The last couple of years has been anything but easy for retail companies in the real world.
People no longer want to visit shopping malls or physical stores, robbing many brick-and-mortar stores of business opportunities. Even though opening online sales channels has expanded the market, the landscape is over-competitive, especially with companies like Amazon and Etsy offering anything and everything a shopper would want – except for footwear brands like Nike and Puma.
For verticals such as food & beverage retailers and supermarkets, shifting online has been difficult, with intermediaries imposing tough competition, altering focus, and competing for market and consumer awareness.
Then came the need for companies to offer drive-in and take-out services, touchless order technology, buffet services, and more. These are excellent ways to cater to consumers’ needs and have opened new selling doors, but they come at a price.
The world is on the brink of another significant change — the metaverse — and it’s gaining popularity. But rather than fearing it, retailers can leverage it to reset, rebuild, and reshape to stay on top of their eCommerce game by building innovative and differentiated customer experiences.
What is the Metaverse?
The definition of the metaverse is constantly changing. Currently, it refers to the next generation of the internet or a network of immersive 3D virtual spaces where consumers can meet, build, socialize, work, purchase products and services, and attend conferences with other people who are not in the same physical world.
The metaverse is designed and developed to replicate the physical world, although it still needs to be determined how many more years it will take to develop fully.
The National Association of Software and Service Companies or NASSCOM says that “the widespread adoption of the metaverse is still a long way ahead, despite strong early signs.“
Will the metaverse revolutionize retail experiences for consumers? The technology driving this may take a minimum of 8-10 years to become even close to conventional.
Companies have started implementing metaverse applications and use cases across multiple industry verticals; however, the technology’s scaling up will be based on technological advancements, return on investment (ROI), and talent readiness.
The Metaverse Hype
It’s hard to ignore headlines and forecasts of the metaverse and, on the other hand, to avoid the fear of missing out. Since Facebook CEO Mark Zuckerberg rebranded the company to Meta in his speech in October 2021, the metaverse has received criticism and cheers worldwide.
In the United States alone, the monthly average of searches in the virtual world is 480,000. The term “metaverse” also topped the Retail Insight Network’s list of the top 5 keywords tweeted on retail tech in the first quarter of 2022.
The metaverse is poised for substantial growth. According to research & consulting firm Gartner, people are expected to spend at least an hour daily in the metaverse by 2026. AR, VR, and mixed reality (MR) will change how people conduct business, socialize, work, and pay bills. This is just the beginning of a new era, and Bloomberg Intelligence suggests that the metaverse market will be valued at $800 billion by the end of 2024.
Meta said, “We believe the metaverse will be the biggest opportunity for modern business since the creation of the internet.” This means that the metaverse has garnered the attention of top executives and industry leaders.
A study by Accenture involving executives reported that 71% of executives find the metaverse as a game changer for businesses, while 42% say that the technology will be a “breakthrough” or “revolutionizing.” For retail businesses, the metaverse will be leveraged to engage their users and add a “physical touch” to online goods and services displays.
The Role of Metaverse in the Retail Industry
The retail industry has adopted a multi-channel approach in the last ten years, wherein companies have been looking at merging in-store and online retail. To bridge the gaps between physical and online retail experiences, companies are leveraging metaverse distinctively to offer immersive and varied experiences to their shoppers, which needs to be improved in the online landscape.
The metaverse is a promising technology. It is a virtual world that is set to revolutionize the way we experience retail. Combining virtual reality (VR), augmented reality (AR), edge computing, artificial intelligence (AI), and other technologies will allow shoppers to explore stores in a completely new way. It will provide them with an immersive shopping experience that is impossible in physical stores.
The Metaverse will also enable retailers to personalize their offerings for each customer. With AI-powered analytics and insights, retailers can tailor their products and services to meet the needs of each shopper. This level of personalization has never been seen before, and it promises to transform how customers interact with brands and make purchasing decisions.
What’s interesting is how this 3D virtual space will reshape retail experiences for shoppers and brands. With only sight and sound applicable in the metaverse, our senses are limited, leaving much to be desired. The other senses — which are unavailable in the metaverse — play a significant role in our physical world experiences, prompting questions like:
- How will the metaverse compensate for this lack?
- How can retailers leverage the virtual world to create universal, immersive customer experiences?
- And how will we create physical world experiences in a space with only the available senses?
Changes & Opportunities That Metaverse Offers Retailers
The COVID-19 pandemic has profoundly impacted the retail sector, with many businesses forced to close their doors and move online. However, the pandemic has also created opportunities for retailers to innovate and offer customers a unique physical shopping experience.
The metaverse is a digital world that offers retailers a wide range of possibilities to connect with customers and create unique customer experiences. Unlike traditional online shopping, customers in the Metaverse can move around freely, explore different virtual spaces, and interact with others in a social and immersive way.
The Metaverse offers retailers several advantages, including the ability to:
- Create Unique Customer Experiences: In the Metaverse, retailers can create virtual spaces to engage and entertain customers. For example, a retailer could create a virtual reality (VR) showroom where customers can try on products or a game-like environment where customers can earn rewards for making purchases.
- Connect With Customers on a Personal Level: In the Metaverse, retailers can connect with customers in a more personal and immersive way than is possible in the physical world. For example, a retailer could offer customer support in a virtual reality (VR) environment or hold virtual events where customers can interact with each other and the retailer.
- Reach a Global Audience: The Metaverse is a global platform that allows retailers to reach customers worldwide. This is especially important for small businesses and niche retailers who may have difficulty reaching customers in the physical world.
The metaverse also offers many opportunities for retailers to connect with customers and create unique customer experiences. Let’s explore some of these opportunities.
This marks a drastic change in retailers’ expectations as well as those of users. There is no longer diversity between the digital and real worlds; it’s given more clarity that a hybrid or multichannel approach is what users want and demand.
The world is opening new avenues for revenue generation because of digitalization. Rather than focusing on the existing revenue streams, it creates multiple opportunities to connect with shoppers and generate leads beyond the physical store visit.
To tap into this, brands need to get used to providing unique retail experiences to customers wherever they are, including the metaverse. According to a study by JP Morgan, approximately $54 billion was spent on additional in-game content in 2020, a statistic poised for growth. And it’s not only for children: Gucci created a digital version of its Dionysus Bag for the Roblox marketplace and sold it for over $4,000 — much more than the price of the physical world variant.
Cohesive experiences mean more sales
Bridging the gaps between the physical and online stores while creating an immersive customer experience is key to success. The need for this integration is explained by Google research indicating that omnichannel and marketplace formats will power 86% of sales growth across the US and EU regions in the next five years.
The research indicates that retailers and brands with a strong digital presence will witness success, even if customers opt for physical store shopping.
For shopping malls, this can be the stepping point for the next iteration — an extension of the place in a virtual environment where people meet, socialize and create memories.
The personalization that is already expected of online stores is soon becoming a need for physical stores, with stores developing an immersive atmosphere, including digital displays that change the content after studying your gender and age.
Physical retailers can personalize recommendations to users or display product information on display screens after users show an interest, following customers picking a product from the shelf. Beauty and apparel brands are also introducing a feature where customers can try their products virtually, such as Chanel’s collaboration with FarFetch, where customers can use an app to choose products and schedule an appointment to try them on.
How the Metaverse Will Transform Online Shopping
Online shopping has come a long way in the past few years. You can now buy just about anything you want with a button. But shopping in the real world is still better. You can’t see or touch the products you’re buying and don’t get the social experience of shopping with other people.
But that’s all about to change with the Metaverse.
Meta, Microsoft, and Google are the masterminds behind the metaverse. It’s a place where you can be anyone you want and do anything you want. And it’s going to change the way we shop online.
- Online shopping will become more immersive.
Online shopping can feel pretty sterile. You browse through the products on a computer or mobile screen, making it difficult to get a sense of their appearance in the real world.
With the Metaverse, you’ll be able to shop in virtual stores that are just as immersive as the physical world. You’ll be able to see and touch the products you’re buying and feel like you’re there.
- Customers can socialize more while shopping in the Metaverse.
Shopping online can be a lonely experience. Since you’re doing your shopping alone, you don’t interact with other customers; hence, you don’t get to see their reactions.
With the Metaverse, you’ll be able to shop in social VR environments where you can interact with other shoppers. You’ll be able to see the reactions of other shoppers and thereby get shopping advice from friends.
Finally, the Metaverse will allow for a new shopping experience combining online and offline shopping.
- The Metaverse will make online shopping more distinctive.
At present, online shopping is indistinctive. You’re buying products that someone else has displayed for you, and you don’t have any control over the process.
The metaverse will allow you to create your virtual storefront, and you’ll be able to select the products that you sell. Moreover, you’ll also be able to interact with the customers directly, and you’ll get to know them on a personal level.
What Are the Adoption Barriers for Consumers & Retailers to Use the Metaverse
In the metaverse, consumers use AR and VR technologies to virtually engage with each other and their environments, with extensions into the real world.
According to a study by Zappi involving 2,000 adult respondents in the US and UK, 69% said they had never heard of the metaverse. In contrast, over 55% said they do not understand the concept, and only 6% said they are “extremely familiar” with it.
However, some respondents find the concept irrelevant (50%) than unattractive (44%). In fact, only 20% of consumers expect to use the virtual environment within the next year; while one-third expect to use it in the next five years, and nearly 50% expect to be active in the metaverse in the next ten years.
Let’s explore some adoption barriers for consumers to use the metaverse.
- Access to the Metaverse is Difficult
Metaverse platforms require hardware designed and developed for AR and VR technologies. Most Web 2.0 platforms like Instagram and YouTube offer free access to users, while Meta’s version of the metaverse is accessible through a Meta Quest 2 headset, which is available for $399.
Other platforms may require different hardware or software tools, so mass adoption of metaverse experiences may be sluggish compared to social networking platforms.
Brands looking forward to entering the metaverse should remember that ease of access and understanding will be necessary for long-term success. They should focus on inclusivity as it will go a long way to maintaining long-lasting relationships with customers in the virtual world.
Mitigating the barriers to entry for consumers will be important in making the metaverse a thriving ecosystem. The most critical aspect is providing “metaverse grade” universal connectivity. The scaling flexibility of 5G’s low latency and high-frequency benefits will go a long way to achieving this ubiquitous connectivity, which will tackle the challenges to consumer adoption.
- Metaverse Regulation is Still Underway
Access to the metaverse is only a part of the many concerns.
Some immersive experiences like Fortnite and Roblox have simplified things by establishing themselves as a gaming platform via the virtual environment.
Customers can easily log into Roblox like Facebook, but when it comes to engaging and moderating communities, it couldn’t be more different. For example, the platform was recently accused of false marketing by Truth in Advertising, stating that Roblox “doesn’t explicitly identify branded worlds, called advergames.“
The same challenges hold true for user safety.
In May 2022, a female researcher reported that her virtual avatar was harassed on the Horizon World metaverse platform. To curb these challenges, Meta previously introduced a safety feature called Personal Boundary in February 2022 — the continuation of such encounters suggests that providing user privacy is still an ongoing concern.
- Data Privacy Concerns
Currently, protecting user privacy remains the top priority. At a superior level, data privacy concerns in the Web 2.0 ecosystem mostly revolve around consent, protecting data, and lowering unnecessary user behavior and signal tracking. On the other hand, the list of user data signals that can be tracked in the virtual world increases.
Based on the sophistication of the platform, collecting user data could soon include biometrics, personal interests, virtual avatar behavior, eye-tracking within AR/VR hardware, and many more factors that will require data privacy regulations.
How the Retail Industry Can Evolve with the Metaverse
The retail industry is in the midst of a major transformation. With the rise of the metaverse — a 3D digital world — retailers are forced to rethink their strategies and embrace the new technology. As the metaverse continues to grow in popularity, it’s becoming increasingly important for retailers to understand how to use it to their advantage.
“See you in the metaverse!” is a phrase that is gaining momentum; it’s predicted that by 2026, people will be spending an hour a day in the metaverse, so retailers must start to take advantage of this innovative technology.
Fortunately, retailers can take a few concrete steps to get started in the metaverse. Here are some ways that retailers can start to evolve with the metaverse:
- Create a Virtual Storefront
One of the most effective ways for retailers to get started in the metaverse is to create a virtual storefront. This allows customers to explore the store, browse products, and even purchase items without leaving the virtual world.
Retailers can also use the metaverse to offer unique experiences to customers. This could include virtual tours of the store, virtual product demonstrations, or even virtual events.
- Leverage Augmented Reality
Augmented reality (AR) is a technology that enables individuals to interact with digital or virtual objects in the physical world. Retailers can use AR to create immersive customer experiences, such as virtual try-on sessions or interactive product displays.
- Utilize Social Platforms
Social platforms such as Facebook, Instagram, and Snapchat are great ways for retailers to reach customers in the metaverse. Retailers can use these platforms to promote products, engage with customers, and even host virtual events.
Buy Now, Pay Later (BNPL) in the Metaverse: How Cryptocurrency Payments are Changing the Game
The metaverse is an exciting and rapidly evolving digital world. One of the most recent and exciting applications of cryptocurrency payments in the metaverse is BNPL, or “buy now, pay later” services. BNPL services have become extremely popular in recent years and are one of the most significant trends in the payments sector now & beyond.
While BNPL services have been around for quite some time, they are mainly used for physical products. Cryptocurrency payments could enable the extension of BNPL to virtual assets in the metaverse. But buying these digital assets can be expensive, and many users need the funds to make these large purchases.
That’s why BNPL, or buy now, pay later, is a game-changer for the metaverse economy. It would allow individuals to finance any big purchases of virtual assets in the metaverse over time.
Cryptocurrency payments, however, could take BNPL to the next level. Companies like Decentraland and XRPayNet are partnering with cryptocurrency exchanges to make it easier for users to make large purchases in the metaverse.
For example, Decentraland recently teamed up with Binance to allow users to buy virtual land and other assets using Binance’s BNPL Pay service. This will make it much easier for customers to make big purchases that can be as high as $15,000 for a chunk of virtual land, bolstering the metaverse economy.
XRPayNet, built on the XRP Ledger, is another example that offers an app to bring BNPL to the crypto industry. XRPayNet is planning to become the crypto world’s AfterPay.
The applications of BNPL in the metaverse are still in their nascent stages. However, if partnerships like the one between Decentraland and Binance are successful, it could be a huge leap forward for the mass adoption of cryptocurrency payments in the metaverse.
If you’re looking to make large purchases of digital assets in the metaverse, BNPL could be the perfect alternative. Make sure to research and find the right partner to fulfill your purchasing needs.
In a nutshell, the retail industry is rapidly changing, and the metaverse plays a leading role in this transformation. By taking advantage of the opportunities that the metaverse provides, retailers can stay ahead of the curve and ensure their success in the future.