The metaverse is a portmanteau of two words: Meta, which means ‘beyond’ in Greek, and Verse, which is suggestive of the universe. Although there is no official definition for the word, in simple terms it means a confluence of our physical and virtual world or a parallel 3D universe where we can create our digital avatars that will interact and communicate in virtual spaces.
The retail brands are expressing their interest in Metaverse. International brands like Nike, Coca-Cola, Louis Vuitton, Adidas, Gucci, and many more are showing their interest to invest in Metaverse. But it’s also creating skepticism and whether these brands are viewing this as a potential market that will change how the consumers will interact/shop or is it just a marketing gimmick is still unclear.
Metaverse is becoming a buzzword nowadays, and it is also getting a lot of attention among netizens. In 2021, Facebook rebranded itself as Meta Platforms Inc. with a strong VR/AR element. Somehow, it showed that the new era of digitization is starting. The brands are investing in this form, as due to the pandemic the shopping experience has totally made a drift, in which online mode has taken a huge lead.
The Metaverse is pushing the envelope by offering virtual showrooms and stores that can enhance the customer experience and can also be time-saving, and convenient for the customers. According to research, 77.24% of shoppers stop at just ‘add to cart’ and end up buying nothing. With the introduction of the metaverse, the whole shopping experience can be improved. Roma Narsinghani, a renowned concept jewellery designer, who owns a brand by her own name shared with us, “Shopping experiences have become even more social and customer-centric since the pandemic, as everyone is shopping online nowadays. Metaverse will be the next step in it. As we spend most of our time on mobile phones these days, we usually interact digitally rather than physically. The metaverse can become a great opportunity in that which can create an immersive digital experience that could be somehow impossible in the real world. Right now, metaverse is all about brand awareness and promotions but eventually it will become another avenue to shop.”
Pankhuri Gandotra, Founder & CEO, Writings on the Wall, a popular home decor brand highlighted that, “The shopping experience will overall change as there must be a big reason behind Facebook changing its name to Meta, and there will be a lot of strategies and innovations geared towards the e-commerce sector in it, as Facebook is the primary source of revenue for many e-retailer like us. I also believe that the metaverse will somehow give the same feeling that the physical stores usually provide.”
With the Metaverse, the future of retail will be astonishing which will enhance the overall customer experience. The metaverse also saw an introduction of digital avatars which were earlier just used by online gamers. This has also hit differently in the sector as the online users will be able to shop and interact with things using their digital avatar. Metaverse can be used in different forms like Virtual Reality, Integrated branding in the digital world, selling non-fungible tokens (NFTs), Augmented Reality to enhance the shopping experience, and more.
Purvi Rohit Pugalia, Co-Founder, Not So Pink, a women’s workwear brand shared with us and highlighted, “Imagine meeting your digital twin trying out virtually available fashion formals on them. In that world, a consumer would be able to walk around and feel the shopping experience using their digital avatar. A woman would be able to try the best dresses for women with different shades, combos, and sizes under one roof with thousands of options. It will surely be an interactive shopping experience and through it, they get to understand and feel the product just like they would do in a walk-in store. It is surely going to be a game-changer and will be liked by everyone.”
She also mentioned a report and highlighted that Almost 41% of the Gen-Z population believes that the brand should sell their products in the metaverse world. She believes that our generation is already going there.
Making the right move
Brands have to reposition themselves to start their metaverse journey in a way that can add more consumer value in the world. And for that, the brands have started reconsidering their value framework, adding more authenticity, and seeking more meaningful relationships with their consumers. The metaverse is offering brands to provide creative potential that can also accelerate the brands to offer other lifestyle services that can fulfill the demands of the customer across different sections. Like the e-commerce giant Amazon is ‘prime’ example of this as they have forayed into different sectors like: music, film, gaming, and web-hosting.
Business in the Meta world will not just compete with each other but also compete with other visual distractions in the metaverse world. By leveraging data science, and deep insights on customer behaviour a rebranding needs to be considered to fit in the metaverse world.
Ajay Singh, Lead Marketing, HRX, a brand owned by Hrithik Roshan totally denies that there is any need of rebranding and mentions that it all depends on how the brand communicates, and the message that they want to communicate in that world and customize it accordingly. But the brand positioning remains the same. He believes that the metaverse is the great platform for brands that reaffirms what the brand stands for.
Pugalia thought differently and stated, “Yes, in a way it is all about repositioning and revamping the business model. Looking at the competition in the market, stabilizing long-term goals, and foraying into this new space requires the company to start from the scratch. The most important aspect is to think about creative stories as this world is all about creating an experience that the brands need to be prepared for in all forms. The brands that have already worked to create a brand image will surely get a benefit when they enter the metaverse world. It might also create pressure to deliver but then that’s the part of business.”
For business, metaverse would allow 3-D realistic world in which users can purchase products directly from the brand. But for that business needs to introduce different strategies and innovation that can interact in that shape. The big brands are betting big on this industry as per a research the metaverse market is pegged to become $800 billion by 2024 with tech giants like Meta, Microsoft, Apple, and Google investing big on it.
“The future is going to be a blended reality universe and the goal for the brands would be to reduce the gap between physical products/stores and virtual stores/products. According to me, one important aspect in terms of strategy would be digital sustainability, and many people believe that if it’s digital, it will be sustainable which is wrong. Reducing the carbon footprint is one of the keys. We’re entering this new world through jewellery wearable NFTs, and for that, we need a really skilled 3D designer that could cost around 50,000-5,0000 approximately,” Narsinghani highlighted.
NFT (Non Fungible Tokens) is the way through which you can pay and invest in the Metaverse world. Like in the parallel world i.e. physical world there is need of creation and ownership of assets in the same way NFTs operate in the metaverse. Singh mentioned, “We at HRX are looking at NFTs as digital tokens. Using this, we can enable users to get access to what we offer in the metaverse world as well in the real world. Right now, as a brand it’s critical to define what exactly will be utilities that we can attach with our respective NFTs but we will make them not just buyable but also tradable.”
“The NFTs can also be used by the brand to excite and attract the followers to be a part of their brand by owning a piece whose value can be extracted in the future,” he added.
“NFTs are adding a lot of value to the art, through which original artists can get recognition and royalty. It also creates a lot of opportunities for wall decor brands like us as there are a lot of walls in the Metaverse which are waiting to be beautified,” Gandotra mentioned.
Metaverse- conquering opportunity for Traditional brands or New-age brands
Many Industry experts believe that there is a potential opportunity for the new-age brands as they are the one who can prioritize the consumers and their experience easily which we saw in the D2C ecosystem. But it won’t be an easy task, as traditional brands have created a brand value in the real world which will help them in the metaverse world. One thing is sure about this world, that this world will give major potential opportunities for brands to prioritize their consumer experience over anything else.
Talking about the new-age brands having more advantages in the world, Singh replied “There’s definitely a big advantage for new-age brands in this space as their target audience is most active in this space. In the Fitness and Lifestyle industry, Metaverse is going to play a huge role in the Marketing and Growth perspective. The improving tech infrastructure in the country also plays a huge role which will be critical for the overall growth of Metaverse.”
“I believe it’s more about skill set, training, and setting up the right team. The advantage will be given to those brands who are only selling virtual pieces and also the brands who started foraying into the virtual space would get a first mover advantage as they can build a virtual community easily. For many brands, traditional or new-age, the customer engagement and brand-awareness strategies are made targeting Gen-Z consumers but they are less profitable for now. In the future, the brands will make profit making ventures along with building a virtual community,” Narsinghani mentioned.
Metaverse as a revenue stream
The brands are looking at the Metaverse as a revenue stream through different modes such as:
- Organizing virtual events through digital twins
- Creating playful content that people can look using NFTs
- Create a discussion forum using VR/AR by using their own avatars
According to one of the spokespeople of Meta, who mentioned in an interview, Meta will take an overall cut of up to 47.5% on each transaction which will include a “hardware platform fee” of 30% of sales made through Meta Quest store.
“I look at the concept of metaverse as a boon now and it is definitely going to be the next step. There are a lot of things that have advanced in the working of the business model, especially in the fashion formals category for women, and the metaverse is the future we must look at. It is surely going to help generate revenue for brands. E.g.: Creating virtual formal pants or formal shirts for Women will not take much raw materials, and hence in that case labor will be minimal too. This will eventually help generate better revenue in terms of profit. In fact, we can also bring the old designs of office wear that can turn into virtual assets, and eventually, it will provide a better revenue scheme with minimal investment,” Pugalia mentioned.
Gandotra said “The Metaverse will be the next paradigm of ecommerce. And our brand is looking forward to owning a store in Metaverse and we are planning to open a store first in metaverse before the physical one.”
Narsinghani on the revenue model explains, “NFTs for virtual items include royalty fees/ revenue shares/ future transactions when the item will change hands. This could also mean brands can resell one file a number of times. In real life, there are a lot of costs involved in creating the actual product/stock. The designers will also get a huge amount of creative advantage in creating virtual goods as the practical limitations won’t apply here. From the brand’s perspective, one can create virtual stores or platforms for an immersive shopping experience.”
Singh said, “Our brand is at the start of this metaverse journey and we are learning about it constantly and evolving at a rapid pace. Just like other brands, we will have a presence in NFTs and metaverse space. Blockchain technology and NFTs have a huge potential in the metaverse and it will be a source of revenue too.”
“More and more brands are spending their time on Web 3 and different metaverse which make it obvious for brands like HRX to have a presence on it. However, it’s still new, and we are trying to maximize it ”, he further added.