The Metaverse and eCommerce: What should we expect?
The term ‘metaverse’ accelerated to the forefront of popular culture at the back end of 2021, coinciding with Facebook’s rebrand to Meta.
Since then, we have seen big business dip its toe into the metaverse, with early adoption driven by mega-budget household names like Nike, Burberry, Vans and H&M.
For the small-to-medium-sized retail player, it poses questions:
Should we be discussing our own metaverse strategy or is this just another pseudo-tech fad? What should we expect over the next few years? And how could the metaverse affect my eCommerce business if we do experience mass adoption?
Let's talk about it.
The Metaverse and eCommerce: Establishing context
First, we should establish context so you can fully understand just what on Earth the metaverse is, and why it’s important to keep at least one eye on the developments in this space.
What is the Metaverse?
You’ve heard of a parallel universe before, right?
You should think of the metaverse as a digital equivalent. It’s the term given to the virtual world that exists side by side with the real, physical one that we all experience day to day.
The metaverse is comprised of online spaces that are established by brands and creators, such as the one Meta is developing.
These spaces offer individuals the ability to interact with one another through:
…a combination of virtual reality, mixed reality, augmented reality and blockchain technology referring to online 3D worlds accessed via computer, smart devices, augmented reality and virtual reality headsets.
eCommerce opportunities in the metaverse
As metaverse development continues the potential is there for this parallel, digital universe to serve as an alternative world for people to exist within.
Represented by their digital avatars, people will be able to perform some of the same activities that they do offline - aside from the social aspects, there are also commercial opportunities, particularly shopping and brand engagement in this new, immersive way.
Businesses are already offering virtual shopping experiences in the metaverse.
This short news report from TODAY demonstrates how the likes of Tommy Hilfiger, Gucci and Balenciaga are creating virtual spaces that consumers can engage with.
In April 2022, H&M launched their first ‘virtual showroom’ where:
“...press and media could walk around, talk to other guests, and view the virtual collection, which was showcased as high-quality visuals — photo-realistic 3D rendered cloth materials and garments animated to simulate the movement of the cutting-edge materials.”
It’s about being able to offer a real-time, virtual experience where consumers can browse product collections from the comfort of their own homes.
As the technology continues to develop, it is feasible that elements of augmented reality will be introduced into the mix, allowing consumers to digitally ‘try on’ the products that they have selected.
Speaking on ‘how to get dressed in the Metaverse’, H&M suggest:
“New technology allows us to engage even more with our customers, so we can be more creative and fun. Digital fashion includes everything traditional fashion offers—from T-shirts to ball gowns—but these pieces are not physically manufactured, or tangible in any way.
Instead, garments are created using 3D and animation design software. Individuals “wear” digital clothing through gaming avatars, augmented reality (AR), or digitally edited photos.”
Brand engagement within the metaverse
Nike was one of the first businesses to create their own virtual world by introducing NIKELAND on Roblox.
Here, users are able to dress their avatars in Nike-branded apparel that is purchased by virtually visiting the NIKELAND store - something that the latest reports suggest over 20m people have now done.
The metaverse allows these global giants to create fun tools that keep consumers interested and engaged with their brand, akin to Nike’s Running Club mobile application. Online forums discussing Nike apparel have long since been established. It’s simply an extension of that into the metaverse.
It’s easy to serve a personalised experience in the metaverse
eCommerce personalisation is the process of creating personal interactions and experiences with customers by understanding their previous purchases, browsing behaviour, location and other differentiating factors.
For example, an eCommerce business could use a website personalisation strategy to serve customized experiences to their users, displaying priority products first, and catering to the customer’s needs and desires.
The metaverse offers even greater personalisation potential. With the introduction of AI technology, it is possible to track the customer in even greater detail, as the metaverse offers a platform for broader human activity beyond simply clicking buttons on a website.
The metaverse breeds a new age of influencers
With fashion comes influencers, and as the early exploration of the metaverse is led by fashion brands, a new age of influencers may well be upon us. In fact, VirtualHumans suggest that there are already over 150 virtual influencers on social media.
Let’s take a step back first. An influencer is anyone who can influence demography to create a positive demand for a product or service. It’s a marketing tactic that the general public has been growing increasingly conscious and wary of: only 23% of people believe content from celebrities and influencers impacts their purchase decisions.
So, what’s next?
Using green screens, 3D animation and motion graphics we are seeing real people create virtual selves that serve as influencers. It is possible that we could experience the ‘next age’ of influential content.
What’s stopping this from happening tomorrow?
Metaverse development remains in its infancy and there are plenty of challenges to work through before these opportunities can be realised in full.
Is this what we want?
Do people actually want a digital extension of themselves, or is this another pseudo-tech idea that falls short of its predicted potential?
According to YouGov research, only 10% of consumers in the UK say they would be interested in going shopping in the metaverse and this would make sense when we consider that 51% of the metaverse user base is aged 13 or younger.
What interest do they have in online shopping? At this stage in their lives, they are far more interested in the immersive experience that the metaverse can provide, which leads us to our next point.
The metaverse is overly gamified in its current form
Fortnite, Second Life and Roblox (the biggest virtual world of all) have given us glimpses of virtual spaces and invited brands into their ecosystems.
But they are online games, and if there’s one thing we can say with certainty, it’s that gamers are constantly seeking out new experiences to keep themselves entertained.
Can the rate of metaverse development keep up with the ever-shortening attention span of the younger demographic?
It’s a fragmented, clunky space
The metaverse consists of various ‘worlds’ hosted on different platforms. We have the gaming-based ones mentioned above, and new, blockchain-based developments that are launching all the time, such as Decentraland.
Consumers are being asked to create various digital versions of themselves, which is problematic. There is no unified experience from platform to platform and consumers will not wish to pay multiple times for similar experiences.
That said, it can also be argued that no one company should hold a monopoly over the metaverse experience.
The high entry barrier for the consumer
Virtual spaces on the likes of Roblox are easy to access as they are essentially computer games, and often free to download. The more immersive metaverse experiences will require VR headsets and high-specification computers to run efficiently.
This technology is expensive and not likely to be found lying around in the average UK household. Technology aside, metaverse usage will also require a certain level of technical ability when using digital equipment.
Metaverse development is expensive
There’s also a high barrier of entry for businesses.
On average, the cost of Metaverse game development can vary from $30,000 to $300,000, depending on the various factors mentioned above.
It’s no surprise that the early testing and development have been led by some of the world’s biggest companies. We are some way off from mass adoption in the world of business.
Hesitancy around laws and safety
We need only look at the raging debate around cryptocurrency law to understand that the metaverse’s legal landscape could change quickly. This creates a hesitancy for other big brands to get involved.
A Forbes article explains:
As the metaverse becomes a fully realized, interoperable and persistent platform, the need for a codified and clearly defined system of applicable laws will be tremendous. While perhaps a valid provenance for the governing law in the metaverse, our current legal system may be as foreign to the needs of the metaverse as Hammurabi's code would be to our present-day IRL world.
So, what should we expect?
The metaverse does not offer an immediate opportunity to the general eCommerce business in its current, emerging state.
Metaverse growth is going to be driven by web 3.0 technology, namely:
- Blockchain technology
- Virtual reality
- Augmented reality
- Internet of things
- Artificial intelligence
- Machine learning
These are technologies that are developing in their own right, so the metaverse is still finding its feet and being tested by the world’s biggest companies.
Notably, Amazon is yet to move on anything metaverse related but any noise from them would almost certainly indicate that there is money to be made in this space.
As a soft prediction, it is possible that a more accessible solution will be rolled out in the years to come, with small-to-medium retailers able to join a metaverse ‘marketplace’ that offers them the ability to create their own virtual store, hosted by a platform provider, at a more affordable price than an outright metaverse development project of their own.
This feels like the play a company like Amazon could well make. As Meta seek to own the social aspect of the Metaverse, another global heavyweight could move to own the virtual ‘shopping mall’.
One thing is for certain, a new age of internet usage is coming, and it is going to be driven by these more immersive experiences. It is expected that the metaverse market will touch $ 1 trillion by 2030.
All eCommerce businesses should maintain an active interest in metaverse developments, watching and learning from these global giants as to how they use their budgets to explore the possibilities outlined in this article. They will spend billions testing and learning, we can cherry-pick what works best for our own strategies in the years to come.
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