According to Statista, global ecommerce sales in 2018 will hit over $2.8 trillion dollars, with 60% occurring on a desktop computer and 40% happening on a mobile device.
Online shopping isn’t just the way of the future, but it is also the present. Yet the in-store experience still reigns supreme, with 90% of consumer purchases happening in store. What if there was a way for technology to disrupt and to bring the reason for going to a store (like trying something on) into the home?
Augmented reality (AR) is a fast-growing trend that blurs the line between the virtual and real worlds. Toronto-based NexTech AR Solutions Corp. (C.NTAR, Forum) is building the foundation for an enterprise to both incorporate and redefine how people shop. Stockhouse recently covered NexTech’s operations with a full-length feature article that discussed how AR dramatically enhances eCommerce businesses, by virtue of lowering returns, increasing conversions, and creating an exciting, immersive shop-at-home experience.
In late 2018, the Company made news when it launched its eCommerce AR platform which it integrated with Shopify, Magento and WordPress, beginning its transition from the beta to commercial stage. It followed that up and announced that its development team has begun integrating IBM Watson’s Machine Learning (ML) algorithms into its patent pending web enabled AR platform.
With this integration NexTech is quickly building out a next generation, industry first, artificial intelligence (AI) based AR eCommerce solution. With AI, the platform will be able to offer scanning of the body, hands, and feet as well as facial features, to understand an individual shopper’s style, sizes and preferences, as well as creating AR holograms acting as personal shopping assistants.
Then in the first week of January Nextech announcement that it integrated Experience API analytics into its patent pending web enabled AR eCommerce platform. These technologies, when combined, create a truly disruptive shop at home solution which could accelerate the value proposition of the entire ecommerce industry turning Nextech into a major player.
NexTech announced today (January 8th, 2019) that it has taken a giant step forward, with its acquisition of a revenue-generating ecommerce business of its own, where it can integrate its AR and artificial intelligence (AI). This all-stock deal changes the whole complexion of the company and turns it into a revenue generating, vertically integrated, fast-growing technology company.
Stockhouse Editorial recently asked the Company’s CEO, Evan Gappelberg, to delve deeper into this new acquisition and find out more about what it means for the future of the Company’s and the AR shopping experience.
NexTech’s business offers AR and AI for ecommerce sites, so that anyone can integrate your platform into their online shopping experience. For newer investors, can you give a quick rundown of how this works?
Sure. First, we turn a site’s 2D objects into 3D objects. Then, with just a few lines of embed code added to their site, like magic, they have AR shopping experiences on site. NexTech’s patent pending web-enabled AR eCommerce solution works on every ecommerce website. It’s a universal solution which works on every browser including but not limited to Chrome, Firefox, and Safari, and on every device including desktops, laptops, ipads, and all mobile phones. So it works everywhere and at $79/month its affordable for everyone. With a web-enabled AR solution NexTech has eliminated the need to download an app which has been the biggest friction point of AR adoption.
Owning your own ecommerce business adds a lot to your operation. Can you detail for investors the value-added benefits?
Sure. A big benefit is we get our own sandbox to “play” in allowing us test our existing AR technology and optimize it for maximum ROI. We also get to try out new features of our AR/AI and see what works before going to market which his very powerful. Our ecommerce site gets about 100 orders per day. With our xAPI analytics already installed, we’re getting thousands of daily real-time data bits showing positive interaction with our AR. We are currently seeing our technology being used in real time which is hugely important when bringing to market a new technology.
So, we get immediate cashflow and immediate revenue and the ability to analyze real-time buying interaction with our AR. The top line revenue in the past 12 months was US$2,650,000 roughly which brings in, roughly, $275,000 in cashflow. This business brings instant accretive value to Nextech.
The story here is that NexTech now owns a revenue-generating business to perfect the Company’s technology. How will the two be combined?
As we have been working on this site in Beta, we have already integrated AR into the site as well as the xAPI analytics. And the early results have been extremely positive. We are currently working on converting the entire site into and AR showcase and expect to bring more products onto the site for sale as well as make additional bolt on acquisitions.
AR is a relatively new addition to the world of ecommerce, which means the benefit of early adoption could be huge. Those that do use it report conversion rates of three times, even up to 11-times, what do you see for NexTech in this regard?
AR has been rapidly scaling into the ecommerce landscape through early adopters like IKEA whose app lets you see the furniture in your house by overlaying a digital twin of the object in your living room. Alibaba, Starbucks, IKEA, Houzz, and others have been driving AR ecommerce because the results are increased interaction and sales. Houzz reported that it gets 11X its sales conversion rates using mobile AR versus their standard app, meaning a consumer is 11X more likely to buy a couch if they use AR to see what the couch looks like in their house. These kinds of statistically material results will continue to drive the rapid adoption of AR into e-commerce especially if no app download is needed.
We are seeing similar results but expect things to get really interesting next month when we have AI integrated into the site. AI opens up a world of possibilities and will give us a whole new tool box to create value for our ecommerce business, platform and shareholders.
How crucial is robust data?
Data is what drives adoption so it’s extremely critical that we get real-time data on as granular a level as possible, which is exactly why this ecommerce site makes such a difference for us. As business owners we will use our data to get other people that own ecommerce sites to sign up for our service. We become their test case, in a short amount of time we’re going to have a tremendous amount of data to mine and use for our AR roadmap.
This established, 7-year-old fully-integrated business that NexTech is acquiring offers a lot of upside. It includes three warehouses and a brick-and-mortar store. How will this help scale your operations?
Well as mentioned previously, we do expect to make additional strategic acquisitions so the existing infrastructure which includes 15,000 square feet of warehouses, inventory control software, experienced employees — as well as being integrated with Amazon, eBay and PayPal — allows us reach economies of scale in our ecommerce business very quickly. In addition, our brick-and-mortar store will become our AR retail showroom where we can demo products in 3D and talk to customers directly to see what they like and dislike, again providing us with valuable data.
There is a lot of potential to increase the value of both your business and that of the acquired business using your own technology. What kind of figures are you predicting around the conversion rate?
The conversion rate of the existing ecommerce business is around 2.5 – 3%, but with AR they can go up dramatically. We instantly saw close to 100% pick up in sales volume per visitor with our AR integration with just one product.
Increasing the conversion rate of sales with AR and AI would be a huge benefit for shareholders, because it would both prove the value of our technologies for others but also increase revenues, increase profits, and increase the earnings of Nextech itself.
What announcements does NexTech plan to make that investors and shareholders should keep an eye out for?
We plan on bringing more tech to the market. Launching AI in February and then every 30-60 days, we will introduce new features and functionality to our platform. We are also on the hunt for additional strategic acquisition targets that add value. Between acquisitions and rollout of new technology 2019 is going to be a very busy year for us!
Having only been public for a few months, NTAR stock has risen sharply in a tumultuous market. How have you been able to successfully buck this trend?
NexTech AR Solutions Corp. has brought together a seasoned team of entrepreneurs and using AR and AI, which is arguably the most immersive technology ever conceived by man, is building out a next generation technology stack for the ecommerce industry, as well as for education and live streaming which all represent multi-billion dollar opportunities converging under two (AR/AI) multi-decade-long mega trends which are just getting started. As a first mover and the only public company pure play opportunity, I guess our story is resonating with early smart investors