The business case for the metaverse, however you may define it, is taking shape in very public campaigns and sensational headlines. Love it, hate it, or unsure about it, these early days of virtual worlds and an evolving metaverse represent the next era of the web, one that is immersive, three-dimensional, and communal. More so, it’s an opportunity for businesses to reimagine digital experiences, engagement, and relationships with early adopter and highly connected consumers, particularly Generation-Z, Generation-Y, and Generation-Alpha..
Reflecting on decades of digital Darwinism, curiosity and testing and learning has helped leaders understand where to create new value in emerging digital landscapes. As they experiment and learn, these leaders gain invaluable expertise, insights, and digital literacy. They identify opportunities to further invest in proofs of concepts and pilots and also, where not to invest. The same can’t be said for those who wait or underestimate emergent trends (think e-commerce).
The Metaverse May Be Years from Materializing, So What?
While we haven’t settled on a common vision for an interconnected metaverse, the metaverse won’t magically appear overnight. It will evolve in stages.
Gartner estimates it will take eight-plus years to for the metaverse to cross over from early-adopter status to early majority adoption. But waiting for the early majority to start your learning journey is too late. In fact, Gartner recommends that this is the time to take advantage of the technologies and platforms helping to shape it.
In just a few years, for instance, Gartner expects that by 2026, 25% of people will spend at least one hour a day in a metaverse for work, shopping, education, social media, and/or entertainment.
The next web and the metaverse are unfolding right now via a myriad of emergent technologies.
Web3, NFTs and portable digital assets, digital currencies, AR and VR, IoT, 5G, AI, edge and spatial computing, are contributing to a world that connects online and physical worlds through layers of augmented and immersive information and experiences.
Digital twins are already inviting users into specific worlds or applications to interact with information, simulations, and space to test and learn, improve decision-making, and even navigate potential scenarios. According to the Gartner strategic planning assumption, by 2027 over 40% of large organizations worldwide will use a combination of Web3, spatial computing, and digital twins in metaverse-based projects aimed at increasing revenue.
Imagine, for example, creating digital twins of your customers in a metaverse simulation of your customer journeys. Gartner predicts that digital twins of a customer (DToC) could greatly enhance models for designing and delivering dynamic and personalized experiences at scale.
Virtual Worlds Represent an Opportunity to Experiment and Learn, Today
Virtual worlds, such as Fortnite, Minecraft, Roblox, World of Warcraft (WoW), represent a more immersive and personal web experience for its users. And they are already rewiring consumer behaviors, expectations, and standards.
These worlds change the dynamics of how people…
- interact with information and one another,
- how they consume, collaborate, transact, and build,
- how they’re inform and are informed, and
- how they influence and are influenced.
The currencies, assets, and space that surround users represent more than a world of entertainment, it’s the next iteration of interfaces, platforms, touch points, and navigation. Understanding new behaviors, engagement dynamics, and user experiences open doors to new opportunities for customer experience, commerce, community building, product and service innovation, and the future of marketing and brand.
There’s much to learn from how people, particularly Gen-Y and Gen-Z, interact, shop, and experience them and why. Virtual worlds offer businesses an array of opportunities to understand in-world behaviors and cultures and uncover ways to build-out next generation experiences and products.
Executives Don’t Want to Relive Their Early E-Commerce Mistakes
Companies can’t chase every trend, so it’s important to have access to experts, data, and scenario planning models that help decision-makes separate the hype from potential.
I’ve spoken with so many executives, who tell me that the metaverse, along with emerging possibilities with NFTs and web3, represent a moment of truth to not repeat the same mistakes made in the e-commerce revolution. And to this day, there are still so many missed opportunities in e-commerce and CX optimization. The same executives will say that C-Suites regard digital as a distant relative to brick-and-mortar and in-store retail.
After 30 years, when it comes to wowing customers online and on mobile devices, e-commerce isn’t remotely representative of its full potential. That hasn’t helped its growth. Over the years, it has largely evolved into something that’s more static and transactional than experiential, although there are notable exceptions. Many e-commerce websites still look and feel a lot like they did in the 1990s. They’re 2D digital catalogs with homogeneous photography that invites no more interactivity than the ability to enlarge, zoom, and sometimes rotate to varying degrees.
Engagement in virtual worlds though pushes the user experience forward and deeper, with interaction rooted in game design and mechanics over traditional website UX. It means that for these users, they must shift their behaviors and expectations when transacting on the traditional web. Said another way, they must change or lower their expectations and standards to interact with traditional businesses online. At some point, they won’t do that anymore.
I try to think about evolving digital experiences this way.
Pretend that your digital or e-commerce experience was a popular game on one of the most prominent gaming platforms, Nintendo, Sony, XBOX. You couldn’t expect to go to market with the same graphics/resolution, interface, playability, or dynamics three-to-five years from now. What about in 2030 or 2035? No way. If the game wasn’t leading edge, taking advantage of the latest advancements, you would lose to other titles that pushed experiences forward. Fast forward in time, playing the games of today will either feel outdated or nostalgic, at best.
Virtual worlds represent a potential platform shift for an immersive, 3D web.
Virtual Worlds are Reshaping E-Commerce and Consumerism
The convergence of digital trends is changing behaviors and expectations to the point of no return. Mobile-first activity, AR, social commerce, TikTok search and discovery, live video, in-messaging engagement, ChatGPT and generative AI, are each in their own way, raising the bar for what digital experiences can deliver. Add to that, the emergence of virtual commerce, in-world transactions, and visual commerce, the ability to experience products online in 3D, AR, and VR before you purchase. All this leads to a more connected, advanced, and digitally literate user/customer who will expect experiences that don’t require them to change their behaviors.
Companies will have to do more than just show up to facilitate digital transactions like we see in e-commerce, mobile, and social media today. Brands will need to understand maturing customer needs and expectations, identity and self-expression, virtual world communities and cultures, and identify new value-creation accordingly.
Enterprising brands are racing to learn as the next web takes shape.
In one example, Forever 21, a teen-focused fashion brand and retailer, introduced a virtual bubblegum-pink beanie in Roblox, emblazoned with the word, “FOREVER” across the brim. It cost about $1USD and sold roughly 1 million units. The beanie was more than a novelty. It offered users and their avatars a unique digital asset that reflected their personality, giving them a social object for self-expression. Following its popularity in world, Forever 21 offered a limited edition physical version for $14.99. This provided consumers the a fun way to match their avatars and express their personality in real life
Even though Roblox is not the only virtual world out there or even a definitive example of a potential metaverse, it is highly popular.
For example, Roblox claims that half of all children in the U.S. between the ages of 9 and 12 use its “imagination” platform. Sixty-seven percent of Roblox users are under the age of 16, with only 14% of Roblox’s users over the age of 25.
WoW, Minecraft, Fortnite, and others, are also inspiring younger consumers to learn new online behaviors and skills, which are contributing to new standards for expectations, engagement, and desired experiences.
In WoW, the average age of players is 28.
Curious and thoughtful brands recognize these worlds as opportunities to gather consumer insights, and inform engagement, brand and marketing, and digital and physical asset creation. The aim is to appeal to connected, younger, and inherently digital consumers who live in the everyday, always-on space that connects online and IRL (in real world) behaviors.
Forever 21 is just one of the latest brands successfully exploring these horizon worlds. Gucci, Burberry, Nike, ADIDAS, among many others, have successfully introduced skins, digital assets, and NFTs in virtual worlds and on blockchains to reach Gen-Y, Gen-Z, and Gen-Alpha.
In early 2022, Gucci created a virtual space in Sandbox to display NFT artwork and vintage fashion pieces. The luxury brand also released a pair of $12.99 virtual sneakers, which customer could wear using augmented reality on their mobile devices.
In November 2022, Burberry partnered with Minecraft. Burberry’s signature tartan “check” scarf was deployed as a digital skin, free for players’ avatars to wear in the game. Following its popularity, Burberry also released a real-life collection, including a ~$475 scarf with pixelated Burberry lettering in tribute to its digital version.
The New Virtual World is Theirs, Everyone Else is Just Visiting
To hyper-connected customers, this virtual genesis all makes sense. They don’t wake up and tell themselves, “Today, I will be digital-first.” Digital, physical, hybrid, it’s all just life. It’s interconnected online and IRL. And it’s always evolving.
Their spending power is significant.
According to a 2021 report by JPMorgan, virtual worlds, the evolving metaverse, and NFTs will represent 10% of the luxury goods market by 2030. This equates to a ~$53 billion revenue opportunity and a 25% increase in the market’s overall profits.
A new study by Bain and Company estimates that Generations Y, Z, and Alpha will become the biggest buyers of luxury goods by 2030.
Separate research also shows that Gen Z and Gen Alpha’s luxury spending is expected to grow three times faster than any other generation.
Understanding what, where, how, and why they buy serves as the bridge between today’s brands and customers, the goods/assets they seek, and the shopping/e-commerce experiences they favor.
For instance, younger generations are more likely to be mindful about their spending. They view purchases as investments. Studies also show that they’re shifting away from buying goods that serve as a status symbol and instead, investing in self-expression. Spending becomes less of an indulgence and more akin to elevated essentialism.
If they have a say in the matter, they prefer not to have to go back to traditional web or e-commerce experiences. They would rather not have to put effort in buying from or being served by you. They want forward-moving experiences that are intuitive, experiential, and immersive like those they have in their favorite worlds.
Companies that connect with consumers in these worlds and offer culturally relevant, personalized onboarding to their brand and product experiences will learn what it takes to nurture those relationships. Successful companies will also adapt traditional e-commerce and physical retail experiences to the benefit of all customers. This is ongoing as times, trends, tastes, and technologies evolve.
For Your Consideration: Recommendations on Reimagining Experiences and Product Innovation
As the metaverse take shape, open your mind to play the short- and long-game. Following are initial recommendations to help you think through value creation in virtual worlds, in this pre-metaverse stage of the next web, and each important stage along the way:
Understand the values of your customer and the value they prioritize in their decision-making.
- What brands, goods, assets do they covet and why?
Evaluate virtual world experiences and how users/customers connect, transact, and collaborate differently.
- How are immersive user experiences reshaping behaviors and expectations?
- Which emergent technologies are gaining user adoption and how are they potentially influencing next trends?
Learn how and why successful pilots and campaigns excel, beyond the hype?
- Identify the patterns that contribute to short- and long-term brand-building.
- How do digital/physical assets align with consumer values, behaviors, and market trends?
- What are the ways these in-world engagements and product experiences enhance customer relationships, loyalty, and potentially CLV?
- What are the ways that you can translate these insights and potential investments into ROI for the organization? What do executives need to understand to support you? Speak the language of the C-Suite.
- If you’re a luxury brand, how do free or lower-cost digital assets connect to the prestige of your brand experience and value.
Compare those findings to your existing physical and digital journeys.
- How do new behaviors uncover areas of effort that customers put into engaging with you in/across touch points?
- How and where can you enhance the user experience across their journey, in every touch point, online, on mobile, and in-store/on-premise? What can you improve? What are you missing?
Track evolving trends to identify new areas for exploration and experimentation.
- Which new technologies create opportunities for further exploration?
- Who else in the organization can you collaborate with on broader opportunities?
- What can these findings teach you about new value creation?
- What pilots can you introduce that help you test and learn?