Virtual retail is retailing on the Internet. Many traditional retailers are entering the virtual retail market in support of their physical stores. To enter the virtual retail market, you will need a website, and a reliable means of processing customer payments. Virtual retail is retailing on the Internet.

Companies have the opportunity to better engage potential customers by presenting products to them in a highly immersive virtual reality (VR) shopping environment. However, a minimal amount is known about why and whether customers will adopt such fully immersive shopping environments. We therefore develop and experimentally validate a theoretical model, which explains how immersion affects adoption. The participants experienced the environment by using a head-mounted display (high immersion) or by viewing product models in 3D on a desktop (low immersion). We find that immersion does not affect the users’ intention to reuse the shopping environment, because two paths cancel each other out: Highly immersive shopping environments positively influence a hedonic path through telepresence, but surprisingly, they negatively influence a utilitarian path through product diagnosticity. We can explain this effect via low readability of product information in the VR environment and expect VR’s full potential to develop when the technology is further advanced. Our study contributes to literature on immersive systems and IS adoption research by introducing a research model for the adoption of VR shopping environments. A key practical implication of our study is that system designers need to pay special attention to the current state of technology when designing VR applications.

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