How Does Virtual Reality Matter? Evidence from an Online Real Estate Platform

Abstract

Virtual reality (VR) is an emerging vision technology that constructs a simulated 3D environment to mimic the real world. The technique has been used as a tool for online product presentation, which enables consumers to obtain rich product information through interacting with the simulated interface. In recent years, VR has been adopted by leading online real estate platforms worldwide as a novel function for online house tours, referred to as VR Tour. In this study, we analyze the impact of VR Tour on properties’ selling time. Using data from a large online real estate platform in China, we conduct survival analyses and employ multiple identification strategies to investigate the impact of VR Tour. Our results show that VR Tour could significantly reduce the property’s selling time. Properties that support VR Tour benefit from both attracting consumers to their webpage through the display of a VR badge and sustaining consumers’ purchase interest after consumers exploit the VR Tour function and obtain property information. The effectiveness of VR Tour varies over time, with a deceleration effect on the selling process in the short run, but an acceleration effect in the long run. The temporal deceleration effect could attribute to consumers’ lack of experience in using the VR Tour function, hurting both the consumers’ purchase experience and the property’s selling process. Furthermore, we find a substitution effect of VR Tour over pictures on the property selling process, resulting in a longer selling time when more pictures are posted for VR-enabled properties. Our work provides insights into both VR literature and managerial practice.