Augmented reality (AR) has emerged as a new interactive technology that enables marketers to craft an immersive experience for customers. The technology complaints the physical environment with virtual objects, and thus have the unique power to put the (virtual) product in the hands of the consumer. This provides marketers with a new option for reaching out and engaging with customers. Although the AR market is estimated to grow exponentially by the year 2023, little is known about how AR-applications on smart devices influence customer experience. This thesis addresses the research gap by exploring how IKEA Place, an AR-application, influences customer experience. By using a conceptual framework of online customer experience we explore how different antecedents influence the experience with AR. Furthermore, the study also highlight the differences between a website and an AR-application, and thus give a more nuanced understanding about AR. As the majority of the research on AR-technology has a quantitative approach, this study was done through a qualitative study using a quasi-experimental design. The empirical result indicates that aesthetics, ease-of-use, telepresence and assortment influence customer experience extensively. Moreover, the result also suggests that hedonic value influences the augmented experience more than the utilitarian, and thus customers do not perceive the application to fulfil their utility needs.