When Facebook founder, Mark Zuckerberg, announced that his firm will henceforth be known as Meta, you may have first heard of the ‘Metaverse’, then.
The word has been used since the early 1990s, but it is currently being used to cover a wide range of physical and virtual world connections.
Residents of the Metaverse will feel as if they are a part of what Zuckerberg refers to as an “embodied internet.”
Users will be brought together for shared experiences and community that traditional 2D webpages and applications could not provide.Increasingly sophisticated computers, interactive platforms, and virtual reality devices will enable all of this. So, is the Metaverse the future of retail?
“The next big thing will start off looking like a toy,” American venture capitalist Chris Dixon famously quipped, an observation he feels is at the heart of why we regularly dismiss discoveries that, only in hindsight, show to be instruments of significant technical and societal change.
Much of our initial dismissal stems from the fact that, in their infancy, many revolutionary technologies “undershoot” the demands and expectations of users, as author and academic Clay Christensen phrased it.
The initial telephones were unstable and limited.
After 127 years, the first Skype calls were prone to stalling and breaking connections. It would have been easy to reject both technologies as frivolous toys with no long-term value, as many did.
However, as Christensen pointed out, these same technologies frequently progress at a rate that far outpaces customer demands.
All of this is important today because we are surrounded by a slew of technologies — virtual reality headsets, augmented reality technology, gaming platforms, crypto currencies, blockchain, non-fungible tokens (NFTs), virtual goods, and more — that, while still toy-like, are bringing us closer to a place called the “Metaverse,” which will fundamentally alter how we work, play, and shop, among other things.
Metaverse101
The term “metaverse” can be traced back to Neal Stephenson’s 1992 science fiction novel “Snow Crash,” which is reported to have changed the perspective of people like LinkedIn creator Reid Hoffman, drastically altering his thoughts on the future of technology.
Simply put, the Metaverse is the collective, persistent, parallel reality generated by the sewing together of all virtual worlds to build a cosmos that we can travel through without difficulty.
“Persistent” is the essential word here.
The virtual world of the Metaverse will continue to evolve and alter even when users are logged out, much as the physical world does not stop working when you go to sleep.
To put it another way, unlike today’s internet, where each of us is essentially pushing and pulling static information from a server in a largely asynchronous manner, the concept of a Metaverse will allow us to enter a “persistent” (always on) alternate reality where we can interact with people, places, and things in a completely “synchronous” (real-time) manner.
The Metaverse is, in essence, a parallel universe in which we can work, play, and socialize. To be clear, this isn’t just a virtual replica of the internet as we know it today. The Metaverse is what completely replaces the internet as we know it today.
While the idea of such a parallel world has been discussed for more than two decades, our collective experience with the pandemic — cycling through lockdowns, social distancing, and the intense feelings of disconnection and isolation that they produced — has only accelerated our collective imagination around the creation of an alternate reality where one can interact in real-time, at any time, with others (potentially thousands or millions of others) and halves the time.
A world in which everybody can travel whenever and wherever they want, without restriction. Any experience becomes conceivable and accessible in this universe.
There are already companies laying the initial foundations of such a new world as we speak. For example, Epic Games’ Fortnite, released in 2017, offers three various play modes, including a “battle royale” option in which up to 100 players compete in a last-person-standing free-for-all. “Fortnite is a game,” Epic Games creator Tim Sweeney said in 2019 when asked if the game was a platform or a game.
However, please re-ask that question in a year.” Epic began to answer that question over the next 12 months by expanding Fortnite into its own realm, blurring the barriers between real-life and virtual encounters. For instance, artist Travis Scott held a five-concert series in Fortnite that drew about 50 million people. And Epic is far from alone in seeing gaming as a portal to the Metaverse.
Twitch, Amazon’s livestream gaming network, has more than 140 million monthly unique users who viewed nearly 2.2 billion hours of live streamed video in April alone. And it’s gotten the attention of brands. Burberry, for example, became the first fashion brand to broadcast the launch of its latest collection on Twitch in the fall of 2020, attracting over 40,000 people. It would be naive to believe that Amazon doesn’t want to be Metaverse’s principal shopping outlet.
Facebook, too, sees the Metaverse’s promise, as indicated by its 2014 acquisition of virtual reality headset maker Oculus and, more recently, its construction of Facebook Horizon, a virtual reality platform now in closed beta. Horizon, in its current form, allows individuals and small groups to connect and participate in a wide range of activities, effectively allowing users to enter a virtual, real-time version of Facebook.
Facebook, like Roblox, believes that the experiential content environment in Horizon will be shaped primarily by users and organizations.
The underlying message here is that the Metaverse will be constructed jointly, by all of us — individuals, brands, technological businesses, government and non-governmental organizations — anybody and everyone.
While firms such as Facebook, Google, Disney, and Amazon will each develop their own distinct presences and experience platforms within the Metaverse, they will all need to agree on a set of shared protocols for cross-domain interoperability and accessibility across all device types. Because the Metaverse’s ultimate potential can only be realized when each of these “worlds” — be it Fortnite, Facebook Horizon, or millions of others — is stitched together into a cosmos where we may teleport from one world or experience to another in real time.
Economic Value in the Metaverse
In a boundless, digital environment, how does one produce economic value?
The worth of an object in the physical world is determined by a few important dynamics, including its authenticity, scarcity, and ownability. Until now, the internet has been basically limitless in size and quantity of digital content due to its very architecture.
However, most digital things have become commodified as a result of this same limitlessness. After all, the internet was created to facilitate file sharing rather than file purchase.
For example, how much is a LeBron James highlight film worth? Well, not much if I just rip it off YouTube. After all, there’s nothing about it that’s fundamentally restricted, authentic, or unique. Although anyone can download the same film, none of us can genuinely claim ownership of it.
Nonetheless, at least one LeBron James highlight film is for sale on NBA Top Shot, a platform that allows fans and investors to buy, sell, and exchange officially licensed sports video highlights, for more than $230,000.
With a few notable exceptions, there is little difference between the worthless LeBron footage from Google and the $230,000 clip on Top Shot. Top Shot verifies each clip and grants exclusive rights to these one-of-a-kind treasures.
Similarly, any digital object — be it art, apparel, a LeBron James portrait, or even experiences — may now be authenticated as real, verifiably limited, and exclusively ownable, thanks to blockchain. Because of these factors, these one-of-a-kind and limited assets, also known as NFTs, can be valuable.
Consider the case of Pokémon cards. The cards themselves are essentially worthless. The rarity and authenticity of particular cards are the only factors that contribute to their remarkable worth. For the first time in history, the same essential tenants of value may now be applied to digital assets.
In reality, the sale and acquisition of NFTs has accounted for about half a trillion dollars as of this writing. The selling of digital art and collectibles now accounts for the majority of this.
Mike Winkelmann, a digital artist who goes under the moniker Beeple, for example, has never gotten more than $100 for one of his paintings until lately. Winkelman, on the other hand, sold an NFT of his work for more than $66,000 USD in late 2020.
The same sculpture sold for $6.6 million a few months later. And if that wasn’t enough, in March 2021, the artist sold a $69 million digital collage at Christie’s auction house. Why? Because the authenticity, rarity, and exclusive ownership rights can now be verified via a blockchain ledger.
Clothing, collectibles, and even virtual real estate — yes, real estate — are already being influenced by these fundamental economic concepts. Virtual real estate assets such as the New York Stock Exchange, which recently sold for $23,000, are now available through platforms like Upland.
Who would pay that much for a computerized depiction of the New York Stock Exchange? Someone who believes that as more people invest and prime assets become scarcer, the value of digital assets will logically increase. It’s as simple as supply and demand.
Retailing in the Metaverse
When it comes to retail, some predict the construction of shopping venues in the Metaverse, such as stores, malls, and more.
This is most likely due to myopia. It would be both unimaginative and unproductive to simply move industrial age shopping conceptions and conventions to the Metaverse.
The Metaverse’s creation will allow us to break away from the current industrial shape and function of physical stores, allowing us to go light years beyond even today’s best digital shopping experiences.
Eventually, practically all of us will spend time in the Metaverse socializing, learning, working, and amusing ourselves. Some people may opt to spend nearly all of their waking hours there, considering the actual world to be tedious, limiting, and inefficient in comparison.
The ratio between the virtual and real items we own will substantially increase as we spend more time in the Metaverse. Who wants to go to two distinct virtual parties in the same virtual weekend?
Status symbols like the virtual store you own, the virtual clothing and jewelry you wear, and the virtual cosmetics you use will become just as essential as real-world purchases and assets as we spend more time in the Metaverse.
Brands will take advantage of this desire by developing an ever-expanding range of virtual goods at real-world pricing. Indeed, the amount of time spent in the Metaverse as opposed to the real world might be considered a status symbol in and of itself.
Nobody knows for sure, but most experts think that the Metaverse is an inevitable stage in the convergence of humans and technology, as well as an evolutionary blending of reality and virtuality, even if it is years or even decades away. While the Metaverse may take decades to emerge, organizations developing that future will be making progressively large expenditures today and in the future.
For example, Scuti is a startup dedicated to “bringing to life the world’s first retail marketplace through games and allowing companies to sell and ship directly to game players.”
Another start-up, Obsess, creates computer-generated landscapes and experiences for major fashion and beauty brands. Ikea, for example, is already utilizing augmented reality technology in its Studio app to allow users to build their own environments.
L’Oréal, the world’s largest cosmetics company, has created a complete line of virtual cosmetics.
Gucci has also started selling virtual clothes, with the unveiling of the Gucci Virtual 25 sneakers, designed by Gucci creative director Alessandro Michele and retailing for $12.99 per pair.
Each of these items is a little step toward the Metaverse, despite the limitations imposed by today’s technologies and protocols. Growth will be sluggish and gradual until, as with the internet, enough infrastructure, developers, and users come together to produce a tipping point.
Smart brands will buy virtual real estate and pay builders to expand their brand presence and experiences, selling both digital and physical things to consumers who spend time in both realms.
Laggard brands and organizations will be trapped in the real world, and even worse, in the ghetto that the legacy internet will morph into.
Physical And Digital Retailing Are Finally Coming Closer
In the retail industry, omnichannel is now an already 2020 trend.
According to McKinsey, physical sales are growing, not declining, since consumers demand a more personalized and unique shopping experience, which has reduced retail’s “anxiety.”
This corresponds to a significant increase in internet sales.
Everything leads to the metaverse as the ultimate e-commerce, digital, and physical experience unifier and solution.
The impression of “presence,” or the capacity to interact with other people, products, avatars, and other items, shortens the experience to previously inconceivable lengths.
This is enhanced by the capacity for co-creation, or collaboration amongst digital worlds in the field.
But let’s look at it from a practical perspective. The metaverse has entered the retail market for the first time.
For example, the collaboration between Meta and Carrefour is now formal and will apply to all of the group’s marketplaces.
Everything points to the metaverse as the ultimate unifier and solution for e-commerce, digital, and physical experiences.
The sensation of “presence,” or the ability to interact with other people, products, avatars, and other objects, reduces the time of the experience to previously unthinkable levels. The ability for co-creation, or collaboration, among digital worlds in the field aids this.
But let’s take a look at it from a practical standpoint. For the first time, the metaverse has penetrated the retail sector. For example, Meta and Carrefour’s relationship is now formal and will apply to all of the group’s marketplaces.
And then finally, there’s a fusion between Physical and Digital Retail
In the retail industry, omnichannel has been a popular trend at times. Sell through all channels, both traditional and non-traditional, physical and digital, if you like.
Physical sales are growing, not declining, since consumers demand a more personalized and unique shopping experience, which has reduced retail’s “anxiety.” This corresponds to a significant increase in internet sales.
Everything leads to the metaverse as the ultimate e-commerce, digital, and physical experience unifier and solution. The impression of “presence,” or the capacity to interact with other people, products, avatars, and other items, shortens the experience to previously inconceivable lengths. Co-creation, or collaboration between the digital and physical worlds, is also possible.
But let’s look at it from a practical perspective. The metaverse has entered the retail market for the first time. For example, the collaboration between Meta and Carrefour is now formal and will apply to all of the group’s marketplaces.
The data back up this rapid advancement.
According to a Morgan Stanley study, the metaverse will account for 10% of luxury purchases in the next few years.
As a result, marketing will have to renounce all prior strategies, reinvent itself, and re-establish itself in this new virtual advertising universe. In this context, the importance of retail cannot be emphasized.
Two of the most fundamental shifts are human-commercial linkages and personalized experiences. Thanks to the metaverse, users will be able to be served virtually by an avatar that understands and adjusts to their needs and can quickly satisfy them.
To put it another way,
The metaverse is unquestionably the next retail revolution.
The metaverse and the future of the big retail brands…and the not so big ones
The most potent motivator of corporate digital change has been the epidemic. And, as we previously indicated, the concept of the metaverse has risen to prominence in the digital and technology sector in recent months, particularly with Facebook’s metamorphosis into Meta.
Fashion and retail are gaining traction, despite the fact that entertainment and video games are the fastest expanding sectors in the globe.
How far would you like to travel?
Some digital clothing, which can only be worn online, is already more precious than its physical counterparts. It is, without a doubt, a historic revolution with unforeseeable implications.
In less than 5 minutes, Nike sold virtual sneakers worth more than 3.5 million euros. As a result, the majority of large retailers are opening virtual-only stores, which are expected to become the standard by 2025.
For all of these reasons, according to a survey done by Business Reporter, 70% of significant corporations will have a presence in the metaverse within the next five years.
Generation Z and millennials have set their sights on a virtual market that will have a significant impact on many facets of our lives, such as the cloning of genuine offices where we may meet and work. It’s the “hybridization” of our reality. As a result, by 2025, the metaverse is expected to account for more than half of all daily activity.
In early 2022, H&M wants to open a store in the Ceek City metaverse. This was disclosed shortly after the business held an event to showcase its new H&M Innovation Circular Design Story collection, during which attendees were able to create digital duplicates and take part in a spectacular virtual procession as protagonists.
It all comes down to recreating one of those flagship stores down to the last detail, including promotional posters with international models and other promotional themes. Users’ virtual avatars would be able to walk around the store’s hallways just like they would in a real store. The collections will consist of digital apparel that can be purchased with NFT assets or other currencies. To put it another way, we’re beginning to dismantle the barriers that still separate the physical and virtual worlds.
Gucci, Adidas Originals, Balenciaga, and Ralph Lauren are among the brands that have jumped on the digital clothing bandwagon in the metaverse.
The boom of cryptocurrencies and NFTs
What makes the universe of the metaverse possible? Cryptocurrencies, its underlying technology, blockchain, and another technology, NFTs, are all rapidly growing technologies (Non-Fungible Tokens).
Businesses are aiming towards Web 3.0, which encompasses 3D, virtual reality, and augmented reality. It is already here, despite the fact that it is the future.
The goal is to achieve a sense of living in the digital world that is as near to real life as possible. The importance of visual realism and interaction with the virtual world should be emphasized.
Here, non-fungible tokens (NTFs), which are revolutionizing the retail industry, come into play. These are digital files that are blockchain-encrypted and may be resold or swapped online. They are genuine, original, limited-edition, one-of-a-kind, and unrepeatable.
By 2022, companies will have invested tenfold in the metaverse thanks to these digital assets, or unique and non-exchangeable tokens, which we may identify with ‘assets’ or digital objects. As a result, by 2024, the metaverse is expected to be worth $800 million.
The coming together of the physical and virtual worlds breathes fresh life into the ever-evolving concept of shopping.
As consumers became more comfortable with digital purchasing on Amazon and erstwhile brick-and-mortar businesses embraced the new format, the Internet hastened the decline of retail shopping malls around the world. However, people prefer the visceral, real purchasing experience that online retailers provide.
The final word…or words.
In the Metaverse, the future of retail will provide customers with an experience that is not limited by traditional design.
Designers and programmers will be able to create a store in any style they want, from an old-fashioned mall to the moon’s surface.
Obsess, a platform designer, is creating shopping experiences that connect large retailers with customers all over the world.
Experiential gadgets such as the Oculus headsets are already being used by VR sites to allow users to explore virtual worlds and games. Beginning to shop in these new imaginative worlds will be a logical progression.
The digital avatar has long been understood by online gamers and chat room users as an image or graphical rendering used to represent an individual in the digital realm.
Online users will be able to shop and interact with things in the virtual world using a digital avatar in the Metaverse of their own design and/or choice Imagine utilizing your virtual avatar to interact with products and other people in this new type of store.
This experience may at first resemble typical consumer behaviors, but it will eventually evolve into its own distinct experience.
Of course, the future of retail in the metaverse will allow you to shop for your avatar as well as with your avatar.
Stores might provide one-of-a-kind clothing and accessories that allow customers to customize their online persona to better represent their physical or idealized selves. In order to combine the actual and virtual worlds, physical product providers may add digital gear for avatars with qualified orders.
Although shopping in the Metaverse may be a new notion for many consumers, it is already being adopted by a variety of brands and businesses. Aside from avatar shopping, the following are some of the most common retail metaverse use cases:
- Virtual Reality – Some shops are already working on platforms that take use of the virtual reality experience afforded by devices like the Oculus Rift.
- Integrated Branding – Brands have been paying for product placement in movies and television shows for a long time. Companies like Procter & Gamble and Hellman’s are now collaborating with online gaming to be a part of the digital world.
- Selling non-fungible tokens (NFTs) – Major brands such as Crockpot sell digital renderings of things for purchase in the digital realm.
- Augmented Reality – Retailers such as Amazon and IKEA have begun to invest in augmented reality so that users may use phone apps to see how a certain item would look on their physical bodies or in their homes and offices, in addition to picturing products in the digital world.
- Digital Avatar Accessories – Major companies such as Gucci and Louis Vuitton have started selling digital avatar accessories like handbags and jewelry.
Customers have already begun to enjoy virtual purchasing experiences thanks to companies like Alibaba. Alibaba has been offering special purchasing opportunities to their clients for years, utilizing China’s annual shopping holiday, Singles Day. The establishment of the virtual store is the most recent of these experiences.
Shoppers can tour a virtual store identical to any other physical business using VR headgear or disposable cardboard holders coupled with their cellphones.
It’s an exciting approach for merchants to deliver a one-of-a-kind experience to keep customers coming back to their websites and making purchases.
As the Metaverse is constructed and platforms are established, there will be a greater demand for people who are skilled in areas like AI, machine learning, and data science.
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