Metaverse will change the customer’s e-commerce experience from “browse, choose, click and buy” to “browse, experience, and buy”.
What is metaverse?
Metaverse is a network of simulated digital virtual worlds. Here, users can interact with a computer-generated environment and with other users with the help of artificial intelligence (AI), virtual reality (VR), and augmented reality (AR) tools.
The metaverse will not be owned by a single vendor. It will rather function as a virtual economy, facilitated by digital currencies and non-fungible tokens (NFTs).
According to Gartner, by 2026, 25% of people will spend at least an hour a day in a metaverse for work, education, social media, entertainment, and shopping.
Impact of metaverse in retail
- Highly personalized digital experience
- Omnichannel experience
- Reduced returns
- Widened customer base
- Convenience
Metaverse In Retail: Major Events In 2022
Factors Driving the Market Predictions
In a country like India, where 65% of the population is below the age of 35—and given that Gen X spends 80% of their time on digital platforms—businesses cannot afford not to be on the metaverse platform.
The global metaverse market is projected to reach $1.6 billion by 2030, expanding at a compound annual growth (CAGR) of 50.74% from 2022 to 2030.
Indian Metaverse-NFT economy
According to Goldman Sachs, India’s metaverse–NFT economy is worth about $50-100 million annually and would touch $100 billion by 2025.
Major companies engaged in metaverse
- TCS has partnered with companies such as Tanishq and Croma to deploy metaverse solutions. (Note: Value is in Units)
- Infosys has offered shopping and commerce options and experiences such as virtual try-on for Australian Open, a tennis tournament. (By 2025, AI will add US$ 450-500B in value to India’s GDP)
- boAT hosted the first-ever metaverse K-pop concert with LOKA.
- Capgeminipartnered with Unity for metaverse innovation.
Opportunities for retailers
Brand exposure: Retailers can strengthen their presence through virtual billboards and interactive advertising.IT services provider Cloud Nine was one of the first companies to advertise its services on Decentraland’s virtual billboard.
Unique experience: The metaverse provides a unique experience to customers. They can engage with brands through virtual events, contests, and games. Such experiences can increase loyalty among consumers and thereby enhance brand engagement.
The Metaverse Fashion Week illustrates how retailers can create unique brand engagement opportunities. Retailers such as Tommy Hilfiger, Perry Ellis, and Dolce & Gabbana participated in the pilot phase that saw a wave of immersive and unique customer-brand interactions.
Personalized customer experience: Just as retailers can customize the online experience for customers by leveraging data, they can offer a similar personalized experience in a virtual environment. For example, Meta’s Horizon Worlds allows users to create their own virtual world and invite friends, thereby offering a personalized experience.
Challenges for retailers
Ensuring protection of data and privacy: Breach of data is a major threat with any new technology, and metaverse is an attractive target for cyber hackers. New approaches and techniques need to be developed for a secure experience that customers can trust.
Availability of talent: Having people with the right skills to create, manage, and support experiences in the metaverse is imperative for customer engagement. However, as this is a new technology and niche domain, it is difficult to find the right resources.
Lack of regulations: Without any clear data protection laws and regulations, the metaverse virtual space could be compromised, adversely impacting customers. Hence, stringent rules and regulations need to be developed to keep the retail metaverse safe for consumers.
Managing customers’ expectations: Retailers need to make customers aware of what they are doing in the metaverse and what they can expect from their business in the metaverse.
Future of retail metaverse
It is important for brands to focus on creating an emotionally engaging shopping experience. In the metaverse, this means using images and sounds to provide a realistic space and feel.
It also means creating strategies whereby taste, touch and feel can be included in the metaverse shopping experience.
Nike and Walmart’s Flipkart are taking their first steps in the retail metaverse business. Retailers will do well to seek advice and tips from these companies. Attention to detail and focus on delivering immersive experiences are the key factors that would enable brands to offer a unique retail experience even in the virtual world.
To conclude
Retail has evolved at a fast pace, transitioning from the brick-and-mortar format to online stores. Adopting metaverse will take it to a completely different level. This digital innovation is set to revolutionize customer experience. In a day and time where customer comes first, how retail brands strategize to build their metaverse avatar will be a key deciding factor in the continuity of business operations.
That said, the metaverse comes with its share of risks, from data theft to customer identity protection-related. It is equally important for retail brands to factor in customer confidentiality and privacy. One bad experience and the customer will shun it.
Ignoring metaverse could prove costly for retail. Therefore, the need of the hour is to adopt it with caution. This includes regulatory support from relevant authorities, including governments the world over. Stringent regulations and punitive measures are required to prevent hacking and other cyber security crimes.
Customers, too, need to be aware and well-informed of how the metaverse operates. There is no better deterrent than active vigilance.
All in all, the prospects for metaverse in retail are bright. However, it will require active participation and involvement of the relevant stakeholders – retail brands, customers and authorities – to render the digital innovation a success.
By Ashwini Chakre, AGR Knowledge Mumbai.