Overstock lets its iPhone app shoppers with iOS 11 see products in 3-D. These shoppers have a higher conversion rate and spend more time in the app.

Overstock.com Inc.’s augmented reality feature launched just a few months ago, but the web-only mass merchant is confidently making a long-term bet on this blossoming technology, says Amit Goyal, senior vice president of software engineering for Overstock.

“We believe this technology will change the future of retail,” says Goyal, noting the retailer believes augmented reality will influence consumers who shop for home products.

Augmented reality allows consumers to see 3-D products in the context of their home via their smartphones. Retailers such as Wayfair Inc., No. 16 in the Internet Retailer 2017 Top 500and Build.com Inc. (No. 72) have both launched apps that show some of their products in augmented reality. However, for products to be shown to scale in augmented reality, consumers need to have premium mobile devices that have depth-sensing cameras that until recently, few consumers owned.

This changed in June when Apple Inc. launched its augmented reality software for app developers, ARKit. That meant, as of November, augmented reality was available to any consumer with an iPhone 6s or later running the iOS11 operating system. As of December, 59% of Apple devices are running iOS 11, according to Apple. Plus, 44.9% of smartphone-owning adults own an iPhone as of June, according to digital measurement firm comScore Inc.

When Apple (No. 2) made its announcement, Overstock (No. 30) decided to launch an augmented reality feature it its app.


Overstock added augmented reality into its app in time for the November iPhone release. The retailer has since tweaked the interface based on user feedback and behavior, Goyal says. For example, Overstock displays several text balloons guiding the shopper through the augmented reality process. However, it determined that some of the pointers were not needed, such as how to rotate a product, which led Overstock to remove the tip.

About a third of Overstock’s app shoppers now have access to the feature, which is a small sample of total shoppers, says Goyal, who declines to reveal exact figures. App shoppers who use the augmented reality feature have a notably higher increase (a double-digit percentage) in conversion rate compared with app shoppers who have not used augmented reality, he says. Augmented reality shoppers also spend more time in the app and open the app more frequently than non-AR users, says Goyal, declining to reveal specifics.

Overstock has about 2,000 of its best-selling products available to view in 3-D, which is only a small percent of its millions of SKUs. The retailer’s goal is to have 50,000 SKUs available by the end of the first quarter of 2018, which won’t be easy, Goyal says.


Quality assurance—which involves employees verifying if the 3-D product models are to scale, the right color and the right texture—eats up the most time.

“We’ve rejected so many models because the dimensions were off by just a little bit,” Goyal says.

Because the to-scale process is mostly manual, this step causes a bottleneck in production, he says. Overstock is hiring more people to quicken the process, he adds.

Overstock has 25 full-time employees dedicated to augmented reality, including developers, user experience and quality assurance roles. The retailer also uses several vendors to create the 3-D furniture models. Goyal declines to say how much Overstock has spent on the technology but says, “I’m not too worried over the ROI.”


“Our hope is that this will completely change the way people create their dream home,” he adds. “For us, the ROI is to be the leader when that transformation happens, when most of home furnishing shopping is in AR or VR.”

As more shoppers gain access to augmented reality via the iPhone, consumer adoption of augmented reality will likely pick up, Goyal says. However, the next barrier to overcome is standardization. Currently, there is no standard or automated way to create 3-D images or to save them. For example, if one vendor creates a 3-D image and saves it as a certain type of file, there is no guarantee that file will work with other imaging software, Goyal says.

Overstock, however, believes standardization will eventually come, and 3-D images will be standardized in much the same way that photos and other images are saved as “JPEG” files. In the meantime, the retailer has a lengthy to-do list for its augmented reality team.


Next up is adding augmented reality into its Android app, which would be available for consumers that own the new Google Inc. Pixel 2, ASUS ZenFone AR smartphone and the Lenovo Phab 2 Pro smartphone.

The retailer also wants to use the 3-D images to create a virtual reality shopping experience.

For VR, a shopper would upload photos of her room, Overstock would create a virtual version of the room, an interior designer would design the room with 3-D Overstock products and then show the shopper how it looks in virtual reality, likely with an inexpensive VR viewer like Google Cardboard. Overstock is still figuring out all the details, such as pricing, but hopes to launch this feature in the first quarter.

Overstock also wants to use these 3-D images on its e-commerce site. For example, having 3-D images will allow the retailer to spin its products 360 degrees on product detail pages.


This capability also will allow it to have computer-generated images of products that it can use in two-dimensional renderings. For example, if the retailer has an image of a designed living room and a product featured in it is sold out, Overstock can remove the out-of-stock product from the image and replace it with an in-stock product, all without have to conduct a new photo shoot, Goyal says.