Snapping Up Success: Why Snap's Enterprise Focus is a Smart Play
Snap recently announced it's offering augmented reality mirrors and a suite of other softwares for retailers to use in-store and online. Here's why it's a smart move for the company.
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Snap Inc., the parent company of the popular messaging and social app Snapchat, hosted its partner summit in Santa Monica last week. Many of the company’s announcements had to do with retail, which is why I was on the scene to find out what’s in store for the future of how we’ll shop and sell.
What was Announced? Meet ARES
In case you missed it, I detailed in this post the most important announcements in terms of fashion, retail, and digital identity. I also shared a look inside their Partner Summit on Instagram here and here.
To summarize, Snap has its sites set on retail with a suite of software solutions aimed at enhancing the in-store and online shopping experiences. This new enterprise-focused division of Snap is called Augmented Reality Enterprise Services, or ARES for short, and is led by Jill Popelka, who has more than twenty years of experience in management consulting at SAP and Accenture.
The technologies are grouped under the name “Shopping Suite” and include a 3D viewer, an AI-powered fit finder, and virtual try-on for apparel, accessories, and footwear.
Since I learned about the launch of ARES a few weeks ago, I’ve been saying it’s a smart strategic move for the company, especially when you consider the current media landscape and the state of retail.
Six Reasons Why Focusing on Enterprise is a Smart Play for Snap
1. The Old Media Model is Dead 🪦
With layoffs at every major news company from CNN and Buzzfeed to ESPN, it’s clear the old model of media is dead. Snap is a business, and as such, it needs to make money. I know this seems like an obvious statement but following an era of overinflated tech evaluations (hello, Silicon Valley Bank) I feel it needs to be explicitly stated.
Any internet company today relying on digital advertising for revenue in 2023 needs to diversify, and that’s exactly what Snap is doing. In addition to offering solutions for business, Snap has quietly been moving to a subscription-based model. Snapchat+, the company’s paid plan, offers users exclusive features, including the ability to customize their in-app experience. On stage, Snap’s Co-Founder and CEO Evan Spiegel shared that Snapchat+ now has 3 million subscribers.
In diversifying its revenue, Snap is setting itself up to avoid some of the pitfalls of other media platforms that relied solely on advertising dollars (I’m looking at you, Facebook Meta).
2. Conquering the Competition 🏆
If you think of Snapchat’s largest competitor as Instagram, the enterprise focus also makes sense. Many retailers felt burned after setting up shop on Facebook Business Pages only to find the platform quickly became a pay-to-play marketplace. With the influencer era officially over, the future relationship between Instagram and fashion isn’t clear. Meanwhile, the app can’t seem to figure out where to put the shopping button without pissing people off.
Snap is also positioning itself to slay a lot of startups. I can’t tell you how many upstarts I know that do pieces of what Snap is offering through ARES. A high-quality 3D viewer for products? That’s the entire business model of startups like Threekit, Modelry, and Threedium. Virtual clothing try-on? That’s what companies like Zeekit, Zyler, and 3DLook have been trying to do since the pandemic. And don’t even get me started on the slew of startups jockeying to solve the problem of fit with technology, including Prime AI, True Fit, Kiwi Sizing, and Fit Analytics (which was acquired by Snap in 2021).
The flurry of activity surrounding these technologies indicates there’s some kind of need, but the fact that one player hasn’t emerged as the solution of choice means there’s an opportunity for Snap to dominate in this category. And speaking of owning categories….
3. No one “Owns” the Smart Mirror Category 🪞
Even though smart mirrors have been around for a few years, no single company dominates this space. With Lululemon’s fitness-focused Mirror failing, the smart mirror category is a wide-open playing field. Snap, perhaps learning from Lululemon’s mistakes, is betting smart mirrors will do better in shops and malls rather than in consumers’ homes à la Mirror.
4. Snap is the Leader in AR Try-on for Apparel 👗
Snap has invested a lot of time and energy into making its augmented reality technology appear less gimmicky, and although what I saw last week wasn’t 100% realistic, it was the most entertaining AR experience I’ve tried to date. While competitors like Modiface (now owned by L'Oréal) and WANNA have nailed makeup, footwear, and accessory try-on, Snap is the leader in AR try-on for apparel. In fact, DressX, a digital fashion company that just raised a $15 million Series A, relies on Snap’s technology.
5. Retailers Need Plug-and-Play Solutions 🔌
Retailers have had it harder than ever these past few years. Since the pandemic, many brands that were household names shut their doors, including Bed Bath & Beyond, Toys ‘R Us, and Sears, to name a few. Now more than ever, retailers need strategic solutions that aren’t just about grabbing headlines. But with the rate of technological change, not all retailers can afford to keep up. Hiring an agency to build custom AR solutions is costly and time-consuming. ARES offers a plug-and-play solution for those who want to stay on top of emerging tech trends without having to hire experts in these fields internally.
6. Hyped Technologies End up in Enterprise 💼
Like so many emerging technologies we’ve seen enter (and exit) the hype cycle, augmented reality is finding a strong use case in the enterprise sector, and I think ultimately that’s where it belongs. After all, do you really want a giant piece of hardware like a mirror in your home?
When augmented reality jumps from our apps and smartphones and into mirrors it opens the possibilities for all kinds of out-of-home surfaces to become more interactive and enhanced. John Anderson, you could use a Guinness right about now.
Take, for example, the humble vending machine. Snap’s pilot project with Coca-Cola demonstrated how old distribution channels can be digitized and gamified.
While earnings from Snap’s focus on ARES aren’t public just yet, the company is already pointing to a number of case studies that show promising results for early customers:
Goodr leveraged AR Try-On and interactive 3D Viewer technology to replicate the experience of in-store shopping on customers’ mobile devices and saw an 81% uplift in add-to-cart and 67% uplift in conversion for mobile device users, leading to a 59% increase in revenue per visitor (Snap Inc. internal data March 15 - August 15 2022).
Princess Polly incorporated Fit Finder and AR Try-On features to deliver recommendations to over 7.5 million shoppers who had a 24% reduced return rate than shoppers not using the technology (Snap Inc. internal data July 1 2020 - October 31 2022).
Gobi Cashmere’s conversion rate was 4X higher for shoppers using Fit Finder recommendations and AR Try-On for clothing, helping provide personalized experiences to 1 in 4 of shoppers (Snap Inc. internal data September 1 2022- October 31, 2022).
Snap is positioned to do for AR what Shopify did for eCommerce— that is, make it more accessible for retailers everywhere. Now we’ll see which retailers are game.
News to Know 📰
Artificial Intelligence
AI Is Really Good at Designing Knitwear (Belts, Not So Much) // BoF
AI Models are Here. Can They Actually Improve Fashion Representation? // Vogue Business
Digital Fashion
A supermodel turned herself into one of Epic’s hyperrealistic MetaHuman // The Verge
Digital Fashion Brand Play! Pop! Go! Launches its First Physical Collection // Glossy
Spatial Computing
Free Resource
What Does the Future of Social Commerce Entail? (A new Research Report)
Thanks so much for reading.