A brand experience in Roblox - part of the move towards Metaverse shopping.
Image credit- roblox

As many retailers have been forced to shutter physical outlets, we’ve seen increasing reliance and development in the digital space, prompting these retailers to recreate immersive experiences in the virtual world. The acceleration of digital transformation during the pandemic was met with further propulsion into the next digital evolution as we were – and are – being ushered into the Web3 era.

Users have transformed into creators, content drives commerce, and a decentralized community builds brand value together.

But outside of the Metaverse buzz and outside of 3D virtual shopping experiences, brands are needing to diversify themselves across niche distribution channels, where new environments are being built to reshape how consumers shop, interact, and play. With Web3, this will empower retailers in developing collaborative channels to connect with consumers, and create exciting brand experiences through ultra-personalised shopping experiences that will generate additional revenue streams online.

Creating an Exclusive Gated Community

Businesses are heavily affected by algorithms on social media channels and increasingly stringent data privacy laws, making its use expensive with limited exposure to their target customers. While social media channels have finally grasped native social commerce, brands are adapting their approaches from broadcasting to the masses, to creating exclusive communities through private channels. Where other regions such as India and Brazil commonly use WhatsApp messaging as a form of communication and commerce channel, China is also at the forefront of relaying through private traffic channels. As opposed to paid reach, this marketing method allows brands to funnel customers from their database into groupings to build up engagement and retention within closed social circles.

Equally, the West is also taking up these learnings through other social channels such as Discord and Twitch in recreating a gated branded community channel. What was once a gamer platform [Twitch], non-gamers are also flocking to these servers to engage with similar individuals and participate in conversations and activities, breaking the barrier between brand and consumer. User participation is often rewarded with physical or digital products, like status badges, NFTs, or access to other private channels and exclusive events.

Branded universes such as the Boohoo verse are at the vanguard of Metaverse shopping.
Image Credit – boohoo

British fast-fashion brand Boohoo has also jumped into the Web3 world, entering the Metaverse and launching free NFTs that double as  access cards to exclusive offers and events. Besides winning lines on retail buzzword bingo, Boohoo has done well in being able to encapsulate the environment of the Web3 sphere with the right lingo, but also using its platform and reach to educate consumers on Web3 while building up its digital community. They have leveraged the united tech community atmosphere by partnering with female-led NFT projects to show support and making the digital space accessible for all. Boohoo also hosts a Discord server, actively engaging with fans by holding community game nights, lounges for open topic discussions, and generally keeping consumers in the know for new happenings and activations while being part of its Metaverse fashion lines.       

Rather than broadcasting messages, sharing images, and replying to comments wittily as social media managers do, brands are to switch up with a community manager that is responsible for creating a close-knit community of consumers to build a brand people want. Decentralising a brand means treating consumers as investors themselves, strengthening brand affinity by involving consumers in product development decisions, and rewarding fans for loyal participation.

Gamifying the Virtual Experience

While many brands have already experimented and shifted online with digital stores during the pandemic, brands are now traversing exclusive and unique flagship experiences in virtual pop-ups, accessible only in the Metaverse. Gucci previously had released a virtual in-game handbag accessory on Roblox, which had outsold the value of a real handbag at USD 4,115 and even tripled its price tag by scalpers – yet holding no real monetary value outside of the game.

This proves to show digital and real-life assets are no longer seen as separate entities and that brands carry the same value – if not more – even in digital realms. Consumers are willing to spend solely on virtual assets, as ownership in the digital world is no different from real life – if not better, as consumers can flaunt their digital goods to a wider reach as opposed to their intimate social circle.

Brands are also seen beginning to build digital playgrounds with their own virtual currency for fans to immerse themselves in as part of associating oneself with the brand. Where loyalty was once defined by transactional numbers, the era of Web3 opens up a new dimension of commerce. Decentralising brand-building efforts and allowing consumers to be part of a brand that reflects their personal values and join as an extension of the team drives commerce opportunities and long-term brand advocacy.

Forever 21 allowed Metaverse shopping customers to curate their own collections in a virtual environment.
image credit – forever 21

Victoria’s Secret, the lingerie brand currently in its rebirth, has recently launched its first digital tween brand ‘Happy Nation’ on Roblox, where it is size-inclusive and gender-free. Given over half of Roblox’s daily active users are under 13 years old, this new brand division aims to create a judgment-free community where tweens can be their most authentic selves and explore philanthropic partnerships through play-to-donate activations in the Metaverse.  Forever21 is another brand that has gamified the Metaverse experience, allowing people to build their own Forever21 store and curate their own collection to compete as top stores across the region. Brands here are pushing presence in the Metaverse to engage with their consumers, promoting self-expression, and enabling fans to have “ownership” of the brand in the virtual environment.

Retailers have always invested in building stores where their consumers are but now have the opportunity to explore new spaces and regional expansion with no limitations. Brands have the possibility to design inspiring virtual spaces that will bring unique experiences and entice users to visit and engage. The future of virtual stores will exist beyond the screen but encompass a version involving mixed reality, overlaying augmented reality and virtual reality together with physical environments, enabling the Metaverse experience, IRL.

Metaverse shopping is the concept of dressing your digital twin for interactive experiences and applications.
image credit – ralph lauren

Dressing your Digital Twin

As users spend more time online, avatars are seen as a replica of one’s self in the virtual world. YPulse reports that 52% of Gen Z and 39% of Millennials who play digital games say their avatar represents their personality. However, spending and preferences in the virtual world may not reflect the same as purchases in reality, as users carry the freedom to explore different looks and craft new identities online.

China, in particular, is very receptive towards virtual identities where the use cases of virtual idols such as Ayayi and Luo Tianyi among the many others, have high influencing power and are impactful towards decision making. Lil Miquela, one of the first American virtual avatars, was known for its realistic characteristics and was featured in many fashion campaigns. Today, the owners of the virtual avatar have evolved Lil Miquela as a virtual character that is community-owned, allowing people to become the creators in control, where fans can use tokens to vote on her character journey.

Retailers have now started selling digital clothing – also known as ‘skins’ – allowing people to customize their virtual identities online. Known as the ‘Direct to Avatar’ (D2A) model, brands are selling digital fashion items directly to avatars, without reliance on the middlemen. Digital fashion is free from supply chain and sustainability issues -a bonus for conscious consumers – and can be carried across various digital environments. Out of a study, 9 in 10 consumers have shown interest to purchase digital fashion, leading the in-game skins market to soar USD 50 billion in revenue this year. Ralph Lauren has pioneered in creating cosmetic skins after having already sold over 100,000 pieces of virtual clothing to dress avatars. The trend of personalization is now translated to online experiences, enabling consumers to have the freedom of expression and creativity within the digital realms.

“Consumers do not see the difference between online & offline worlds, especially across generational differences where generation Alpha are born into the digital world, blurring their real life with their virtual identities & social circle in the Metaverse.”

tiffany lung

Key Takeaway

Only having just grasped the concept of omnichannel and social commerce, we’re still in the early days of redesigning retail in the virtual realm. Retailers need to join where customers are, and in this case, by existing in the digital sphere. Early adopters who innovate and experiment first will have competitive advantage as the digital space and new consumer behaviours continue to evolve.

Consumers do not see the difference between online and offline worlds, especially across generational differences where generation Alpha are born into the digital world, blurring their real life with their virtual identities and social circle in the Metaverse. Brands need to make their online community easy and accessible to join, however it is important to best translate brand personality and authenticity through an array of virtual experiences that communicate real value. Just as consumers enjoy associating with brands in real life within their stores, events, and social media channels, consumers will also enjoy hanging out in virtual locations and interacting with individuals alike who also share the same interest in the brand and lifestyle.

There is a profitable opportunity through digital engagements and brands can unlock new financial capital through a virtual brand strategy. While physical retail is still in revival, it is also time to move beyond traditional brick and mortar stores and offline retail experiences to redefine brand engagement and product discovery online.