As the boundaries between the physical and the digital continue to fade, a new paradigm of commerce is emerging.
Coined in Neal Stephenson's 1992 novel Snow Crash, the Metaverse envisions an intersection of real and virtual worlds, allowing users to interact, socialise, and engage with one another. What began as a concept in science fiction is now a reality, transforming how we connect, engage and buy.
Initially, the Metaverse manifested in the gaming world, where immersive experiences allowed players to interact. However, the concept has since evolved into something much more significant. According to a recent McKinsey report, Value creation in the Metaverse, the Metaverse has the potential to reach $5 trillion in value creation by 2030.
So, why should brands care about Metacommerce? The consumers of tomorrow are using the Metaverse beyond gaming, and brands that fail to position themselves where these consumers are could miss out on the chance to seize a valuable opportunity.
Who are the consumers of tomorrow?
According to the United Nations’ World Population, Millennials and Gen Z make up 3 billion of the global population. As their numbers increase, they will make up a huge part of the commercial market.
Millennials and Gen Z are active gamers and buy digital assets for their digital avatars. The active gamer population currently stands at around 3 billion people and is expected to reach a massive $545.98 billion by 2028. These figures point to an increase in Metaverse immersion.
Digital avatars, initially used for personal representation in the Metaverse, are also growing exponentially in sectors like retail, offering enhanced 24/7 customer service. The global digital avatar market is projected to reach $527 billion by 2030, with a 46.4% compound annual growth rate (CAGR). Similarly, the digital clothing market is expected to hit $527 billion by 2030, with a 46.4% CAGR by 2028.
According to recent Roblox Q1 earnings, virtual sale items, referred to as ‘bookings’, on the gaming platform reached a staggering $773.8 million, up 23% year-over-year.
Much like the scepticism that initially surrounded e-commerce in the ’90s, some brands may hesitate to embrace the Metaverse and its potential, but the consumers are telling us this is where they want to be.
As the Metaverse has high promises of innovation and limitless possibilities, the question isn't whether brands should engage with Metacommerce but how and when.
A playground of opportunities
In the current climate, where uncertainty and market shifts push costs higher, it's not about cutting corners but investing in innovations that offer higher returns for companies. This is where the Metaverse emerges as a playground of opportunity for brands to explore new dimensions in commerce.
Designing an immersive online store within the Metaverse allows brands to access consumer markets at a fraction of the cost of traditional brick-and-mortar retail. Within this sphere, brands can test their product with digital wearables before production; sell these digital wearables to measure market demand, thereby reducing waste, and let consumers secure products pre-production.
Minted digital wearables (NFTs) serve as a digital receipt securely stored in consumers' wallets while blockchain technology records immutable transactions. This paves the way for the future circular economy while solving authenticity concerns around high-value goods. If regulations begin to mandate Digital Product Passports (DPPs), the integration of blockchain technology will become essential from the beginning of a product’s lifecycle.
The opportunities don't stop there. The lack of real-time interaction on e-commerce can often lead to abandoned carts. Emerging technologies like AI-driven avatars are made possible in the Metaverse, transforming the online customer service experience to help with the customer's shopping journey and final purchasing decision.
This is a golden age for brands to invest in a Metaverse strategy. With adoption on the cusp, luxury giants like Louis Vuitton, Gucci, Nike, and Adidas are leading, experimenting and innovating. The current market climate is forgiving and values every exercise as a mark of innovation. Brands that seize this moment have a unique chance to shape the landscape.
Where to start?
Venturing into the Metaverse requires more than just enthusiasm; it demands strategic insight and a coherent plan. Similar to creating your marketing plan, establish a clear vision and work backwards from there. Don't follow the crowd blindly; align your strategy with your brand value and understand where and who your consumers are in the virtual world. Similar to any journey, a solid roadmap ensures a sustainable return on investment.
The horizon of commerce is expanding into the Metaverse, where the fusion of physical and digital experiences becomes the cornerstone of interaction. Brands that embrace this evolution position themselves as pioneers, catering to the demands of the digital-savvy generations. As the Metaverse has high promises of innovation and limitless possibilities, the question isn't whether brands should engage with Metacommerce but how and when.
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