Retail Metaverse- Virtual fast becoming a reality
How retailers can execute on their metaverse strategy.
Brands & retailers are looking for new emerging platforms to interact and connect with their consumers. Enabling shoppers to experience their brand in a virtual environment providing a memorable and an immersive experience is quickly becoming the next frontier in Retail. Virtual is now truly becoming a reality and the metaverse is definitely here to stay.
As per Bloomberg, the size of the pie is large with the global metaverse revenue potential reaching around 800B by 2024 with contributions coming from platforms, experiences and transactions in virtual reality. The opportunity is huge with multiple players racing to establish an early movers advantage in this metaverse led commerce ecosystem. But are the retailers ready for metaverse and more importantly, how can they ride what seems to be the next big wave? But before we get into this further, let me first clarify the terminology to avoid any confusion.
Metaverse or Web3
Metaverse is a network of 3D virtual worlds- an alternate reality focused on social connection- where anyone can navigate the virtual ecosystems as digital avatars. These virtual worlds are a combination of internet, augmented and virtual reality, each with their own economy, content, media and commerce. Metaverse is built leveraging technologies like Spatial computing, AR/VR/XR, photogrammetry, blockchain, digital currencies, edge computing, NFT’s etc. Web3 on the other hand is what we call a “decentralized web”- based on blockchain (peer to peer networks) - a secure permissionless internet which the users can access without disclosing their personal information or compromising their privacy. Infact, both metaverse & web3 are inter-related as metaverse can have a decentralized structure. However, Web3 is a new technology framework which is much broader in scope than just providing an immersive experience. Bottomline is that there is an intense focus to leverage all these technology innovations to co-create life-like unique & hyper personalized experiences leading to unparalleled shopper engagement & loyalty. The goal here is to capture the hearts & minds of the new generation and meet the shoppers wherever they are in their purchase journey.
Retailers rushing to get a slice of the virtual world.
Metaverse is now front and center in every discussion- kind of similar to the excitement we saw around Cloud and IoT a few years back. This focus on metaverse can no longer be brushed off as these virtual engagements are now having a big impact on the customer purchase journeys- how they discover, engage and eventually buy. In addition, brands are now using the virtual platforms to directly engage, influence and in many cases, disintermediating the retailers. Hence, retailers can no longer afford to be on the sidelines. Not wanting to be left behind, retailers are scrambling to get a piece of this action, registering for metaverse related trademarks and some rebranding themselves putting their stake in the ground. It is interesting to see how this is now beginning to influence retailer’s corporate strategy & business models, thereby warranting a relook at their technology roadmaps.
But there are challenges ahead..
The economics of the metaverse is not yet viable as the tech required to make this ‘virtual a reality’ is still evolving and the hardware/peripherals are expensive and not mainstream. Apart from this infrastructure & accessibility challenge, talent and skilled workforce is scarce and a bottleneck for building these platforms and experiences. In addition, a fragmented ecosystem with no interoperability within various virtual worlds is a huge deterrent for adoption and scale. Consolidation and weeding out is bound to happen but for now, it is free for all. Last but not the least, we cannot discount the potential issues around trust, lack of a regulatory framework, privacy and not to forget the negative impact it may have on mental & physical health.
For retailers, it is indeed a tough ask to strike the right balance between virtual & reality. Most are still wary and carefully watching the metaverse debate unfold from the sidelines. But can they afford to let this pass? The simple answer is No. But how can retailers execute on their metaverse strategy?
Keep the innovation engine running
Retailers need to continue exploring this space further and keep their innovation engine running. Primarily, it is essential to have clarity on your retail strategy and investment priorities. Depending on your digital maturity, there could be different approaches to executing your metaverse strategy.
Retailers who have had a fast start are the ones who stay focused on their shopper journeys and approach their digital commerce infrastructure with a channel less approach- meaning metaverse is another engagement platform for which retailers need to be ready for, incorporating technologies and strategies which enable them to meet their consumers wherever they are- brick and mortar stores or ecommerce platforms, social channels or in this case metaverse. The key, however, is to be able to offer consistent and a fully integrated experience across multiple touchpoints in the purchase journey.
Here are the 3 ways retailers can start their metaverse journey
First, focus on Brand Engagement. You can start small by building presence with pop up virtual spaces to initiate brand engagement with prospective shoppers. Use gamification to attract and engage with your audiences.
Second, build on Social Commerce. Live Events, Gaming and social ads are fast becoming great engagement platforms in Metaverse. Retailers can launch the digital versions of their product / 3D models and leverage these social platforms to sell them directly to avatars in the metaverse ecosystem. These Direct to Avatar commerce models (DTA) are becoming popular and this ‘avatar economy’ probably offers the simplest way of experimenting with shopper engagement in this digital world. Integrating commerce capabilities or at the least directing the flow of traffic from virtual to your own commerce platform is a foundational use case in the retailers metaverse playbook.
Third, set up Virtual Showrooms. Once you have some experience with brand engagement and social platforms in metaverse, it is maybe time to look at setting up a virtual showroom. This is a great example of how metaverse with all its integrated technologies can be leveraged to provide a more immersive and hence, unique experience for the shoppers with an objective to build an emotional connect.
But don't forget the basics..
To be able to execute the above, retailers need to build a cloud based foundational infrastructure which enables them to have digital commerce platforms capable of providing these experiences in metaverse and connect the dots between customer preferences, product discovery and search, payments, inventories, fulfillment and associate productivity & enablement. In addition, enhancing the data AI/ML capabilities and building an execution framework to offer a great shopper experience, personalized & seamless, irrespective of the virtual or physical world is fundamental and a bare minimum needed for retailers to thrive.
Virtual is Reality. Embrace the change and keep innovating
There is no doubt that Metaverse is here to stay. Ask the Gen Z- the digital natives who are sidestepping the traditional retail formats, favoring the gaming, social & virtual platforms accelerating the move towards metaverse by fearlessly marching into this new world. Not yet mainstream, but having a presence in the metaverse is now essential- another alternative for brands & retailers to engage with new and existing shoppers.
It's inevitable that with time, technological advancements will make these virtual experiences economically viable, more immersive & lifelike, thereby simulating an in-person experience. The pandora’s box has been opened and the world has had a peek into this fascinating alternate reality. And for many, this is where the future lies.