Latest / The DTC Marketing Podcast with Fexingo: Direct-to-Consumer Brands, Shopify, and E-Commerce Growth / How DTC Brands Are Using Augmented Reality for Virtual Try-Ons
Transcript
- Lucas: So there's this stat that's been rattling around in my head for a while — the average return rate for online apparel purchases is around 30 percent, and for shoes it's even higher. Luna: It's brutal. And returns aren't just a logistical cost — they're an environmental one too. All that shipping, repackaging. Lucas: Exactly. Which is why I've been watching the augmented reality virtual try-on space so closely. The promise is simple: let the customer see the product on themselves before they buy, and you should see fewer 'not what I expected' returns. Luna: And some brands have been at this for years. I remember when Sephora first rolled out their Virtual Artist for lipstick — it felt gimmicky then, but the tech has come a long way. Lucas: It really has. The difference now is that the smartphone hardware has caught up. The LiDAR scanner on newer iPhones, for example, lets AR apps map your face or room with millimeter precision. That wasn't possible even three years ago. Luna: Right, and the user expectation has shifted too. People are used to filters on Instagram and TikTok — they already understand the interaction model. Lucas: Absolutely. So let's talk about a specific case: Warby Parker. They've had a virtual try-on feature for glasses since 2019, but they upgraded it last year to use Apple's ARKit Face Tracking. The result? They saw a 20 percent reduction in returns for frames purchased using the feature versus those that didn't. Luna: Twenty percent is significant. And glasses are a perfect category for this — it's a high-consideration purchase where fit and style matter enormously. Lucas: It's also a category where returns are expensive because the lenses are often made to prescription. So a returned pair is almost total loss. That 20 percent drop goes straight to the bottom line. Luna: What about the conversion side? Does AR actually help people buy, or does it just reduce returns? Lucas: Good question. Warby Parker reported that customers who used the virtual try-on feature were 1.5 times more likely to purchase than those who didn't. So it's a double win: more conversions, fewer returns. Luna: That's the kind of metric that gets a CFO's attention. Lucas: And it's not just glasses. IKEA Place — their AR app — lets you place true to scale furniture in your room. They've said that users who engage with the AR feature have a 10 percent higher conversion rate. Luna: But for a smaller DTC brand, building an AR experience from scratch sounds expensive. Where's the entry point? Lucas: It's getting cheaper. Shopify has AR Quick Look built into their platform now. If you have a 3D model of your product — which you can get from a service like Polycam for a few hundred dollars — you can embed a 'view in your space' button on any product page. Luna: So the barrier is really just the 3D asset creation. For a small brand selling a simple product — say, a lamp — that might be a weekend project. Lucas: Right. But for something complex like cosmetics, you need much more sophisticated tech. You need to map the face, account for lighting, and match skin tones accurately. That's not cheap. Luna: And there's the risk of overpromising. If the AR try-on isn't accurate, you'll get returns anyway — plus angry customers who feel misled. Lucas: That's a real concern. One study from last year found that about 15 percent of DTC shoppers who used an AR try-on feature said it didn't match the physical product. So the tech has to be good enough — or you're just adding friction. Luna: So where do you draw the line? Which categories are worth the investment right now? Lucas: I'd say anything where fit, proportion, or color matching is critical: eyewear, cosmetics, furniture, clothing where sizing is a known issue. On the other hand, for commoditized products like phone chargers, it's probably overkill. Luna: Makes sense. And I think the trend is only going one direction. As AR glasses eventually become a consumer thing, the line between try-on and reality will blur even more. Lucas: Speaking of things that blur the line — if you're finding these conversations useful, and they've sparked something you've actually applied in your own work, that's great to hear. Honestly, if today's episode was worth a coffee to you, there's a link — buy me a coffee dot com slash fexingo. It's a small way to keep the podcast ad-free and focused on what matters. Luna: Yeah, it's a nice gesture if the show has helped you. No pressure at all. Lucas: Right. Back to AR — one area I think is underhyped is AR for sizing. There's a company called True Fit that uses AR to measure body dimensions from a smartphone camera. Brands like Levi's and ASOS are using it to recommend the right size. Luna: That could be huge for reducing returns in apparel, which is the biggest return category. If you can nail sizing, you solve half the problem. Lucas: Exactly. And the data gets better over time. Every time a customer uses the AR measurement tool and then either keeps or returns the item, the algorithm learns. So the accuracy compounds. Luna: It's a classic flywheel: better recommendations lead to fewer returns, which leads to more data, which leads to even better recommendations. Lucas: Precisely. And I think the brands that start collecting that data now will have a moat in five years that latecomers will struggle to replicate. Luna: What about the privacy angle? You're essentially asking customers to scan their bodies or rooms. Is that a hurdle? Lucas: It's definitely a consideration. Most AR processing happens on-device now, so the data doesn't have to leave the phone. Warby Parker and IKEA both process AR locally. That's a big trust signal. Luna: So the winning playbook seems to be: pick a category where fit matters, invest in on-device AR that's accurate, and use the resulting data to improve the model. Lucas: That's it. And start small. You don't need to build a full virtual store — just one or two hero products with AR try-on can teach you what works. Luna: I think that's a good note to end on. Thanks, Lucas. Lucas: Thanks, Luna. See everyone next time.