3D in Retail and Beyond, with Beck Besecker, CEO of 3D Cloud by Marxent

The following was transcribed from a recent interview on The Agile Brand with Greg Kihlström podcast. 

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Today we’re going to talk about the use of 3D in retail and beyond. To help me discuss this topic, I’d like to welcome Beck Besecker, Co-Founder and CEO of 3D Cloud by Marxent.

[Greg Kihlstrom] Let’s talk about the use of 3D in retail. How would you describe the current state of 3D usage in retail by the average retailer, as opposed to industry leaders?

We're still in the first inning of 3D within retail. I'd like to answer this question by kind of going to where it will be.

So what’s inevitable is that eventually 3D will become the principal way you see and interact with products online. So imagine every single product page that you'd go to on Amazon or Wayfair or Target.com or Macy's, that it's in fact a 3D model that you can interact with and articulate and pinch and zoom and twirl and spin and download. Eventually, 3D will replace all photography on every product page. And that will be everything from furniture to shoes to luxury watches, you know, dog food, bottles. It will be everywhere. But we're probably 10 years away from that. And the reason is 3D is transformable; it's reusable. You can take 3D and see it in physical space using AR or other applications. You can use that content for advertising. You can use that content for visual merchandising. It's just a very, very malleable asset that people will just come to expect in time. 

Today, the cost of 3D modeling is still quite high. I mean, you could be spending $30, $40, $50, $60, $70 on creating a relatively simple product. And the quality, like the visual quality you can create in 3D, a live 3D model, is still not quite, you know, hyper-realistic, right, like a photo would be. So the cost and the technology have a little bit of ways to go, but the categories that are already out in front are the home categories. So furniture is by far the largest use case of 3D, for, you know, furniture, kitchen, bath, decking, places where you need 3D to do some sort of configuration before you buy a product. Those are the leaders in the space right now.

What kinds of things are those leaders doing that are setting them apart?

What's happening is they use an analogy, like we used to call a professional to book an airline ticket, right? Because they had a desktop tool and they would tick away, you know, while you're on the phone with them, and get you your ticket, right? Then Expedia and Travelocity and all these sites, you know, Web-ified them and made them easy to use, and point-and-click, drag-and-drop, and all of a sudden we can all book airline tickets by ourselves. The same thing is now happening for the home industry, where it used to be, if you wanted to design a kitchen or a bathroom or lay out furniture in a virtual space, there was a desktop tool; you would download Photoshop or some other professional tool. You had to have a big graphics card and a big processor, and you had to be trained on how to use the software. 

Now, because 3D is now available for browsers, we can take all that software, really make it drag-and-drop, super-simple, put it on the Web, and people can do it themselves. And so, I mean, we're doing hundreds of thousands of kitchens and decks and bathrooms and consumers are just doing it themselves. And so now it's becoming like a self-service e-commerce tool to design a kitchen and check out.

Beyond some of the leaders and some of the areas where it's being used currently, where do you see some other big opportunities in retail, and what kind of benefits do you think it can bring there?

There’s a confluence of variables I have to meet in order for it to work. So, for instance, for something like a kitchen, if we created 3D models of a kitchen catalog, those products, you know, the faucets and the  appliances and the counters and the cabinets themselves, once we create those assets, they're not going to change very often, right, like once every two or three years, you might update a finish or something. So the cost of creating those assets can be amortized over a long period of time. Then you also look at, well, what's the use case? It's like, well, OK, I actually have to configure this in order to buy a kitchen, and it's a several thousand-dollar purchase. And so the amortization of the content, plus the use case, is creating a value proposition that works.

To move into other categories, to your question, let's say handbags, as an example. Will people use 3D to sort of visualize and interact with a handbag, if they're on Gucci or some place like that? Well, if it costs you $1,000 to create that 3D asset and that product's out of inventory in two months, you're not going to get a return on investment. Then you have to ask the question, “Well, do people actually really want to be able to hold a 3D Gucci bag in their hand, like does the product market fit there? Now, if the cost of creating that handbag is 25 cents, you know, why not, right? You're probably going to get some lift out of that experience. And so you’ve got to find the cost and the amortization and the use case, and if they all sort of intersect to actually make an ROI that actually works. So that's how we go from category to category and start testing that.

I work a lot with organizations where we're working on personalization strategies and, wouldn't it be great if we could, if you have a product, whatever that product is, in the ad, on the website, on the mobile app, wherever you are, could you see the exact product in the exact angle, with true personalization. That becomes really hard when you're doing product photography. You can't take a million photos of every single thing. It sounds like it might be early days to really try something like that at scale. But I definitely see some potential for things like that as well.

A really interesting thing that we're experiencing right now is, let's say you're the manufacturer of a product. Let's just say you're doing furniture. And I'm the retailer. And the manufacturer, you may, come along with me – so, “I love the couches you manufacturer; I'm going to buy them.” And then I say, “Hey, I need to merchandise those couches on my site. Do you have any photography?” And you say, “Yeah, here's some product shots I've made out of 3D, and here's some lifestyle images, like in a house and in context, a really nice, glossy photo. But my website – I'm the retailer – uses a different background, right? And I only may sell three of the five products that are in that photo. And so there's this gap in the market between what the manufacturers provide and what the retailers want, because they're gonna personalize that content to their site. 

So all of this 3D stuff is actually a great answer to how to solve that, if the manufacturer says, “Well, here are the assets, and if you need to produce custom content for your own merchandising, you know, have at it.” And then what that also does is now, all of a sudden, instead of using these assets for you know, you create photography in September and use them all year ‘round, you can create instant content for holidays, right, and promotions. And so it's much faster, much more flexible, much less expensive, which is pretty neat.

So there's a lot of talk about metaverse and all things related to that, for various reasons. You know,  obviously, it uses a lot of 3D. How do you see that changing retail and even what you're doing?

I'm going to try to be not jaded. Well, it’s funny, so we wrote the very first augmented reality app for the app store in November of ‘11. And so we love to be on the bleeding edge. So we love innovation. It's why we do what we do. It’s, you know, the best part of the job. I've also lived from AR to VR to MR to XR to now, you know, it's all these different monikers we give the space. Well, here's where I think there's an absolute, no question, use case. That’s, if you're in some kind of game experience like Roblox or Fortnite and you've got avatars and you want to somehow wrap your personality and brand in, like, a virtual Nike shoe or a virtual Gucci bag or what have you, that makes a ton of sense to me. I mean, that's just basic brand advertising and marketing, right? Some of these other cases, like we have a lot of furniture clients who are like, “Hey, what should we do about the metaverse?” I'm like, “Well, man, it's kind of interesting. All you do is talk about creating high-quality, realistic assets, and now you want to put them in Roblox, that's basically cartoonish, like there's a little bit of a logic gap in there somewhere, that needs to be sorted.

So my view, at least I can only really speak to where I've had some experience, but I think what's really interesting about a metaverse type opportunity, for at least the home category, is some day, when you buy your home, the seller will also give you an exact 3D model interactive replica of your home to go along with it, and Zillow will have 3D homes that you can download and interact. And so the idea of going out into something like the metaverse, whether it's a connected experience or stand-alone, and pulling things out of that world and into your own digital version of your space, I think that's pretty cool. But, you know, the way I think about the metaverse now is the first thing we do when any technology is new is we copy what we already have in that new medium, right? 

And that’s what we did with websites. They used to, the taxonomy of a catalog looked like a store, right? And then of course that's all changed. And so, to me, creating a virtual mall – and I’m not trying to downplay the guys that are doing these kinds of things – to create a virtual mall to walk around is like, to me, the equivalent of creating a virtual car lot to walk around to buy a car, like that makes no earthly sense to me. I don't want to walk around a mall. I want the mall to come to me. But I think that's how you start, right? The first thing you do is you go, “Oh, hey, let’s emulate the real world, and then we'll iterate and come up with something cooler.”

Let's go back to those companies that may not quite be on the cutting edge of using 3D in their retail but, you know, getting started and maybe accelerating their 3D usage. So for those that aren't quite there yet, what are some things that they should be keeping in mind as they're trying to get started in this realm?

Initially, in this space, a lot of early adopters thought of 3D as like an application, like “I need an augmented reality application,” or “I need a product configure app,” or “I need a room planning app.” And that was perfectly fair, three, four or five years ago. But the truth is there's lots of use cases for 3D, and while you might pilot or beta something by just buying an individual app, once you, if you're a big enterprise like a Kohler or a Lowe’s or a Best Buy or whomever, 3D really is like a platform decision. You need to buy a content management system, almost like you'd buy a CRM. You wouldn't buy nine different CRM systems, right? You'd buy one CRN system and deploy. The same is true with 3D because you want to repurpose the same asset and you want to deploy it to different applications, and you want analytics all in the same place. And so I think, outside of maybe piloting something, the biggest decision that people need to make first is, “OK, what's going to be my content management system first, and then what are going to be my applications, second?”

You mentioned analytics, so I'll go there a little bit further. How should those companies be measuring success? What are the metrics that your customers use to measure how well they're doing?

I mean, there are a ton of parallels to e-commerce, things like dwell time, where we all know, the more time you spend with something, the more likely you are to buy it. Augmented reality absolutely works. There's no question about it. If AR is available on a product page, you get a two to three times increase in conversion. It's very consistent. Now, I mean, some of that’s you’re interested in the product anyway, so you probably want to discount it. But even if you get a 100 percent, 20 percent or 30 percent increase in conversion, that’s still pretty good, right? 

So what we have learned, though, is augmented reality does not work equally for all things. It's primarily used in the home category as a replacement for measuring. So if you look at what gets used in AR, it's big things like dining room sets and bedroom furniture and sectionals. Those are the most popular categories. People don't really use AR for, like, lamps and mirrors. So you probably don't want to spend money there. But it's all the same kind of metrics. It's increases in average order value. It's duration in the application. It's conversion to leads, if you’re using it as a lead generation tool, like into a design team. It is reduction in returns because people are able to interact and make sure they buy the right thing at the right size. So it's all the same metrics that we use to measure website performance.

About the Guest

Beck and his brother Barry are early innovators in marketing technology, first pioneering cloud-based targeting marketing at Copient, a firm acquired by NCR. Their latest company, Marxent, is another cloud-based platform for retailers that is pioneering 3D content management and 3D applications including AR, VR, product configurations, and 3D room planners. Clients include Macy's, Ashley, La-Z-Boy, and many more leading brands.

About the Host, Greg Kihlström

Greg Kihlstrom is a best selling author, speaker, and entrepreneur and host ofThe Agile Brand podcast. He has worked with some of the world’s leading organizations oncustomer experience, employee experience, and digital transformation initiatives, both before and after selling his award-winning digital experience agency, Carousel30, in 2017. Currently, he is Principal and Chief Strategist atGK5A. He has worked with some of the world’s top brands, including AOL, Choice Hotels, Coca-Cola, Dell, FedEx, GEICO, Marriott, MTV, Starbucks, Toyota and VMware. He currently serves on the University of Richmond’s Customer Experience Advisory Board, was the founding Chair of the American Advertising Federation’s National Innovation Committee, and served on the Virginia Tech Pamplin College of Business Marketing Mentorship Advisory Board. Greg is Lean Six Sigma Black Belt certified, and holds a certification in Business Agility from ICP-BAF.