer that is
using this technology and you have a large retailer that isn’t, there
is going to be a dramatic difference in the success rates.
Tracey: Yeah, yeah, absolutely.
I think that’s key to point that out. And the way we always think
about this is, there’s this huge trend in retail to think about your
customer experience. I call them brand memories or emotional notes.
How do you get your customer to come back to your store? So instead
of focusing your labor force on stocking the shelves and touching the
shelves when it may not make a difference. Instead of saying those
people are gonna be out of a job, why not refocus those to worry
about your customer more? That’s where the opportunity exists is how
can you deploy your labor in a way that is really going to matter to
your customer and make that journey and that experience much more
impactful, memorable.
Alan: I used to hate — I still
don’t like it — but I used to hate grocery shopping. And it wasn’t
so much that I didn’t enjoy walking up and down the aisles. It was
because either the music is crap or the lighting is bad. Being able
to have a system like this where you could — literally — you could
change the lighting, you could put a drop ceiling in, you could trial
these different things and see the comfort levels of people in
different scenarios, because something as subtle as changing the
lighting could be a huge impact in the customer experience or the
customer emotion and them shopping. And that’s not something you’re
focused on when you’re focused on which product goes at which height
and that sort of thing.
Tracey: Yeah. Yeah. Definitely.
Some retailers are leading the way there. Mariano’s is a chain here
in Chicago that’s done it right, and they’ve leading the way there.
But you can shop while you have a glass of wine and somebody is
playing piano in the background.
Alan: Why do I have to go to a
sterile place to buy my groceries?
Tracey: Right. Exactly. And
that’s why a lot of them are opening up food courts and things like
that, where you can buy the food. Sit down, have a meal. It becomes a
destination, a memory. Even Tesco, I think, has done this for a
number of years already. But you can have your nails done in the
middle of the grocery store while your cart sits there, docked off to
the side. All because the wrapping that experience around, just
putting products in the basket.
Alan: I think one of the most
incredible things that we have coming is… I don’t want to say
removing the retail altogether, but you guys have a system that
people at home — as these headsets become more prevalent and people
in VR — you’re gonna be able to shop from your house, exactly like
how you would walk up and down the aisles and get the same experience
of shopping and finding new things. And because, I think, product
discovery is part of the whole physical shopping experience. But in
VR, you’re going to be able to say, “hey, show me hot sauces.”
And instead of having a rack of hot sauces that has maybe 100 things,
you can have 10,000 hot sauces and you could have a dial of heat
versus very, very mild, very hot. Is that something you guys are
thinking about in the future; how do we help our retailers use the
digital aspect as a direct-to-consumer method? Or is that strictly
physical retail?
Tracey: It’s both. I mean, we’ve
kept our eye on that market. There’s a couple of things working in
our favor and there’s a couple of things that I think you have to
develop yet. I mean, in working in our favor, as you know, a number
of headsets — headset plural for Asian — lower cost headset. All
those things might be a little longer tail, but you’re starting to
see some of that stuff. If a headset’s half the price of an iPhone,
everybody might have four or five in their house. So you’re right
there.
Alan: The Oculus Quest is coming
out next week at [Facebook] F8, and it’s full six degrees of freedom.
Standalone; you don’t need a computer, you just put on the headset.
You have two controllers, so you have your hands. You don’t need to
set up a room. You don’t need scanners and base stations to set up
around your room. You put on the headset, you can walk around, you
can move around, and it’s $399.
Tracey: Precisely. And that’ll
continue. Some of the things that have to be figured out yet are, if
you’re a brand, there’s a lot of opportunity there to go
direct-to-consumer; there’s been Dollar Shave Club, and a few of
these other places that have done that with a lot of success. How do
you enable a brand to go direct-to-consumer in a way that makes
sense? I think we’ve got to figure that out. Then, if you’re a
retailer, same type of thing. Retailers have a lot of brand equity
wrapped up in brick-and-mortar. How do you replicate that in a
virtual experience? Now, the way we think about that is you need an
experience that’s magnitudes 10x better than what it is to walk into
the store, or people just aren’t going to do it. The difference is,
the average brick-and-mortar grocery store now has 40,000 SKUs, and
the average household buys 268 of those a year. So, a fraction of
those are things that I would ever be, or you would ever be,
interested in. But if there is a way to present and merchandise those
in a way that makes the experience much more engaging for me, and I
can still experience, and I’m curious about new products that’s at my
fingertips, but the experience is narrowed down, so all the things I
would never consider are gone — I think that’s a possibility.
And then I think that the stepping
stone into the future, as you start to develop an artificial
intelligence with personality, is with the products themselves; they
can tell you about themselves. You can pull in all sorts of other
information that you might not have available inside of the
brick-and-mortar, even if it’s on your cell phone. There’s a lot of
ways there where you have “Alan’s Own Virtual Store,”
that’s got beer, cereal and TVs… or whatever that shopping trip
looks like, you have that ability, as long as the content is there
before you.
Alan: One of the things that I
always thought would be really cool is, I love grocery shopping in
the fresh vegetables and stuff, but would it be cool if I could go
and look at the fresh vegetables? Or maybe it’s fish or something,
and I’m standing by a seaside looking at a fish market. You know what
I mean?
Tracey: Yeah.
Alan: Like, why do we have to
be…? Because everybody — especially in virtual reality retail —
they seem to be recreating retail stores. If I wanted that, I’d just
go to the retail store. Put me on a beach, standing next to the
fishing village where I get the sounds and sights, and I go choose my
fish and it comes delivered by whatever.
Tracey: We did an experience a
couple of years ago and unveiled it at the National Retail Federation
Conference. Intel was part of it. Basically, we worked with Columbia;
they make tents, and one of the biggest gripes is the tents on a
showroom floor, you can only fit three or four [people inside]
because of floor space. So we created a VR experience that would
allow you to go to the top of Mt. Everest and see a camp site that’s
got lots of different tents, allow you to crawl in them, look at,
play around with them, understand really what they’re going to look
like, how they perform, all that–
Alan: How many people can fit in
it? [laughs] Because this thing says six person, but I can fit me and
my dog. [laughs]
Tracey: Yeah, exactly. So you
start to think about just the inventory that would be available. And
now with Prime one-day and two-day shipping, to order an experience
where you’re confident what you’re going to get and have it show up
the next day or two is… it’s kind of the norm now.
Alan: I’m actually running a
panel at AWE this year with the head of VR for Macy’s, and they
implemented VR furniture shopping in six of their stores. In those
six stores, they saw a 65 percent increase in order size and less
than 2 percent return rates. So rather than scale it out to 10 stores
and then 20 stores, they just took it right to 100 different stores.
There’s a hundred Macy’s across America that have VR now. And one of
the things that stuck with me is that, building a furniture display
store within a Macy’s cost about half a million dollars; building the
VR part of it is under $50,000. So there’s your 10x return. Not to
mention they’re now seeing across their entire hundred stores a 45
percent increase, versus non-VR.
Tracey: Yeah. That’s amazing.
Alan: These are not trivial
numbers.
Tracey: It goes back to the
different levers; whether it’s brand awareness, higher sales or
again, if you have less returns, that’s a huge impact. The
interesting thing there is when you’re trying to create these impulse
purchases, you have literally an infinite inventory available to help
drive awareness and impulse and upsell that you wouldn’t necessarily
have in brick-and-mortar as well.
Alan: If you can speak to maybe
some of the specifics around the Columbia tent, did they use it? Did
it show positive returns? What was the ROI, if there was one?
Tracey: We never ended up
rolling that one out. That was more of, “hey, here’s what the
future could look like with a real life use case” there. That
was two years ago. Even so, things have changed quite a bit now. Two
and a half–
Alan: You ought to dust that one
off.
Tracey: Yeah, exactly. We could
kind of see where the future is headed. And again, we’re sort of
monitoring the headset adoption, and we could have the best content
even today. But if there’s no consumers there, it’s sort of a chicken
and the egg. Who’s going to pay for it? Who’s going to see the value?
Who’s going to take advantage of it?
Alan: Absolutely. Mountain
Equipment Co-op, which is a Canadian outdoors store, they just
introduced augmented reality visualizer for their tents, actually. So
you can now pull out your phone, see the tent in your space using
ARKit, an ARCore. It’s looking through the lens of a phone and a
device that is in the hands of billions of people. A lot of consumers
have a smartphone — I would venture to say all of them — and the
technologies behind building something in VR and building something
in AR are quite similar. You can build in Unity, it’s the same thing.
One of the things that we’ve been telling our customers is, look,
when you build something for… maybe it’s for training; that same
asset can be used for retail, it can be used for training, it can be
used for a number of different aspects within the organization. And
you guys are building stores that are complete replications of a
retail store; have they thought to maybe use these assets in
different ways?
Tracey: Yeah, I think they’re
starting to. It’s one of the value props we always try to instill is,
if you’re going to create the 3D content — individual items — you
want to leverage those in as many places as you can. Not only from
B2B planning to win brands and retailers, but possibly your
e-commerce site for an in-depth rotation of the product, or future
state AR/VR when the headsets are there. You’re absolutely right. The
content cost is coming down. It’s been one of those historical
impediments; “where are you going to get the content from? Do
you have enough images to recreate it?” And those things are
getting better as well.
Alan: Yeah, we’re seeing a
revolution with 3D modelers and sites like TurboSquid and Sketchfab
and these kind of sites, where they’re taking the world’s content
creators and giving them an outlet to sell their content. Three years
ago, even just to make one 3D asset was in the hundreds of dollars.
And it’s now, I would assume, sub-hundred dollars, depending on what
the object is. And the photorealism is getting there as well. Before,
we started working on a watch, and we’ve had the same watch for like
three years — it looked so cartoonish and crap before — and now
we’ve got it looking completely photorealistic. Took us three years
to get there, but now we’ve got a formula for it.
Tracey: Yeah, exact for us.
We’ve been doing this for 10 years. We started in 2009 before really
headsets were hitting the market. So we’ve got more of a general form
factor grocery items; bags, bottles, boxes, pouches, canisters — we
can create those on the fly, with some dimensions and images using
computer vision. So we’ve got that. I think where we’re starting to
look out is things like apparel and fashion. If you’ve got a blouse
or a button-down shirt, you don’t need just a shirt. You want the
shirt on a mannequin, you want it hanging, and you want it folded.
Alan: You need the Olympic data;
you need it to flow, and what does that fabric look like, versus this
one?
Tracey: Yeah. We’re using some
depth sensing cameras to be able to scan that on a mannequin, and
then use machine learning to take the mannequin out of the garment,
essentially. And from there, we can hang and fold it, and you get
three or four different representations of it with a two-to-three
minute scan. We have to continually think about how to make content
creation as easy and as inexpensive as possible to leverage these
types of platforms.
Alan: Absolutely. I think that
was one of the biggest challenges over the last few years, was…
well, put it this way: Amazon has 1.5 billion products for sale on
Amazon. And over the next 10 years, every single one is going to have
to be sold in 3D somehow. How do you take a billion products, and
convert them to 3D? You nailed it by saying computer vision and
machine learning. That’s the future of where it’s going. There won’t
be physical photographs of product shots anymore. I think it’s all
going to move digital.
Tracey: Yeah. Yeah, and you’re
starting to see some cooperation between retailers and brands now,
where at the very beginning of creating a product — I don’t care if
it’s a coffee mug or a shirt or anything — you typically have some
sort of CAD drawing of that. The end designer for that item is using
some sort of CAD program. The problem has been, it’s been siloed off
into one area of an organization, and maybe the format doesn’t
integrate well with anything else. Now, by the time you get that
product on shelf, a lot of those details are lost or even
non-existent. You’re starting to see some real cooperation. Everybody
can see the future of, how do we follow that digital item’s journey
from inception in someone’s mind all the way to the shelf, and allow
this proliferation of formats and details that everybody can
leverage. You see Khronos now having that 3D commerce exploratory
group, which I hope — and I’m sure — will turn into a full-working
group. It’s because everybody can see that cooperation benefits
everyone.
Alan: This is an important
point. I want to just emphasize it, because even if you created a 3D
model… let’s say, for example, you create a 3D model of a shirt in
OBJ, which is a 3D model format. If you want to drop that into
Facebook, it won’t work. You want to drop it into Snapchat, it won’t
work. If you want to drop it on the web, it won’t work. So
standardizing the 3D models that everybody uses; There’s OBJ, there’s
glTF, there’s FDX, there’s now USDZ with Apple. There’s all these
different formats, and they all have different abilities. Some look
more photorealistic, some don’t. Some are larger files, some are
smaller. And by this Khronos group, which is a group that organizes
3D model… I guess visuals, and computer compression and stuff like
that. They’re a group that consolidates the industry, things like
MP4s and stuff like that. But really, by them standardizing this,
it’s going to unlock true 3D commerce, because unless we can figure
out how to make one model that works across all platforms, it’s still
going to be a very cost-prohibitive exercise for retailers and
brands.
Tracey: Yeah. If you think about
the analog as sort of the JPEG of 15 to 25 years ago; imagine if you
had 10 different flavors of what an image was, and everybody picked
one and they weren’t interoperable. I think that’s where we are now
with 3D, across the web and all these other platforms.
Alan: We’ve spent an exorbitant
amount of time trying to make things look photorealistic on WebAR,
and we just got everything working. We finally got WebAR working, and
then Apple shut down the cameras, and I was like, “what?”
So, Apple’s kind of this outlier messing with everybody’s mojo here,
but they are big enough that they can do that. I think hopefully
Khronos Group is able to bring Apple into the fold, because
otherwise, we’re going to have to have some sort of universal
converter for them, which there’re already converters popping up,
but–
Tracey: Yeah, and one of the
things we’ve had to invest in before these initiatives got going is
this kind of content pipeline, that takes raw content and any number
of the various formats and can transcode those; the MobileWeb, FDX,
OBJ, DAE, all the various flavors. It’s been painful, because even
within some of those standards, you have a wide leeway of creativity
to build something slightly different that you might not anticipate.
We’re looking forward to when there is maybe one or two different
formats that rule this, instead of 10 or 15 that are out there now.
Alan: It even gets crazier.
Within OBJ, you’ve got texture files and it gets crazy, the amount of
details that these things have. And you need them. But like you said,
being able to standardize this and that will also allow for marketers
to have a better understanding of how they can use these 3D assets
across multiple business units. The guys in Ecom can use the same
models as the people — or maybe in your case — setting up a store
visualizer, right? So you’re in VR, it looks beautiful; then, taking
that exact same thing, make it available as a 3D object on a web
commerce browser, and then being able to drop that and see yourself
in AR wearing that thing. Having that full content management stack
is going to be very important.
Tracey: Even if there is one
single source of truth for a 3D object — I’m sure you know, as you
get into the headset and you got to run 90 frames a second or 60, at
least to make it an enjoyable experience, draw calls and all the
other technical side of how that texture map is laid out, PBR — all
sorts of things could impact performance. You almost need to be able
to, within maybe a small band, make sure that thing runs, performing
across MobileWeb, headsets, or all the different capabilities.
Alan: Yeah, we’re not quite
there yet. [laughs]
Tracey: Absolutely, yeah.
Alan: I’m just thinking like, oh
my god, we have so much work to do. [laughs] It’s the work that
companies like InContext Solutions are doing that is really
pioneering and paving the way for retailers and brands to really
start leveraging the full power of spatial computing.
Tracey: Yeah, absolutely. I
mean, there’s a number of things working in our favor there — and
Moore’s Law, if you will — against some of these initiatives. And
we’ll get there. We’re trying to look at how fast it’s going to be.
The first Oculus was… out in, what, early 2012? So we’re seven
years into this journey already. And it might take another two,
three, five, seven years to see some of these things come out. But
with all the investment of the Apples, the Microsofts, the Googles,
the Facebooks, the Amazon. I mean, there’s no doubt in my mind that
we’re gonna get there.
Alan: Yeah. I mean, if Amazon
hired a few hundred 3D modellers, Apple’s hired a thousand AR
developers. Wal-Mart just rolled out 17,000 VR headsets to train
their staff. The big companies get it. They did a couple of POCs a
few years ago. They went, “oh, wow. This increased our training
retentions by 25 percent.” That’s not an inconsequential number.
Macy’s: “increased our sales basket size by 45 percent on
average, and decreased our return rates to 2 percent.” These are
crazy statistics, and the companies that are getting in now are gonna
have such a big advantage over those who are putting it off. And then
one of the things that I keep reiterating on the show is that, you
have to utilize what’s existing now. When we advise companies, we
advise them not just on, “here’s an AR thing that you could do,”
but we look at it from a holistic standpoint. What can you use this
technology for in your training? In your internal training? In your
your marketing? And your sales, and all of these things? I
interviewed the CEO — Caspar Thykier — of Zappar, the AR platform,
and he said, “live within what this technology can do right now,
while planning for the future”. So, use the technology that
exists currently, because it’s still amazing. Don’t keep looking to
the future as, “oh, when it comes, we’ll do it.” It’s here
now; leverage the technology now, and look to the future of what’s
possible in the future.
Tracey: Yeah. History really
hasn’t been kind to those… we look at the last computing platform
like this, you could consider mobile. Those that adopted mobile late?
There was real consequences there. I mean, it’s the same thing with
even the talent required to create. And now you mentioned 3D
modellers. You also have 3D engineers,and the gaming engineers that
bring these experiences to life. Twelve years ago, there wasn’t a
mobile developer. Now you think about another five to six years in
the future. Like, there is a dearth of need there, for 3D developers
and 3D modelers creating efficient, inexpensive content. We haven’t
been through this maybe for VR, but we’ve been through this paradigm
before.
Alan: Absolutely. And 12 years
ago, app developer wasn’t a job, at all. It wasn’t even a
consideration. And now there’s millions and millions of app
developers. And five years ago, VR/AR wasn’t a job. VR developers, AR
developers, it wasn’t a job. And now there’s maybe a hundred thousand
out there; maybe less, maybe a little more. But in five years from
now, that is one of the jobs of the future.
Tracey: Yeah. That’s why I think
it’s important. You mentioned VR/AR associations. They’ve got a lot
of different programs with universities and students to help seed
that work. But I think that it’s very important to invest in the
future that way, just to help flourish. Because at some point, it
becomes a bottleneck. Every company out there, in my mind, has to be
a software company in the future, and the talent isn’t there. There’s
gonna be a lot of falling at the waysides.
Alan: Well, I think that’s where
VR/AR can actually solve a lot of that, too, because we can
hyper-accelerate education by using these tools to upskill and
reskill people. I read a stat that 65 percent of Grade 1 children
will graduate into jobs that don’t exist. And I think we’re gonna
need to start rejigging education as a whole. That’s my long-term
goal, to create a new education platform using every piece of
technology that we’re building now, with the one focus of just
hyper-accelerating education. On that note, what problem in the world
do you want to see solved with XR Technologies?
Tracey: It’s basic and I’ve sort
of alluded to it at this point, but there’s just so much inefficient
work done and time wasted, frankly, by having to fly people all over
the place. Have a meeting here, wait to get people in a central
location. And there might be times where that’s warranted and
required. But when you try out some of these demos? I mean, I did a
demo with the Wild platform last week and–
Alan: I love that, I love that.
That looks amazing.
Tracey: Yeah. We had a couple of
people across the country on our teams join in. When I’m inside the
experience, and I’m next to somebody, and I can hear them in my
headset? There were times where I felt like I was physically going to
bump into them. That’s how real it felt.
Alan: [laughs] Yeah.
Tracey: When you get to that
level of immersion, there’s no reason you can’t become more efficient
at that process. And there’s a lot of derivative benefits; flying
people as a lot of costs, but you think of the climate change and
pollution on airlines? I mean, there’s a lot of different, derivative
effects there. Even bringing people closer is such an immense benefit
there.
Alan: Absolutely. People aren’t
gonna stop flying. They’re just going to start flying for vacations
rather than work.
Tracey: [laughs] Right.
Alan: I don’t know about you,
but as a businessperson, I’ve traveled the world and everything’s
all, you know, you’re here and now you’re there. It really sucks,
traveling for business.
Tracey: It does.
Alan: Two days later, you’re in
your destination. You’re exhausted. You haven’t showered. And you’ve
got to go to a meeting. You finish the meeting. You get on by plane
and do the whole thing over. It sucks.
Tracey: Yeah, I agree. I agree.
Alan: But getting on a plane to
go to a beach…
Tracey: I can get behind that.
Alan: Well, I want to thank you
so much for joining us on this podcast, Tracey. It’s been really
amazing. Is there anything else you want to share with the audience?
Tracey: We have the latest
generation of our platform; just launched a few weeks ago. One of the
things we’re doing is sort of leveraging the historical knowledge.
We’ve been playing with headsets since 2012. I’ve mentioned the
content pipeline. So, how do you watch content from the Web to use in
simulation, and the headset, and then make that seamless? If you’re
working on your desktop and you have a headset connected, you might
want to jump into the VR experience and see what it looks like for
your customers. We’re enabling that with push-button VR. And again,
the content being transcoded to high res, low res, different levels
of details; all that sort of stuff is something we think we’ve nailed
with all the content. We’re excited to see where our customers take
that. Then again, we’re not abandoning any of the mobile capabilities
we have, and leaning into that as well. And I would just sort of echo
what you said before; if things aren’t perfect today, there’s no
reason not to try it, because there’s still an immense cost savings
or upside potential by just dabbling, and there’s ways to get started
for very little cost. And please, keep your head wrapped around what
the future could hold.
View all episodes
By Alan Smithson from MetaVRse
4.5
1212 ratings
The power of XR will never be able to destroy the good ol‘ desire to go out and shop, but that doesn’t mean that XR couldn’t be used to improve the shopping experience. Tracey Wiedmeyer and Alan discuss a few ideas, from browsing the catch of the day in a VR tropical wonderland, to using VR and AR to test out retail layouts before you build them.
Alan: Today’s guest is Tracey
Wiedmeyer. Tracey is the chief technology officer and co-founder of
InContext Solutions. They’re delivering a mixed reality platform that
is the world’s largest brands and retailers are using to streamline
their merchandising process and go to market strategy much faster.
Tracey is also the former president of the VR/AR Association chapter
in Chicago, Milwaukee and a board member for the Information Research
Technology Institute at Sam Walton College of Business. Tracey is
also a member of the Forbes Technology Council. You can learn more
about InContext Solutions at www.incontextsolutions.com. With that,
I’d love to welcome to the show: Tracey Wiedmeyer.
Tracey: Hey Alan, glad to be
here.
Alan: My pleasure. I’m so
excited. This is a show I’ve been really waiting to do because you
guys have been using virtual and augmented reality, mixed reality to
help retailers preplan their stores, because right now a retailer, if
they want to design a new store, they literally have to build a
physical store, put all the shelves and build a mock store. And
you’re doing this through virtual/augmented reality, and the metrics
that you’re able to collect, keep maps, and where people are looking
and the amount of data that you’re able to collect from users in a
digital world versus a physical world is actually really quite
amazing. So maybe you can just talk about InContext Solutions and
what you’re doing for retailers.
Tracey: Sure, yeah. There was a
lot to bite off there. I’ll break it down little by little as we go
here. So I think you mentioned creating brand new physical stores.
There’s actually more retail stores today, more brick-and-mortar
stores than there were back in 2000 when the retail apocalypse
version 1 hit the street. You know, it was the end of
brick-and-mortar, everyone has gone digital. So I think there’s a lot
of stores being added today and most stores – but whether you’re a
centre store grocery retailer or fashion or apartment store – those
stores go through a regular reset on a period of time, whether that’s
every couple of years or longer than that. I think the nuance there
is actually at the brand level, you know, especially if we focus on
centre store grocery for a little bit here. The brands are actually
working with their retail partners multiple times a year to reset the
categories that you shop. So cereal, frozen foods, healthcare, baby
foods, all that sort of stuff are constantly going through some sort
of revision period, whether it’s… the old way’s every six months,
because that’s how long it takes them, and I’ll get into that in a
little bit. But they’re trying to get you to buy or notice one or two
more products on that journey to the shelf. We’re using virtual
technology now to basically facilitate that process; everything from
a brand new store, to which products go on the shelf, and how many of
them are stacked right to left and front to back. There’s a lot of
low hanging fruit in that process, and maybe I don’t know how much,
Alan, you know about what that process looks like today, or in the
past. What I’m going to do is tell you a little bit about where we’ve
come from.
A lot of brands and retailers have what
they call mock warehouses. They physically stage all their sets, what
every category is going to look like. And then they invite their
brand. You invite your retail partners into that center, which means
you got to physically travel or fly somewhere. And then they present
what they’re thinking. What is this going to look like if it’s
springtime? Now they’re thinking about, what is the fall going to
look like? They’ll physically stock out all the merchandise and then
they have their retail partners go through and go, “well, this
looks good. Y’know, I don’t like that. Can we change this?” That
sort of thing. I think where virtual technologies really hit the mark
is that they’re doing this old, antiquated process every six months,
because it just physically takes that long to do. But if we can do
everything in virtual, and you can then introduce Xbox for retail
concepts, where you put a headset on your desktop and jump in a
virtual store together, no matter where you are in the world. Now you
can start to do that whole perpetual merchandising process much more
frequently. And that’s turned out to be a catalyst for not only doing
more than every six months, but integrating in exact feedback from
your customers, to figure out what’s going to hit the mark. Does that
resonate so far with you?
Alan: Yeah, I think to put it in
perspective, if companies are resetting every six months and going
through this process… we saw with Bell Helicopters, they designed a
helicopter and it took six years to design a helicopter. And in VR,
it took six months. Is that similar? People are being able to be more
frequent, have more data and travel less, I think is the big one as
well.
Tracey: Yeah, and they’re trying
to figure out what is going to hit that emotional note with their
customers, which means trends and interesting packaging and food
trends and merchandise, all that sort of stuff changes much more
frequently than every six months. And if they’re competing with
digital footprints, they’re A/B testing website changes, y’know,
multiple times a day. So how do you compete with that in a
brick-and-mortar world? You have to be more efficient at not only
creating innovative ideas, but then testing those with your customers
and then figure out which one is going to move the needle and rolling
that out. It could be higher sales, but it could also be less labour
involved. Even if you keep sales static, but you touch the shelf
less, there’s millions of dollars at stake.
Alan: Absolutely. One of the
things that I took from your website is a quote, it says “mixed
reality solutions can help you drive faster, smarter, more profitable
decisions at retail”. What are some of the customers that you’re
dealing with? What are some of the results that they’re seeing now,
that this technology has really unlocked?
Tracey: Yeah. So, I’ll give you
a retail example and then a brand example. On the retail side,
they’re testing every six months doing category resets and then
typically what they do is they’ll take a subset of their stores and
roll out this new innovative change to a handful of stores. In the
case that I’m going to talk about here, we did 1500 stores. A lot of
it was, I think about a third of their total store count. And what
they do is they let that idea sit and mellow for about 15 weeks and
then they gather the sales out of that subset of stores and then they
measure 15 weeks pre. So, what were the sales then? What are the
sales now? How did the tests… y’know, how did it do? And should we
roll it out to all the stores? Right? So 15 weeks is three and a half
months. We were able to do a side by side test in about seven days
with several thousand customers. And when we lined up the sales data
at the end of that 15 weeks – y’know, with the data we collected
virtually – was high-90 percent correlated.
What that means is 90, 96, 97 percent
of the time, consumers are doing the same thing in a virtual store
that they were doing in a real store because of the realism we can
achieve. The difference is, it didn’t take 15 weeks. It wasn’t
hundreds of thousand dollars just to roll it out. And you’re able to
then understand the levers we pull. Did it raise sales? Did it keep
sales static, but you touch the shelf less? Or does it just
strengthen your decision? You’ll look many times through our
platform, customers are making the decision to not do anything
because if sales stay the same, but you got to touch the shelf, why
even make the change?
Alan: Why bother? Yeah.
Tracey: Yeah.
Alan: You saved yourself
hundreds of thousands, if not millions of dollars doing a test that
you would have done and you would have maybe even decreased sales by
making those mistakes,
Tracey: Correct. Some of the
most egregious steps that we have, 85 percent of the time that
retailers are touching the shelf, there’s not a change. They just do
it because they’ve always done it that way. So you can think of the
cost and labor involved there. One other example would be on the
brand side.
Alan: What did you say, 85
percent don’t make a change?
Tracey: Yes.
Alan: Wow. So they are trying
things and 85 percent of the time it’s not making any difference.
Tracey: Yeah. Yep.
Alan: Wow.
Tracey: 85 percent of time.
Either it’s stagnant or it actually, like you said, it lowers sales.
So only in that 15 percent of the time are you actually moving the
needle.
Alan: Let’s just stop for a
second. So [chuckles] using your system, InContext Solutions, your
ShopperMX — or whatever system you’re using — a retailer with 96
percent, high-90 accuracy, can run as many tests as they want — with
very little costs associated with it, comparatively — and get the
same data as they would in months in a matter of days. That’s what
I’m hearing?
Tracey: Yes, precisely.
Alan: Why? I’m just trying to
wrap my head around why every retailer doesn’t do this now.
Tracey: That’s a great question.
I think the largest impediment we see is we’re competing with human
processes. One of the things I always tell our teams is if we were
replacing a CRM, there’s a well-defined market there. And, you know,
you’re replacing CRM. This is what you have today, this is where
you’re getting tomorrow. Maybe you’re playing on a cost level or
whatever it is. When you’re competing with human processes in an
organization that’s got 50 years of legacy workflows and processes
wrapped in their human capital. It’s a different process. I mean,
you’re looking at the hype curve where you’ve got the forward
leaners, right. And they’re already well into these technologies.
They’ve been using them for five to ten years. You’ve got people who
are starting to think about it, and what does that mean for the
organization. Then you have basically “put your head in the sand
and let me just continue to do it the way we have been doing it”.
And we all know where that path ends. That’s most of the time what we
compete with, is how do you institute some sort of organizational
change to wrap around this process to make you successful?
Alan: It’s mind-boggling,
because even companies that say we’ve got all these employees and
we’re loyal to our employees, we don’t want to put this technology in
because it’s going to replace them. The problem that I see is that if
they don’t put these technologies in place, those people are gonna be
out of a job because the whole company is gonna fold because we won’t
be able to stay competitive. If you have a large retailer that is
using this technology and you have a large retailer that isn’t, there
is going to be a dramatic difference in the success rates.
Tracey: Yeah, yeah, absolutely.
I think that’s key to point that out. And the way we always think
about this is, there’s this huge trend in retail to think about your
customer experience. I call them brand memories or emotional notes.
How do you get your customer to come back to your store? So instead
of focusing your labor force on stocking the shelves and touching the
shelves when it may not make a difference. Instead of saying those
people are gonna be out of a job, why not refocus those to worry
about your customer more? That’s where the opportunity exists is how
can you deploy your labor in a way that is really going to matter to
your customer and make that journey and that experience much more
impactful, memorable.
Alan: I used to hate — I still
don’t like it — but I used to hate grocery shopping. And it wasn’t
so much that I didn’t enjoy walking up and down the aisles. It was
because either the music is crap or the lighting is bad. Being able
to have a system like this where you could — literally — you could
change the lighting, you could put a drop ceiling in, you could trial
these different things and see the comfort levels of people in
different scenarios, because something as subtle as changing the
lighting could be a huge impact in the customer experience or the
customer emotion and them shopping. And that’s not something you’re
focused on when you’re focused on which product goes at which height
and that sort of thing.
Tracey: Yeah. Yeah. Definitely.
Some retailers are leading the way there. Mariano’s is a chain here
in Chicago that’s done it right, and they’ve leading the way there.
But you can shop while you have a glass of wine and somebody is
playing piano in the background.
Alan: Why do I have to go to a
sterile place to buy my groceries?
Tracey: Right. Exactly. And
that’s why a lot of them are opening up food courts and things like
that, where you can buy the food. Sit down, have a meal. It becomes a
destination, a memory. Even Tesco, I think, has done this for a
number of years already. But you can have your nails done in the
middle of the grocery store while your cart sits there, docked off to
the side. All because the wrapping that experience around, just
putting products in the basket.
Alan: I think one of the most
incredible things that we have coming is… I don’t want to say
removing the retail altogether, but you guys have a system that
people at home — as these headsets become more prevalent and people
in VR — you’re gonna be able to shop from your house, exactly like
how you would walk up and down the aisles and get the same experience
of shopping and finding new things. And because, I think, product
discovery is part of the whole physical shopping experience. But in
VR, you’re going to be able to say, “hey, show me hot sauces.”
And instead of having a rack of hot sauces that has maybe 100 things,
you can have 10,000 hot sauces and you could have a dial of heat
versus very, very mild, very hot. Is that something you guys are
thinking about in the future; how do we help our retailers use the
digital aspect as a direct-to-consumer method? Or is that strictly
physical retail?
Tracey: It’s both. I mean, we’ve
kept our eye on that market. There’s a couple of things working in
our favor and there’s a couple of things that I think you have to
develop yet. I mean, in working in our favor, as you know, a number
of headsets — headset plural for Asian — lower cost headset. All
those things might be a little longer tail, but you’re starting to
see some of that stuff. If a headset’s half the price of an iPhone,
everybody might have four or five in their house. So you’re right
there.
Alan: The Oculus Quest is coming
out next week at [Facebook] F8, and it’s full six degrees of freedom.
Standalone; you don’t need a computer, you just put on the headset.
You have two controllers, so you have your hands. You don’t need to
set up a room. You don’t need scanners and base stations to set up
around your room. You put on the headset, you can walk around, you
can move around, and it’s $399.
Tracey: Precisely. And that’ll
continue. Some of the things that have to be figured out yet are, if
you’re a brand, there’s a lot of opportunity there to go
direct-to-consumer; there’s been Dollar Shave Club, and a few of
these other places that have done that with a lot of success. How do
you enable a brand to go direct-to-consumer in a way that makes
sense? I think we’ve got to figure that out. Then, if you’re a
retailer, same type of thing. Retailers have a lot of brand equity
wrapped up in brick-and-mortar. How do you replicate that in a
virtual experience? Now, the way we think about that is you need an
experience that’s magnitudes 10x better than what it is to walk into
the store, or people just aren’t going to do it. The difference is,
the average brick-and-mortar grocery store now has 40,000 SKUs, and
the average household buys 268 of those a year. So, a fraction of
those are things that I would ever be, or you would ever be,
interested in. But if there is a way to present and merchandise those
in a way that makes the experience much more engaging for me, and I
can still experience, and I’m curious about new products that’s at my
fingertips, but the experience is narrowed down, so all the things I
would never consider are gone — I think that’s a possibility.
And then I think that the stepping
stone into the future, as you start to develop an artificial
intelligence with personality, is with the products themselves; they
can tell you about themselves. You can pull in all sorts of other
information that you might not have available inside of the
brick-and-mortar, even if it’s on your cell phone. There’s a lot of
ways there where you have “Alan’s Own Virtual Store,”
that’s got beer, cereal and TVs… or whatever that shopping trip
looks like, you have that ability, as long as the content is there
before you.
Alan: One of the things that I
always thought would be really cool is, I love grocery shopping in
the fresh vegetables and stuff, but would it be cool if I could go
and look at the fresh vegetables? Or maybe it’s fish or something,
and I’m standing by a seaside looking at a fish market. You know what
I mean?
Tracey: Yeah.
Alan: Like, why do we have to
be…? Because everybody — especially in virtual reality retail —
they seem to be recreating retail stores. If I wanted that, I’d just
go to the retail store. Put me on a beach, standing next to the
fishing village where I get the sounds and sights, and I go choose my
fish and it comes delivered by whatever.
Tracey: We did an experience a
couple of years ago and unveiled it at the National Retail Federation
Conference. Intel was part of it. Basically, we worked with Columbia;
they make tents, and one of the biggest gripes is the tents on a
showroom floor, you can only fit three or four [people inside]
because of floor space. So we created a VR experience that would
allow you to go to the top of Mt. Everest and see a camp site that’s
got lots of different tents, allow you to crawl in them, look at,
play around with them, understand really what they’re going to look
like, how they perform, all that–
Alan: How many people can fit in
it? [laughs] Because this thing says six person, but I can fit me and
my dog. [laughs]
Tracey: Yeah, exactly. So you
start to think about just the inventory that would be available. And
now with Prime one-day and two-day shipping, to order an experience
where you’re confident what you’re going to get and have it show up
the next day or two is… it’s kind of the norm now.
Alan: I’m actually running a
panel at AWE this year with the head of VR for Macy’s, and they
implemented VR furniture shopping in six of their stores. In those
six stores, they saw a 65 percent increase in order size and less
than 2 percent return rates. So rather than scale it out to 10 stores
and then 20 stores, they just took it right to 100 different stores.
There’s a hundred Macy’s across America that have VR now. And one of
the things that stuck with me is that, building a furniture display
store within a Macy’s cost about half a million dollars; building the
VR part of it is under $50,000. So there’s your 10x return. Not to
mention they’re now seeing across their entire hundred stores a 45
percent increase, versus non-VR.
Tracey: Yeah. That’s amazing.
Alan: These are not trivial
numbers.
Tracey: It goes back to the
different levers; whether it’s brand awareness, higher sales or
again, if you have less returns, that’s a huge impact. The
interesting thing there is when you’re trying to create these impulse
purchases, you have literally an infinite inventory available to help
drive awareness and impulse and upsell that you wouldn’t necessarily
have in brick-and-mortar as well.
Alan: If you can speak to maybe
some of the specifics around the Columbia tent, did they use it? Did
it show positive returns? What was the ROI, if there was one?
Tracey: We never ended up
rolling that one out. That was more of, “hey, here’s what the
future could look like with a real life use case” there. That
was two years ago. Even so, things have changed quite a bit now. Two
and a half–
Alan: You ought to dust that one
off.
Tracey: Yeah, exactly. We could
kind of see where the future is headed. And again, we’re sort of
monitoring the headset adoption, and we could have the best content
even today. But if there’s no consumers there, it’s sort of a chicken
and the egg. Who’s going to pay for it? Who’s going to see the value?
Who’s going to take advantage of it?
Alan: Absolutely. Mountain
Equipment Co-op, which is a Canadian outdoors store, they just
introduced augmented reality visualizer for their tents, actually. So
you can now pull out your phone, see the tent in your space using
ARKit, an ARCore. It’s looking through the lens of a phone and a
device that is in the hands of billions of people. A lot of consumers
have a smartphone — I would venture to say all of them — and the
technologies behind building something in VR and building something
in AR are quite similar. You can build in Unity, it’s the same thing.
One of the things that we’ve been telling our customers is, look,
when you build something for… maybe it’s for training; that same
asset can be used for retail, it can be used for training, it can be
used for a number of different aspects within the organization. And
you guys are building stores that are complete replications of a
retail store; have they thought to maybe use these assets in
different ways?
Tracey: Yeah, I think they’re
starting to. It’s one of the value props we always try to instill is,
if you’re going to create the 3D content — individual items — you
want to leverage those in as many places as you can. Not only from
B2B planning to win brands and retailers, but possibly your
e-commerce site for an in-depth rotation of the product, or future
state AR/VR when the headsets are there. You’re absolutely right. The
content cost is coming down. It’s been one of those historical
impediments; “where are you going to get the content from? Do
you have enough images to recreate it?” And those things are
getting better as well.
Alan: Yeah, we’re seeing a
revolution with 3D modelers and sites like TurboSquid and Sketchfab
and these kind of sites, where they’re taking the world’s content
creators and giving them an outlet to sell their content. Three years
ago, even just to make one 3D asset was in the hundreds of dollars.
And it’s now, I would assume, sub-hundred dollars, depending on what
the object is. And the photorealism is getting there as well. Before,
we started working on a watch, and we’ve had the same watch for like
three years — it looked so cartoonish and crap before — and now
we’ve got it looking completely photorealistic. Took us three years
to get there, but now we’ve got a formula for it.
Tracey: Yeah, exact for us.
We’ve been doing this for 10 years. We started in 2009 before really
headsets were hitting the market. So we’ve got more of a general form
factor grocery items; bags, bottles, boxes, pouches, canisters — we
can create those on the fly, with some dimensions and images using
computer vision. So we’ve got that. I think where we’re starting to
look out is things like apparel and fashion. If you’ve got a blouse
or a button-down shirt, you don’t need just a shirt. You want the
shirt on a mannequin, you want it hanging, and you want it folded.
Alan: You need the Olympic data;
you need it to flow, and what does that fabric look like, versus this
one?
Tracey: Yeah. We’re using some
depth sensing cameras to be able to scan that on a mannequin, and
then use machine learning to take the mannequin out of the garment,
essentially. And from there, we can hang and fold it, and you get
three or four different representations of it with a two-to-three
minute scan. We have to continually think about how to make content
creation as easy and as inexpensive as possible to leverage these
types of platforms.
Alan: Absolutely. I think that
was one of the biggest challenges over the last few years, was…
well, put it this way: Amazon has 1.5 billion products for sale on
Amazon. And over the next 10 years, every single one is going to have
to be sold in 3D somehow. How do you take a billion products, and
convert them to 3D? You nailed it by saying computer vision and
machine learning. That’s the future of where it’s going. There won’t
be physical photographs of product shots anymore. I think it’s all
going to move digital.
Tracey: Yeah. Yeah, and you’re
starting to see some cooperation between retailers and brands now,
where at the very beginning of creating a product — I don’t care if
it’s a coffee mug or a shirt or anything — you typically have some
sort of CAD drawing of that. The end designer for that item is using
some sort of CAD program. The problem has been, it’s been siloed off
into one area of an organization, and maybe the format doesn’t
integrate well with anything else. Now, by the time you get that
product on shelf, a lot of those details are lost or even
non-existent. You’re starting to see some real cooperation. Everybody
can see the future of, how do we follow that digital item’s journey
from inception in someone’s mind all the way to the shelf, and allow
this proliferation of formats and details that everybody can
leverage. You see Khronos now having that 3D commerce exploratory
group, which I hope — and I’m sure — will turn into a full-working
group. It’s because everybody can see that cooperation benefits
everyone.
Alan: This is an important
point. I want to just emphasize it, because even if you created a 3D
model… let’s say, for example, you create a 3D model of a shirt in
OBJ, which is a 3D model format. If you want to drop that into
Facebook, it won’t work. You want to drop it into Snapchat, it won’t
work. If you want to drop it on the web, it won’t work. So
standardizing the 3D models that everybody uses; There’s OBJ, there’s
glTF, there’s FDX, there’s now USDZ with Apple. There’s all these
different formats, and they all have different abilities. Some look
more photorealistic, some don’t. Some are larger files, some are
smaller. And by this Khronos group, which is a group that organizes
3D model… I guess visuals, and computer compression and stuff like
that. They’re a group that consolidates the industry, things like
MP4s and stuff like that. But really, by them standardizing this,
it’s going to unlock true 3D commerce, because unless we can figure
out how to make one model that works across all platforms, it’s still
going to be a very cost-prohibitive exercise for retailers and
brands.
Tracey: Yeah. If you think about
the analog as sort of the JPEG of 15 to 25 years ago; imagine if you
had 10 different flavors of what an image was, and everybody picked
one and they weren’t interoperable. I think that’s where we are now
with 3D, across the web and all these other platforms.
Alan: We’ve spent an exorbitant
amount of time trying to make things look photorealistic on WebAR,
and we just got everything working. We finally got WebAR working, and
then Apple shut down the cameras, and I was like, “what?”
So, Apple’s kind of this outlier messing with everybody’s mojo here,
but they are big enough that they can do that. I think hopefully
Khronos Group is able to bring Apple into the fold, because
otherwise, we’re going to have to have some sort of universal
converter for them, which there’re already converters popping up,
but–
Tracey: Yeah, and one of the
things we’ve had to invest in before these initiatives got going is
this kind of content pipeline, that takes raw content and any number
of the various formats and can transcode those; the MobileWeb, FDX,
OBJ, DAE, all the various flavors. It’s been painful, because even
within some of those standards, you have a wide leeway of creativity
to build something slightly different that you might not anticipate.
We’re looking forward to when there is maybe one or two different
formats that rule this, instead of 10 or 15 that are out there now.
Alan: It even gets crazier.
Within OBJ, you’ve got texture files and it gets crazy, the amount of
details that these things have. And you need them. But like you said,
being able to standardize this and that will also allow for marketers
to have a better understanding of how they can use these 3D assets
across multiple business units. The guys in Ecom can use the same
models as the people — or maybe in your case — setting up a store
visualizer, right? So you’re in VR, it looks beautiful; then, taking
that exact same thing, make it available as a 3D object on a web
commerce browser, and then being able to drop that and see yourself
in AR wearing that thing. Having that full content management stack
is going to be very important.
Tracey: Even if there is one
single source of truth for a 3D object — I’m sure you know, as you
get into the headset and you got to run 90 frames a second or 60, at
least to make it an enjoyable experience, draw calls and all the
other technical side of how that texture map is laid out, PBR — all
sorts of things could impact performance. You almost need to be able
to, within maybe a small band, make sure that thing runs, performing
across MobileWeb, headsets, or all the different capabilities.
Alan: Yeah, we’re not quite
there yet. [laughs]
Tracey: Absolutely, yeah.
Alan: I’m just thinking like, oh
my god, we have so much work to do. [laughs] It’s the work that
companies like InContext Solutions are doing that is really
pioneering and paving the way for retailers and brands to really
start leveraging the full power of spatial computing.
Tracey: Yeah, absolutely. I
mean, there’s a number of things working in our favor there — and
Moore’s Law, if you will — against some of these initiatives. And
we’ll get there. We’re trying to look at how fast it’s going to be.
The first Oculus was… out in, what, early 2012? So we’re seven
years into this journey already. And it might take another two,
three, five, seven years to see some of these things come out. But
with all the investment of the Apples, the Microsofts, the Googles,
the Facebooks, the Amazon. I mean, there’s no doubt in my mind that
we’re gonna get there.
Alan: Yeah. I mean, if Amazon
hired a few hundred 3D modellers, Apple’s hired a thousand AR
developers. Wal-Mart just rolled out 17,000 VR headsets to train
their staff. The big companies get it. They did a couple of POCs a
few years ago. They went, “oh, wow. This increased our training
retentions by 25 percent.” That’s not an inconsequential number.
Macy’s: “increased our sales basket size by 45 percent on
average, and decreased our return rates to 2 percent.” These are
crazy statistics, and the companies that are getting in now are gonna
have such a big advantage over those who are putting it off. And then
one of the things that I keep reiterating on the show is that, you
have to utilize what’s existing now. When we advise companies, we
advise them not just on, “here’s an AR thing that you could do,”
but we look at it from a holistic standpoint. What can you use this
technology for in your training? In your internal training? In your
your marketing? And your sales, and all of these things? I
interviewed the CEO — Caspar Thykier — of Zappar, the AR platform,
and he said, “live within what this technology can do right now,
while planning for the future”. So, use the technology that
exists currently, because it’s still amazing. Don’t keep looking to
the future as, “oh, when it comes, we’ll do it.” It’s here
now; leverage the technology now, and look to the future of what’s
possible in the future.
Tracey: Yeah. History really
hasn’t been kind to those… we look at the last computing platform
like this, you could consider mobile. Those that adopted mobile late?
There was real consequences there. I mean, it’s the same thing with
even the talent required to create. And now you mentioned 3D
modellers. You also have 3D engineers,and the gaming engineers that
bring these experiences to life. Twelve years ago, there wasn’t a
mobile developer. Now you think about another five to six years in
the future. Like, there is a dearth of need there, for 3D developers
and 3D modelers creating efficient, inexpensive content. We haven’t
been through this maybe for VR, but we’ve been through this paradigm
before.
Alan: Absolutely. And 12 years
ago, app developer wasn’t a job, at all. It wasn’t even a
consideration. And now there’s millions and millions of app
developers. And five years ago, VR/AR wasn’t a job. VR developers, AR
developers, it wasn’t a job. And now there’s maybe a hundred thousand
out there; maybe less, maybe a little more. But in five years from
now, that is one of the jobs of the future.
Tracey: Yeah. That’s why I think
it’s important. You mentioned VR/AR associations. They’ve got a lot
of different programs with universities and students to help seed
that work. But I think that it’s very important to invest in the
future that way, just to help flourish. Because at some point, it
becomes a bottleneck. Every company out there, in my mind, has to be
a software company in the future, and the talent isn’t there. There’s
gonna be a lot of falling at the waysides.
Alan: Well, I think that’s where
VR/AR can actually solve a lot of that, too, because we can
hyper-accelerate education by using these tools to upskill and
reskill people. I read a stat that 65 percent of Grade 1 children
will graduate into jobs that don’t exist. And I think we’re gonna
need to start rejigging education as a whole. That’s my long-term
goal, to create a new education platform using every piece of
technology that we’re building now, with the one focus of just
hyper-accelerating education. On that note, what problem in the world
do you want to see solved with XR Technologies?
Tracey: It’s basic and I’ve sort
of alluded to it at this point, but there’s just so much inefficient
work done and time wasted, frankly, by having to fly people all over
the place. Have a meeting here, wait to get people in a central
location. And there might be times where that’s warranted and
required. But when you try out some of these demos? I mean, I did a
demo with the Wild platform last week and–
Alan: I love that, I love that.
That looks amazing.
Tracey: Yeah. We had a couple of
people across the country on our teams join in. When I’m inside the
experience, and I’m next to somebody, and I can hear them in my
headset? There were times where I felt like I was physically going to
bump into them. That’s how real it felt.
Alan: [laughs] Yeah.
Tracey: When you get to that
level of immersion, there’s no reason you can’t become more efficient
at that process. And there’s a lot of derivative benefits; flying
people as a lot of costs, but you think of the climate change and
pollution on airlines? I mean, there’s a lot of different, derivative
effects there. Even bringing people closer is such an immense benefit
there.
Alan: Absolutely. People aren’t
gonna stop flying. They’re just going to start flying for vacations
rather than work.
Tracey: [laughs] Right.
Alan: I don’t know about you,
but as a businessperson, I’ve traveled the world and everything’s
all, you know, you’re here and now you’re there. It really sucks,
traveling for business.
Tracey: It does.
Alan: Two days later, you’re in
your destination. You’re exhausted. You haven’t showered. And you’ve
got to go to a meeting. You finish the meeting. You get on by plane
and do the whole thing over. It sucks.
Tracey: Yeah, I agree. I agree.
Alan: But getting on a plane to
go to a beach…
Tracey: I can get behind that.
Alan: Well, I want to thank you
so much for joining us on this podcast, Tracey. It’s been really
amazing. Is there anything else you want to share with the audience?
Tracey: We have the latest
generation of our platform; just launched a few weeks ago. One of the
things we’re doing is sort of leveraging the historical knowledge.
We’ve been playing with headsets since 2012. I’ve mentioned the
content pipeline. So, how do you watch content from the Web to use in
simulation, and the headset, and then make that seamless? If you’re
working on your desktop and you have a headset connected, you might
want to jump into the VR experience and see what it looks like for
your customers. We’re enabling that with push-button VR. And again,
the content being transcoded to high res, low res, different levels
of details; all that sort of stuff is something we think we’ve nailed
with all the content. We’re excited to see where our customers take
that. Then again, we’re not abandoning any of the mobile capabilities
we have, and leaning into that as well. And I would just sort of echo
what you said before; if things aren’t perfect today, there’s no
reason not to try it, because there’s still an immense cost savings
or upside potential by just dabbling, and there’s ways to get started
for very little cost. And please, keep your head wrapped around what
the future could hold.