E-Commerce Is Boring. A Jeff Bezos-Backed Start-Up Wants to Change That.

New York, United States — Pantone's 2019 colour of the year is "Living Coral," and so Obsess, a new fashion website, created an underwater store filled with coral-hued product.

The glass walls and ceiling look out into the ocean, and a gigantic coral reef sits at the centre of the store, surrounded by racks of Altuzarra tops, Topshop slip dresses and Senreve handbags.

Of course, no such underwater boutique actually exists. Obsess created its space online, relying on virtual-reality technology to create a shopping experience it hopes comes close enough to the real thing to stand out from countless other e-commerce sites.

“With the latest technology on our phones, we should be seeing shopping experiences online that are much more visual and much more interesting,” said Neha Singh, Obsess’s founder and chief executive. “The problem is that nobody has tackled changes to the e-commerce experience in 25 years.”

Obsess is a software company that is building virtual reality shopping sites. The start-up has been around since 2017, building VR experiences for companies like Tommy Hilfiger, Levi's and Farfetch, and today, it's launchings its first e-commerce destination. It has pre-seed funding of $775,000 from Lightspeed Ventures, Techstars and from Village Global, a new venture fund that includes money from entrepreneurs like Bill Gates, Mark Zuckerberg and Jeff Bezos.

The website has no search box. Instead, there are different boutiques, all created in CGI: beauty, fitness, travel, wellness, handbags and more. Shoppers can move around the virtual boutiques, click on the product to see them in 3D, and even access augmented reality versions of them, to place them in their setting.

Nobody has tackled changes to the e-commerce experience in 25 years.

The goal of Obsess, said Singh, is to move e-commerce software “move beyond the grid” — that is, evolve beyond the classic thumbnail listings on a white background that’s typically found in e-commerce.

Many shoppers find the online user experience underwhelming. Online shopping accounted for 14.3 percent of total retail sales last year, according to Internet Retailer. That number is growing, but only 2.86 percent of website visits convert into a purchase, according to e-commerce data source Monetate. This is a key reason why some brands have been experimenting with alternative forms of communication like live chat with customers, and why digital brands like Everlane and Third Love, which previously promised to stay away from brick and mortar, are now opening stores.

“Amazon created the original e-commerce interface, but that was intended for books and even though it became the norm, nobody has stopped to think if this is the best way to sell online,” Neha said.

Anne Dwane, a partner at Village Global, said the fund invested in Obsess because it believes AR e-commerce experiences can unlock more profit. Singh said Obsess has already seen triple-digit revenue growth since 2017.

“There are clearly problems to fix in the e-commerce experience because the grid format for searchability doesn’t reflect human behaviour,” Dwane said.

Plenty of fashion brands have already tried to integrate augmented and virtual reality into their online footprint to make e-commerce more exciting. In June, Gucci launched an augmented reality app that allows shoppers to try on shoes digitally; Nike rolled out similar technology last year, allowing shoppers to look at limited edition sneakers before buying them. Amazon has been investing in AR technology too, including smart glasses, Focals, which debuted in October from the Amazon-funded start-up North.

Goat, the digital sneaker marketplace launched an AR experience in May, starting with a Travis Scott Air Jordan. The company said 80 percent of shoppers who bought the sneaker used the AR technology, and Goat plans to roll the technology out to other footwear too.

Fashion publishers have been taking at AR e-commerce too. Goop just launched a digital version of its new Toronto store, and shoppers can browse the store and buy Goop product; little buttons throughout the digital store even open to videos of Gwyneth Paltrow reviewing the product.

In June, fashion influencer Leandra Medine's Man Repeller debuted an interactive page for the company's branded bags, earrings, and hairclips. When shoppers press the "Play" on the page, products show up animated and moving, and the page includes trippy graphics and piano keys that actually play music.

Prior to launching Obsess, Singh worked at Google and also served as head of product for Vogue.com for nearly four years. She said she witnessed how frustrated fashion brands felt with their digital presence, and realised that even the most successful fashion companies hadn’t bothered to change the look of online shopping.

“These luxury brands have amazing runway shows and great retail stores, but their online experience is really underwhelming,” Neha said. “I feel it too, personally, because I love shopping but I hate online shopping. It’s boring and isn’t inspiring.”

These luxury brands have amazing runway shows and great retail stores, but their online experience is really underwhelming.

Singh said brands that have hired Obsess to build product for them saw a 150 percent increased session time and a conversation rate that was twice as high as its typical e-commerce pages. Average order values were also 15 percent higher, she said, which might be why Shopify has predicted that experiential e-commerce is going to be one of the factors that drive fashion e-commerce growth over the next four years.

Obsess's business model leans on affiliate links; earning money off of purchases of the products its engineers have built into the virtual boutiques. Singh says the Obsess site will eventually turn to a marketplace model, where it will charge to create brand-specific boutiques. Singh also sees an opportunity to license the Obsess software to brands for other CGI opportunities, like fashion shoots.

“Fashion doesn’t have to go to a desert to stage a photoshoot because you can just create one with technology,” she said. “Brands that want to compete against Amazon will have to build brand loyalty online, and for us, we think that’s done with technology that makes online shopping inspiring.”

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