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E-Commerce Industry The Disruptive potential of Virtual Reality within the E-COMMERCE INDUSTRY MASTER THESIS Title: The distruptive potential of virtual reality in the e-com- merce industry. The case study of Turn2VR Semester: 4 Synopsis Semester theme: Entrepreneurial Master This Master’s Thesis aims at contributing to the existent body of research on the topic of disruptive technologies, by exploring one study case focused on the potential of virtual Project period : reality within the e-commerce industry. 01 February 2016- 31 May 2016 The project was aimed at identifying the processes and steps that a potential diruptive technology, virtual reality is folowing alongside with increased adoption. The project ECTS: showcases an attempt by a startup company, Turn2VR to 30 gain a foothold in a niche market: e-commerce. For the purpose of testing a partly new approach to Design Supervisor: Thinking and Lean Startup Methodology, in the case of Claus Andreas Turn2VR, the two tools were used together in order to treat Foss Rosenstand uncertainty. Project group: Turn2VR is an innovative company that is developing a vir- 2 members tual reality solution to existing webshops. Once implement- ed, Turn2VR’s solution will allow users of any online shop to see and interact with the products that they are about to buy. Adressing the low-end market, Turn2VR has devel- oped its solution in order to be available on any smart- phone, Android or iOS, and with any head-mounted display ___________ that works with a smartphone (including very cheap Google Cosmin Pirvu Cardboard) The conclusion of the folowed process is that the chosen approach shortened the time necessary to identify the most suitable solution in an uncertain environment. Moreover, the right challenges were also identified easier, allowing for a fast development of the solution. _____________ Alexandru Baltat Number of printed copies: 1 Total number of pages: 201 Total number of characters (including spaces):230.473 Pages in body: 142 Number of characters in Body By signing this document, each member of the group con- (including spaces): 163.250 firms participation on equal terms in the processes of writing Number of appendicies: 3 the project. Thus, each member of the group is responsible Pages in Appendicies: 59 for all the contents of the project. TABLE OF CONTENTS Abstract 4 5.1. Ideation 31 7. Product development 82 1. Introduction 8 5.2. Concepting 33 7.1. Workshop 1 84 2. Problem statement 12 5.3. Commitement 36 8. Market analisys 104 3. From theory to practice 16 5.4. Validation 39 9. Competitive analysis 111 3.1. Virtual reality in e-commerce 16 5.5. Next steps 39 9.1. Trillenium 112 3.2. Disruptive technologies and 6. Methodology 42 9.2. Sixsense 113 disruptive innovation 17 6.1. Design Thinking for problem solving 44 9.3. Ebay 114 3.3. Virality and growth engines 19 6.1.1. Discover 48 10. Business Model 117 3.4. Business Model Canvas, Diffusion 6.1.2. Define 60 10.1. Business Model Canvas 119 of Innovation and The Innovative Core 20 6.1.3. Develop 64 10.2. BMC for Turn2VR 121 3.5. KPI’s in SaaS companies 21 6.1.4. Implications, theoretical Bibliography 140 4. Constrains 24 example 67 Appendix 141 4.1. Limitations 26 6.1.5. Outcomes 74 Appendix 1: Scalability 143 4.2. Delimitations 27 6.2. Lean Methodology for solution Appendix 2: Social Media analisys 167 5. Entrepreneurial journey 30 building 78 Appendix 3: Second workshop 175 2 3 ABSTRACT In the industry of e-commerce and retail that in 2014 has reached the tipping point of To be able to increase the viability of the research conducted, the research design of 15.4 billion EUR in sales in the Nordic countries, advancements in technological fields this thesis has been thoroughly developed. This allows the study to be constructed in such as virtual reality lead towards disruption in the aforementioned industry. Virtual a systematic way, by making use of two different data collection methods – Secondary Reality is not a new phenomenon, as it started back in the 50’s and has recently gained an and Empirical data. The study begins by analyzing previously conducted research and ad- increased interest from both the business sector and academia when the advancements vancements in academic literature, which result in developing a number of hypotheses. within the technology allowed for a broader market reach. Companies such as Facebook, To test the aforementioned hypotheses, Secondary Data is being gathered and analyzed. Google, HTC, Sony and Samsung have helped in the process of pushing the technology to Lastly, after a thorough literature integration, all the hypotheses are tested through the the masses. Academia also explored the vast potential of virtual reality within the educa- use of a case study. tional sector, as the use of virtual reality provides a better understanding of hard to grasp concepts and industries. Keywords: Virtual Reality, Disruptive Technologies, Immersion, Diffusion of Innovation, Moreover, Virtual Reality is a versatile technology which can be applied to a vast amount Design Thinking, Lean Methodology, Business Model Canvas. of industries, with a highly disruptive potential. As a result, the aim of this research is to identify the process that needs to be undertaken by a technology driven Startup Compa- ny that aims at developing virtual reality solutions in an uncertain and innovative envi- ronment to gain a foothold in the low-end market of the e-commerce industry. Particular focus will be given to the principles of disruption and diffusion of innovation as well as the concept of immersion, brought by integrating virtual reality in the e-commerce industry and the applicability of theories such as the lean methodology and design thinking in incubating Turn2VR. 4 5 INTRODUCTION 6 7 INTRODUCTION The rise of VR The emergence of new, revolutionary technologies can always have the potential to dis- or online shopping (Best, 2016). rupt existent solutions, by either overpowering or completely overtaking them. Clayton Although the process of adopting new technology can be lengthy at times, the companies M. Christensen describes disruptive innovation as being the process whereby a small that manage to understand its potential impact can benefit greatly from implementing company or a startup, manages to challenge an established company, with fewer resourc- the mentioned technology in their operations and allowing it increased use through time. es by targeting not the most demanding customers but the neglected ones (Clayton M. In the same manner, companies that fail to understand the potential of new technologies Christensen 2015). Based on how disruptive the innovation is, it can affect one or multiple or are unwilling to experiment with it, for various reasons, can end up being disrupted industries at once. and lose their market share. A classic example when the failure to adopt a new technol- In the case of Virtual Reality, the technology is so adaptive that endless uses apply to ogy lead to a significant loss in market share and ultimately to the failure of the business it, and all the key industries can benefit from it. “Virtual reality or virtual realities (VR), as a whole is Kodak. By choosing not to make use of the vast potential of digital cameras also known by the definition of immersive multimedia or computer-simulated reality, is until it was too late, Kodak became one of the most iconic examples of businesses that a computer technology that replicates an environment, real or imagined, and simulates were disrupted by new technology. a user’s physical presence and environment in a way that allows the user to interact with Another well-known example of disruptive innovation that is worth mentioning is the disk it” (Withagen, 2016). “The most recent advances in virtual reality are the possibilities of drive industry case. When the entrants developed smaller 8-inch drives with lower ca- displaying content on a virtual reality headset (also called a head mounted display), and pacity, the leading companies within the field did not predict the need for smaller drives some simulations include additional sensory information and focus on real sound through but for higher capacity disk drives that could store more information, leaving the entrants speakers or headphones targeted towards VR users” (Best, 2016). “Some advanced haptic with an advantage in the niche market of minicomputers. (Christensen, pp. 3-4). Only systems now include tactile information, generally known as force feedback in medical, few “industries offer researchers the same opportunities for developing theories about gaming and military applications” (Best, 2016). how different types of changes cause certain types of firms to succeed or fail or for testing Furthermore, virtual reality covers remote communication environments which provide those theories as the industry repeats its cycle of change” (Christensen, pp. 3-4). virtual presence of users with the concepts of telepresence and telexistence or a virtual As mentioned previously, many industries could benefit in many ways from implementing artifact (VA) either through the use of standard input devices such as a keyboard and virtual reality technology. Because of the versatility of the technology, it was difficult to mouse, or through multimodal devices such as a wired glove or omnidirectional tread- make an overview of all the industries where it can be implemented, not to mention ana- mills (Best, 2016). The immersive environment can be similar to the real world in order to lyzing each of them. That is why the scope of this thesis is to investigate how virtual reality create a lifelike experience—for example, in simulations for pilots, world-wide VR tourism 8 9 can be applied and can bring value to one specific category: online shopping.
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