Retail in the metaverse

Melissa Minkow at CI&T describes the challenges and opportunities ahead for retail businesses in the metaverse

 

In just over a year, the term ‘metaverse’ has moved from a niche sci-fi plot point to the next great tech revolution. Multi-billion dollar investments from giants such as Meta and Microsoft have quashed initial scepticism, and analysts now agree that it will transform the digital experiences of the future.

 

With Mark Zuckerberg predicting that the metaverse will go mainstream in as little as five years, countless industries must now prepare for the impact these virtual worlds will have on business and society. Retail is no exception – customers who can browse, touch, try. and buy products in immersive new ways are set to create a trillion-dollar revenue opportunity.

 

In some ways, it resembles the dot-com boom: the first retailers who deliver outstanding virtual experiences may become top choices for e-commerce, and are likely enjoy long-term success while competitors may fade away. But like any technology in its infancy, businesses must be ready to mitigate the associated teething troubles, growing pains, and regulatory challenges first.

 

 

Living up to the hype

 In the last decade alone, we’ve seen interactive technologies such as 3D TVs, VR headsets, and AR Google Glass all fail to live up to their initial hype. Even the Nintendo Wii, which rose to be the sixth biggest-selling games console of all time through a promise of immersive, physical gameplay, largely saw players return to sedentary button-mashing in classic ‘couch/controller’ fashion.

 

The metaverse is likely to be different – perhaps even ‘too big to fail’, due to levels of investment and publicity. But for retailers to be successful within it, they must create virtual experiences that go beyond gimmicks, and truly add value to people’s lives.

 

 

Infinite opportunities

What is most exciting about the metaverse is that the potential for customer experiences seems to be limitless. Customers could buy digital items and real estate for use exclusively in the metaverse, or virtually browse products before ordering them.

 

Shopping experiences no longer need to be the same for everyone, either. A retailer could create a ‘perfect’ personalised store for each individual customer – featuring their favourite colour schemes, background music, brands, products, sizes, and more – and secure higher conversion rates as a result. In fact, early versions of this feature already exist, with Meta’s Discovery Commerce online ad tool created to “anticipate customer needs and match products with the people most likely to love them|.

 

All early indicators show virtual retail works well. Forever 21’s personalised stores and Ralph Lauren’s popular clothing lines have both opened on gaming platform Roblox to high customer demand. Meanwhile, the success of video-powered e-commerce has proven that shopping experiences can be engaging, even from afar. Customers no longer need to be segmented, or limited, by their physical location, but rather their interests and needs.

 

As with all e-commerce, personalising experiences in the metaverse will require the application of data. Every customer interaction will provide valuable intelligence about their interests, wants, and needs, and retailers must be ready to capture, analyse, and action this information.

 

 

The right infrastructure

 The foundational technology behind personalised experiences in the metaverse is an advanced customer data platform (CDP). CDPs will need to be able to leverage existing data, such as previous purchases and sizes captured from a customer’s e-commerce history, and aggregate this with new insights from the metaverse.

 

However, this data may at first require deeper analysis than usual, as retailers consider whether users will act differently in the metaverse to how they would in real life. Much like characters in the metaverse-themed novel Ready Player One (2011), the anonymity afforded by virtual worlds might lead to customers adapting their online personalities and purchasing items that don’t reflect their interests in physical stores. Experiences should be tailored accordingly, and decisions made from the abundance of data should account for this added layer of complexity.

 

The exciting universality of the metaverse also raises questions around competition, specifically across retailers, brands, and platforms. How do retailers maintain a consistent customer experience in a marketplace model when every brand operates differently within the metaverse? How do you encourage platforms to work together so that shoppers can bring their metaverse goods from one space to another? The answer is likely to be new forms of cooperation.

 

 

Red tape

Although the metaverse constitutes a new digital frontier, lawmakers have learned their lessons from the early days of the internet. As a result, businesses must be careful with how they use and store data, as the metaverse will be a regulatory minefield. Alongside a stricter duty of care, retailers should be ready for data protection laws, new trading rules, and ownership regulations for both digital and physical items bought in virtual worlds.

 

Meta has already acknowledged in a 2021 year-end report that its efforts will be subject to new worldwide laws “in the areas of privacy and e-commerce, which may delay or impede the development of our products and services”. The risk is that these rules lead to a discrepancy between customers’ expectations and the experiences they receive. A customer may expect to enjoy retail in the metaverse in a way that transcends national boundaries, but regional rules will still apply to retailers.

 

Despite the complexity of rules, it will be entirely possible for retailers to create outstanding customer experiences within the metaverse. They just need the right expertise, relationships, and foundations in place to capitalise on the opportunities and negotiate any challenges.

 

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Melissa Minkow is Director, Retail Strategy at ciandt.com/uk/en-gb&source=gmail&ust=1649409771662000&usg=AOvVaw1db-tFRwe0DlvXhWXISlI_">CI&T

Main image courtesy of iStockPhoto.com