Augmented Reality and consumers’ willingness to pay in mobile e-commerce. Does AR increase consumers’ willingness to pay in an online auction?

Abstract

E-commerce platforms face the challenge of enabling customers to assess the utility of products in their intended environments, particularly in the home furniture sector. Augmented Reality (AR) presents a promising solution, with major companies like IKEA, Wayfair, and Overstock introducing AR applications. Nevertheless, a significant knowledge gap exists, prompting this research to delve into this void and scrutinize the economic value of AR in shaping consumers' Willingness to Pay (WTP) in the context of online auctions. This dissertation comprises three interconnected papers that collectively scrutinize the multifaceted impacts of AR on consumers' WTP in the specific realm of online auctions. The first paper investigates the influence of Augmented Reality (AR) in mobile e-commerce on consumers' perceived risks and WTP in online auctions. Grounded in perceived risk theory, the study addresses Perceived Psychological Risk, Perceived Social Risk, and Perceived Performance Risk. An online experiment involving 61 participants compared AR mobile e-commerce with a 3D mobile e-commerce interface, and data analysis utilized SPSS and Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings indicate that AR Mobile E-commerce significantly reduces perceived social risk, positively affecting WPT. However, AR in Mobile E-commerce does not substantially mitigate perceived psychological risk, and this risk dimension does not significantly affect WPT. Similarly, AR in Mobile E-commerce positively influences the reduction of perceived performance risk, but this risk dimension does not significantly influence WPT. Mediation analysis suggests that perceived social risk plays a crucial role as a mediator between AR in Mobile E-commerce and consumers' WPT. The second paper explores the impact of AR on consumers' WTP in an online auction context within mobile e-commerce, drawing on the experiential hierarchy model (EHM). The study posits that AR positively influences consumers' WTP compared to 3D product displays, triggering affective (enjoyment) and cognitive (perceived ownership and perceived product quality) responses, which subsequently influence behavioral responses (willingness to pay more). Analysis of 61 valid responses through PLS-SEM and SPSS 29 reveals that AR significantly enhances consumers' perceived enjoyment and perceived product quality, positively impacting their willingness to pay. However, perceived ownership does not directly affect willingness to pay. Demographic factors such as age, gender, purchase frequency, and income do not have a direct influence. Mediation analysis suggests that perceived enjoyment, perceived product quality, and perceived ownership do not significantly mediate the relationship between AR and WTP. The third paper addresses the lack of standardized AR application guidelines for e-commerce. Using sentiment analysis of 1,049 user reviews of the IKEA Place App, this study reveals predominant dissatisfaction with the app, leading to the development of a comprehensive set of AR mobile e-commerce design guidelines. The research also compares AR mobile e-commerce with traditional 3D versions, finding a statistically significant difference in usability, with the AR version considered more usable. However, there was no significant correlation between usability scores and participants' willingness to pay on both platforms. This study sheds light on AR's potential and challenges in e-commerce, offering insights into enhancing user experience and economic outcomes. In conclusion, this dissertation contributes to the understanding of how AR impacts consumers' WTP in the context of online auctions within e-commerce, addressing perceived risks, experiential responses, and design guidelines. These findings offer valuable insights for e-commerce businesses seeking to harness AR's potential to enhance the shopping experience and drive revenue growth. Keywords: Augmented Reality, Willingness to Pay, Mobile E-commerce, Perceived Risks, Experiential Hierarchy Model, Usability.