These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for augmented reality software in the furniture industry. This software, in the form of a mobile app, enables users to envision new furniture in their home. After picking a scene from their home, users can download a 3D image of furniture from an online furniture’s web site into the app, and change the furniture’s position and color. The customers for the software are online retailers and furniture buyers. The value proposition for the user is better purchase decisions and for the on-line retailer is fewer returns. Possible methods of value capture include sales of the app to online retailers, pay per click, and commissions per sale of furniture to end users. Intellectual property and network effects are the possible barriers to entry and thus methods of strategic control.

1. Augment Reality in Furniture Industry
Aloysious Lee A0113487A​
Allen Zhang Jianliang A0132448H
Wanwen Huang A0120075W
Prateek Singhal A0119978H
Indranil Munshi A0119945U
Aarcha Jayachandran Sasikala A0120053A
Liu Lu A0120095R
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“SmartShop Service”

2. Outline
• AR Technology Introduction
• Service Introduction
• Value Proposition
• Customer selection
• Revenue Stream
• Scope of activities
• Strategic control
2

3. Augment Reality Introduction
3

4. How does it work?
4
What is Augmented Reality ?
Computer/mobile
Generated Data
(Augment)
Physical,
Real-world
environment
(Reality)
Augment
Reality
Visualizes
the digital
as if it’s
real
Virtual
object
added in it
Pick a real
world
scene

5. SmartShop Service Introduction
https://www.youtube.com/watch?v=qzx1xMlo1kw
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6. 6
How AR Tech works for Furniture
1. Content Management
Work with the data
provided and link with
the online catalog
2. Model
Prepare scaled
virtual 3D models
3. Service Adaption
Design the User
experience and
integrate with
existing sites or App
4. Engagement
Launch app and view
product in the room.
Rotate it, swap colors or
replace it!
Social Sharing

7. 7
SmartShop Service
1. Select the furniture from the Online Catalog
2. Insert/move the furniture within a photo or video
3. Customize the furniture based on available options (e.g. color/size)
Measure the size of the products relative to the surrounding room and fixtures
to offer a real-world perspective on physical fit in the consumer’s home.
“Utilizes AR Tech to help people visually envision the
furniture in their home before their purchase”
Link to product list in service

8. 8
What the end-users see
In a clock-wise direction
1. Place Marker on the Floor
2. 3D Model of the Sofa generated
3. Sofa moved slightly to the left4. Sofa moved to the front
5. Finalized designs can be saved to the picture gallery

9. 9
Engaging end-users

10. SmartShop
Service
Online
Store
Showroom
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Perfect Blend of Traditional Furniture Shopping

11. • Ease of use and Convenience
• Personalization and customization
• AR visualization from any angle
• Interaction with digital objects
• Content Management
• Social media integration
11
SmartShop Service Features Highlight

12. Value Proposition
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13. 13
Shop Experience
Online Retailer
 Improves customers purchase rates
 Provide accurate product
representations
End user
 Save effort
 Do the right purchase
Value Proposition (1)

14. Reduce Returns Rate
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Value Proposition (2)
Online Retailer
Reduce the rate of returns
Improve profitability
End user
 Purchasing Accuracy
 Save time
 Save money

15. 15
Value Proposition (3)
Online Retailer
 Lock in users
 Improve the sales of products
 long-term profits
End user
 Improve customer satisfaction
Improve Customer Loyalty

16. 16
Value Proposition (4)
Online Retailer
 Create product awareness
 Increases chances of a sale
End user
 Share in real-time
 Get suggestions from friends
Social Network Integration

17. Customer Selection
17

18. • Price, quality, durability and functionality are key factors
in decision making
• Trend of cheap design, and better aesthetics furniture
• “Lifestyle” value recognition of furniture
• Demand for online purchased products
• Manufacturers and interior designers become more
creditable
• Eco-friendly products shown due to the trend of social
responsibility, environmental protection
• Impact of personal information sources are greater on
furniture purchase decisions
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Customer Behavior Trends

19. • Online furniture retailers eg: Lazada
• Physical furniture retailers with online presence eg: IKEA
• Retailers must provide detailed data of furniture to
enable AR technology
• 3D image
• Available Colour
• Dimension
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Customer Selection: Retailers

20. 20
Customer Selection: End Users
Traditional Value Modern
Lonely elderly
FamilyLifeCycle
Empty Nest
Complete family III
Complete family II
Complete family I
Young Couple,
no child
Single
Value Orientation
Style-less
Demanding
Modern
Innovative
Modern
Targeting
Online furniture shoppers

21. Value Preposition Comparison
21
0
1
2
3
4
5
6
7
8
Price Convenience Personalization Flexibility Real Space Trial Selection Friendly and
helpful
Employees
Strategy Canvas
AR Furniture Shopping Online Furniture Shopping Physical Store Furniture Shopping

22. Revenue Stream
&
Scope of Activities
22

23. Revenue Stream-Value Capture
Consumer AR Technology App Supplier
Product
B2C
Services
Free Platform
Recommendations
Promotions
Money
Data
Consumers
Products
Final Transaction
B2B
Charges
Pay Per Click
Commission per
Transaction
Pay per Message
Delivered to
customers
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24. Scope of Activities
R&D
Sales
Marketing
• APP UI Design
• Programming
• Feature enhancement
• CRM
• Customers Analysis
• Market Analysis
• Service Distribution
Channels
• Retailers Management
• Partnership management
• Royalty Fee negotiation
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25. Strategic Control
25

26. Strategic Control
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Sustaining
Profitability
IP
Comple
mentary
Assets
Network
Effects
R&D

27. • Copyright
Use IP to protect specific lines of codes and concepts
Shield the source code from competitors
• Tacit Knowledge
Complete knowledge of how Computer/mobile Generated
Data(Augment) integrated with Physical, Real-world
environment (Reality)
Tacit knowledge to reside in key R&D personnel (CTO, R&D
manager, key R&D programmers with non-disclosure
agreement)
Developmental work on further improvements to core service
features be kept in tacit knowledge till codes and concepts got
copyright protection.
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Strategic Control
-IP Protection

28. • Distribution channel
Enable service supported by all kinds of mobile devices
Make service easier to achieve, for example, furniture
bundled with our service to enlarge user bases
• Partnership
Collaborated with more e-sites to ensure that it has
industrial exposure and support from partners
• Advertise
Advertise this service with targeted users
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Strategic Control
-Complementary Assets

29. • Ecosystem
Ecosystem of customers, e-sites and service developers
Service attracts e-sites to allocate their resources more
efficiently and better customized service
Customers use this service to have better shopping
experience.
Data from e-sites helped us to develop better service
functions, provide more professional answers of the fit,
shape, colour and match of existing décor, more selections
of furniture customization fields.
• User Networks
Enable customers to share pictures of the new furniture in
their room and get feedback, build network among users
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Strategic Control
-Network Affects

30. • Speed up the R&D process, increase the switching
cost for e-sites.
• Lock the customers by providing more advanced
services
30
Strategic Control
-R&D

31. 31
Thank you for your attention
Any Questions?

32. Reference
1. Graham, M., Zook, M., and Boulton, A. "Augmented reality in urban places:
contested content and the duplicity of code." Transactions of the Institute of
British Geographers, DOI: 10.1111/j.1475-5661.2012.00539.x 2012.
2. AR Timeline http://www.crystalinks.com/ar.html
3. http://www.juniperresearch.com/press-release/augmented-reality-pr2 Mobile
Augmented Reality Revenues. Last assessed 15th March 2015
4. http://sumo.ly/1kvX via ABI Research Augmented Reality trends. Last assessed
15th March 2015
5. http://www.bbc.com/news/business-29077495 Online Retail Spending Forecasts
by Forrester Research. Last assessed 15th March 2015
6. http://www.technologyreview.com/news/530336/furniture-shopping-with-
augmented-reality/
7. http://www.vizeralabs.com/
8. Consumer Behaviour Model on the Furniture Market, Éva BEDNÁRIK∗ – Judit
PAKAINÉ KOVÁTS
9. Success factors for Augmented Reality Business Models, Nils van Kleef, Johan
Noltes, Sjoerd van der Spoel
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