Zugara is one of 53 companies chosen by VentureBeat to launch at the DEMO Spring 2011 event taking place this week in Palm Desert, Calif. After our selection, the companies pay a fee to present. Our coverage of them remains objective.

Online shopping is often a frustrating experience when it comes to clothes because it’s hard to imagine what they’ll look like on you. That’s where Zugara comes in with a way to “see how it looks” on you through animated visualization.

The Los Angeles-based company is demonstrating its one-click “see how it looks” Webcam Social Shopper experience at today’s DEMO Spring 2011 conference. If the visualization technology works, it could help convert more online browsers into online purchasers. And that could be worth billions of dollars in new revenues for e-commerce companies.

Matt Szymczyk, chief executive of Zugara, says the typical conversion rate (turning shoppers into buyers) for online customers is 2 percent to 3 percent. That’s because online shopping is optimized for browsing, investigating, and accomplishing a transaction. But it’s not optimized for an engaging experience, which is what you get in the malls.

With Zugara, a female shopper could effectively take a dress off the rack and hold it up to herself. She clicks on the “See how it looks” button, allows access to her webcam, takes a few steps back and then sees what would essentially be a mirror in the store. The computer screen will show her an image of how that dress would look on her. She can then better judge if the color and style are right for her. If it’s not for her, she can tell that right away and not deal with the hassle of a return.

If she wants a second opinion from friends, she can snap a photo of the faux dress and share it on Facebook for immediate feedback. The social network thus becomes a tool to help shoppers validate their potential purchases. Meanwhile, the retailer and the dress maker get word of mouth marketing on Facebook. Zugara says studies show that 76 percent of people who shop online say that advanced product viewing features are extremely or very important to a purchase decision.

You could call this “augmented retail,” and the technology is actually called Markerless Augmented Reality. Apparel retailers worldwide can benefit from this kind of tool, which could appeal to younger shoppers in particular. Self-funded Zugara was founded in 2001 and has 13 employees. Competitors include Holition. While you have to print out a marker to make Holition work, you don’t have to do so with the Webcam Social Shopper. The company has five clients and three partners and is in talks with a number of other companies.

Szymczyk has a background in creating interactive marketing strategies for Fortune 500 clients, while Hans Forsman, vice president of creative and user experience, has a focus in user experience design.