Metaverse Is Moving Online Retail into the Third Dimension
Widespread support from technology and consulting companies
The metaverse is THE trending topic right now when it comes to evolving our digital communications. This virtual equivalent of the real world is also opening up previously unimaginable possibilities for retail.
Metalevel, metadata, meta trend – there is a multitude of words with the prefix “meta.” This is usually used to describe a category that comes above everything else in a hierarchy.
The “metaverse” also fits into this context. This neologism is a combination of the “meta” mentioned above and “universe”. Put simply; the metaverse is a virtual extension of the real world.
Once Sci-Fi, Now Reality
A longing for virtual worlds like the metaverse has been around for many years. The concept and basic ideas behind it go back to the science fiction novel Snow Crash, published 30 years ago. Computer games like Fortnite or Minecraft are considered metaverse applications. The first virtual world to come out was Second Life back in 2003; however, it failed to gain widespread popularity despite impressive sales figures.
A Handy Definition
So how might we imagine this metaverse? The German Association for the Digital Economy (BVDW) has probably formulated one of the aptest definitions: “The ultimate vision of the metaverse is a decentralized, interoperable, persistent, and immersive digital ecosystem with unlimited user capacity. It will co-exist both in augmented reality (AR) as well as a truly virtual reality (VR) version as an extension to the physical world. The fully developed metaverse will converge with real life and fundamentally change our society and the way we connect, work, live, and interact with brands.”
Think about that for a moment, and you’ll eventually realize that the metaverse is nothing less than a virtual extension of the real world. Users move through the virtual world as avatars they can design in any way they wish. They can interact with each other, purchase digital products, and build a digital life – a virtual co-existence.
Retail Sets the Pace
German trade journal Absatzwirtschaft predicts that the metaverse’s future prospects will largely depend on whether the costly technology can be refinanced. One driver, the journal contends, is retail, which can tap into an eCommerce channel offering previously unimaginable possibilities via the metaverse. The same applies to manufacturers who sell directly to end customers in the D2C sector.
Companies such as Kaufland, Walmart, and Starbucks have already ventured into the metaverse, and Handelsblatt business newspaper says they are driving the expansion of retail into the metaverse.
And it does appear that retailers in general have recognized the potential of the metaverse. According to a recent study by the EHI Retail Institute, 60 percent of respondents believe that the metaverse isn’t just hype but rather is here to stay. A further 20 percent haven’t quite made their mind up yet.
Five Essential Areas of Application
It’s becoming clear that the metaverse has a number of key applications for retail:
Virtual buying advice and shopping assistance
The digital/personal interaction between the avatars opens up opportunities for dialogs, advice, and communication in the metaverse that even now are a very close approximation of those in the real world at a minimum, if not already superior to them.
Three-dimensional product demonstrations
Even though 360-degree representations give a good impression of products in two-dimensional eCommerce – they can’t compete with a three-dimensional product experience.
Post-purchase customer service
Similar to pre-sales consulting, the metaverse also opens up completely new possibilities in aftersales, for example, by explaining product features in 3D.
Events in the virtual space
Companies can create completely new types of brand experiences via virtual events in the metaverse. The first virtual Fashion Week, which was held in the metaverse from 24–27 March 2022, offered a hint at the possibilities.
Customer retention programs
The metaverse also opens up new options for loyalty programs. Potential applications include digital incentives or gamification elements that boost customer loyalty, for example.
One company participating in the EHI study commented: “Ultimately, the entire world of eCommerce today can and will rediscover itself in the metaverse, comparable to a shift from 2D (today’s eCommerce) to 3D (eCommerce in the metaverse).”
This change is expected to open up the greatest opportunities in the fashion, furniture and furnishings, hobby and leisure, and consumer electronics retail categories.
High Demand for Information
A number of technical terms keep coming up in the context of the metaverse, such as Web 3.0, NFT, peer to peer, and others (please see here for an explanation of these terms).
The EHI study showed that while decision-makers are already familiar with the terms, the broader corporate environment has yet to reach this point. For example, eight out of ten respondents said that their companies weren’t familiar with the topics of Web 3.0 and NFT, and around two thirds believed the same was true for the terms metaverse and blockchain.
Supported by Big Names in the Tech Industry
Second Life, which we mentioned above, was undoubtedly a pioneer in terms of the development of virtual living environments – its operator Linden Lab, however, was more of a lone wolf.
The situation with the metaverse is quite different. “The Metaverse Standards Forum,” an association of various technology and consulting companies, was formed in June of this year. Its goal is to promote an open, integrative metaverse by developing standards for interoperability.
A large number of technology and consulting companies have joined the forum created around founding members such as Adobe Systems, Alibaba, Autodesk, IKEA, Meta, Microsoft, NVIDIA, Sony Interactive Entertainment, and a number of others. The list of members includes, for example, Deutsche Telekom, Electronic Arts, Google, Lenovo, LG, Samsung, and Lego, as well as management consulting firms such as KPMG and PWC.
Wait and See Or – Seize the Opportunity?
The forum demonstrates that there is a great deal of interest in the metaverse; plus, this momentum is likely to help the metaverse become established more quickly than has been the case with other technologies. A further factor is certainly the “coronavirus effect” – during the pandemic, digital commerce platforms became much more widely accepted, and this effect will continue to leave its mark.
Another quote from a retailer participating in the EHI study is likely a realistic assessment of the situation: “It’s not a question of whether a company joins the metaverse or not. Many companies that aren’t in the metaverse ten years from now won’t be able to compete in the marketplace.”
This prediction is supported by the results of a study conducted by Bitkom, the industry association of Germany’s information technology and telecommunications sector. According to the study, a good quarter of respondents (27 percent) can already imagine going shopping in the metaverse, 22 percent would meet friends there, and the same number would attend concerts.