The Metaverse is the New Mall
Retail brands have an unprecedented opportunity to help create it
Facebook’s rebrand as Meta underscored how timely it is for retailers and brands to build experiential e-commerce into their business strategies today in order to establish a distinctive presence in the metaverse tomorrow. As the next generation of the internet, the metaverse is a connected, 3D virtual world where consumers, through their individual avatars, are able to interact in real time with the digital environment and everything and everyone in it. In this virtual universe, users participate in activities like shopping, gaming, learning, working, and attending concerts and events—but they also use the space to just hang out and socialize with one another.
That means, essentially, the metaverse is the new mall.
Morgan Stanley says metaverse gaming and NFTs will constitute 10% of the luxury goods market by 2030 — a $56 billion revenue opportunity. Today, the largest metaverse platforms are Roblox and Epic Games’ Fortnite – with 45 million daily active users and 350 million monthly active users, respectively. The metaverse will evolve quickly and new offerings that aren’t strictly focused on gaming will emerge, drawing their own purpose-based communities of users.
Forward-thinking brands and retailers are already creating immersive e-commerce experiences such as 3D virtual flagship and pop-up stores and envisioning how their brand and products should appear in the metaverse. Technology advances have enabled immersive online shopping experiences that are richer, more dynamic and more interactive than anything we’ve seen before.
Over the next decade, the spending power of today’s teenagers will increase significantly, and this cohort’s expectations will define the future of experiential e-commerce within the metaverse. As digital natives who grew up interacting online and living much of their life through mobile devices, they’ll expect the entire shopping journey to be personal, interactive and customizable.
Here are 4 factors that will play a major role in defining the future of experiential e-commerce:
1. The Metaverse Is Taking Shape
Brands will create their own environments on metaverse platforms devoted to shopping and the spaces will allow consumers to do much more than just browse and purchase. Shoppers will be able to interact with one another and with brands and their products, as well as design, clothe and accessorize their digital avatars; attend events and fashion shows; and participate in other activities. According to a Wunderman Thompson Intelligence Report Into the Metaverse, “Digital engagement is moving from passive consumption to active creation–shifting creative power to the user.”
The emerging class of products that bridge the physical and digital worlds will take center stage in the metaverse. Brands ranging from luxury leaders to CPG makers are already selling digital assets as NFTs and giving consumers the option to buy physical versions of some of the virtual items, too. Dolce & Gabbana, for example, recently sold a collection including both NFTs and physical items at auction for the cryptocurrency equivalent of $6 million.
The metaverse will be enabled by advances in computer hardware and software, including an increased ability to represent digital interfaces in immersive 3D graphics that mirror the real world, as opposed to the 2D “page” interface that’s still typical on most e-commerce sites. Brands need to begin defining how they will represent themselves in the metaverse because shoppers—especially younger demographics—will expect to seamlessly engage with every aspect of their online lives throughout the connected virtual world we’ll inhabit.
2. E-Commerce Will Become More Natural and More Social
Technology is driving a more futuristic e-commerce experience, but it’s also enabling online shopping to become much more natural, social and intuitive—in essence, more like what we’re used to in real life, where we shop in three dimensions and often in the company of others. Shopping in a 3D, photorealistic virtual store with a few pals who can provide real-time advice via live video about a particular fall jacket or shade of lipstick will soon become the norm. Shoppers and their avatars will be able to see, hear and follow each other throughout virtual stores, providing inspiration and feedback to one another.
This social shopping capability will go beyond what consumers have come to expect from the livestream shopping experience. Participants will be able to choose who they want to invite to a private shopping outing in a virtual store and interact with influencers and sales associates via video or avatars in the immersive environment.
3. The Lines Between Gaming and Shopping Will Vanish
The largest gaming platforms have built-in communities of players where brands can find new audiences for their products. Younger generations of consumers who have grown up playing multiplayer video games and watching esports already expect to be able to interact with other people and with brands everywhere they go online. In the future, these consumers will expect the entire shopping journey, including virtual stores, to be customized and rendered for them dynamically in real time—because that’s what they’re used to in the gaming world.
Brands ranging from Ralph Lauren, Gucci and Burberry to MAC and Gillette have allowed gamers to purchase or win virtual clothing, accessories and skins that they can use to personalize their avatars in various games. The next step is full integration of e-commerce shopping and gaming. And that won’t be limited to luxury players, as brands across price points are already seeing strong consumer engagement with their immersive virtual store experiences.
4. VR Headsets Will Make Shopping Irresistibly Immersive
Virtual-reality headsets like the Oculus, owned by Meta, faced some stumbles in consumer adoption when they first hit the market, but the technology has rapidly improved and the pandemic has proven a tailwind for the devices. Consumers flocked to multiplayer video games and online fitness platforms like Peloton and Lululemon-owned Mirror while stuck at home during lockdowns and there’s now a whole new audience that knows firsthand how much more exciting and realistic virtual worlds can be when experienced through a VR headset.
Statista forecasts that more than 26 million AR and VR headsets will be sold each year by 2023 and a recent survey found that nearly a quarter (23%) of Americans have now used one of the devices. VR headset ownership still skews male, but with large numbers of women continuing to join at-home online fitness platforms, the ratio is shifting.
Some brands are already building headset-enabled experiences into their e-commerce and in-store strategies. Shopping in a virtual store environment using a VR headset is an amazingly immersive experience that can’t be replicated on a laptop or mobile phone.
Morgan Stanley states in their “Luxury in the Metaverse” report, “It is no surprise that gaming tends to be a past-time for younger consumers and likely always will be. The transition to fully immersive virtual reality (VR) Metaverse experiences also naturally lends itself to the same younger cohorts. VR is not a prerequisite for Metaverse experiences, nor gaming platforms; yet it adds to the immersive experience, encouraging longer game time.”
As retail companies experiment with novel ways to sell, reach new consumer audiences, and drive sustainability, interactive shopping experiences will become table stakes for brands in every category. We’re quickly moving toward online store environments that will feel even more sensorially rich and immersive than physical store environments and that can be personalized for shoppers in real time. Companies are already building and hosting branded, 3D virtual worlds on their own websites and these spaces will be part of metaverse platforms in the near future. By creating their own visually unique virtual planets, islands, stores and more, these brands are presenting products in a discovery-driven manner that’s never before been possible online.
One of the things that sets these future-looking companies apart is that they’re thinking about virtual selling organizationally and creating specific line items for experiential e-commerce in their budgets. It’s key for all brands to have three- to five-year plans for their experiential e-commerce and metaverse initiatives. With the technology enabling these experiences evolving quickly, all brands will have to watch the space closely to see what developments align most closely with their values, business model and target audiences and invest in those areas accordingly.
At some point, the word “metaverse” itself will fall out of common use, just as “cyberspace” has over time. We’ll all just think of—and refer to—this immersive virtual space as “the internet” rather than as some separate part or next generation of it. For brands, having a carefully crafted presence in this virtual world will be as important as having a simple e-commerce website today.