E-Commerce and The Metaverse: The New Retail Model
Excluding those who have been living under a rock for the past 25 years, we are all well aware that e-commerce has taken the retail world by storm. Add to that a global pandemic, smartphone ubiquity, and globalization, and you have a colossal retail transformation. Whether you are a retail brand with a modest e-commerce presence, a pure e-commerce brand that started up during the pandemic, or a traditional offline retailer that has struggled to enter the online retail space, the Metaverse brings the promise of an entirely new e-commerce retail model that everyone can benefit from.
Upping-the-Ante for Retail-First Presences
In-N-Out Burger is on the Metaverse. Even Gucci is – why aren’t you? Luxury is the perfect example of a retail strategy that actually loses out on traditional e-commerce because it can’t capture the offline luxury experience. The Metaverse remedies this – picture: virtual Gucci Garden in Florence meets Easter egg hunt for limited-edition virtual Gucci accessories. The result? Through-the-roof engagement, 4.5 million items won, and astronomical increases in resale value surpassing that of the items’ offline equivalents. Primarily offline retailers may be behind the times, but the times haven’t given them an opportunity to successfully transition to e-commerce – until the Metaverse. This virtual world can bring these primarily offline retailers – think department stores, retail institutions, local retail superstars – online, by emulating the offline experience and allowing users to continue to try before they buy. Instead of losing their traditional business model and personalized shopping experience, these retailers can simply transition them to a virtual setting and operate offline and online in a similar fashion. What was once a major barrier to e-commerce for retail-first presences has now become a catalyst for an increased capability that was never possible for primarily offline retailers – a transition so significant that it might have saved the iconic Barneys. Primarily offline retailers now have the opportunity to widen their global reach by allowing international residents to virtually try products before buying, and can further heighten customer experience through concierge-like, interactive features with real customer service associates – this definitely beats a Zendesk text message.
A New Era for Pure E-Commerce Brands
What does the Metaverse mean for pure e-commerce brands? Four words: Try Before You Buy. Browse, buy, return – this is the pattern for most of the 2.14 billion worldwide e-commerce consumers (Sleeknote). While there was much debate about whether e-commerce would render brick-and-mortar stores obsolete, the answer is that consumers need both. Despite the widespread growth of e-commerce due to the pandemic, industry executives and analysts have found that consumers have placed more value on physical stores entering 2022. What is a crucial detail missing from the e-commerce experience? Engagement; and this is where brick-and-mortar locations, or virtual Metaverse versions, can fill this gap. The Metaverse eliminates the tradeoff between convenience and certainty in e-commerce retail. E-commerce only brands that have popped up during the pandemic or that existed prior but are not household names nationally will finally have the capability to act as offline retailers and deliver retail-like experiences in the virtual world of the Metaverse. Consumers will have the opportunity to try before they buy, in a completely virtual setting. Countless offline features – pop-up stores, limited edition offerings, fully immersive customer experience such as beauty counter expertise and personal shoppers – all become possible in the Metaverse. The Metaverse picks up the slack of pure e-commerce brands and gives them a chance to be everything they haven’t been: immersive, human, attentive. Oh, and don’t forget, you can buy it twice – as an NFT and in the non-metaverse!
With the Metaverse also comes the birth of e-commerce franchising. This has never been possible in the real world, where the only semblance of an e-commerce franchise model was the use of different online distribution channels such as direct-to-consumer, and shops on Amazon, TikTok, Facebook, Instagram, and Etsy. Enter, the Metaverse – a breeding ground for a new wave of virtual investing, with millions of dollars already invested into virtual real estate alone. For pure e-commerce brands, this offers the opportunity to sell virtual store franchises to interested investors. Brands can open a “store” in every virtual world, land, or city of the Metaverse and invite investors and interested franchisees to own part of it, or brands can accomplish this independently.
How Can Small-Medium (Retail-Only) Business Take Advantage of the Metaverse?
For many small-medium businesses, the cost to enter the world of e-commerce is too significant, and the only financially feasible option is to remain beholden to a third-party e-commerce channel. This is the case for independently operated restaurants, bakers, and cake makers, who cannot afford the approximate $70,000 expenditure to initiate an independent e-commerce operation and instead rely on external platforms that charge very high fees to deliver products to customers. The Metaverse changes the landscape for these small-medium businesses by creating opportunities for increased brand awareness. Think, interactive Cake Boss-esque competitions to find the next best cupcake in Los Angeles – because we watched it, we want one; and now that business has orders that it can fulfill offline. In the case of small-medium brands with exclusively offline operations such as the carefully curated boutiques full of obscurely branded treasures, the Metaverse offers the opportunity for all of the costly activities that would allow it to transition from mom-and-pop shop to established brand. Whether this is a Metaverse brand launch or expansion to multiple virtual locations, it can be accomplished at a fraction of the cost and with an exponentially wider global reach.
The Metaverse ushers in a new era for retail – say goodbye to e-commerce and say hello to meta-commerce. With implications for brands following any retail model from pure e-commerce to traditional offline retail, this new virtual world represents an opportunity for all. The Metaverse is uncharted water – and brands will need to adapt to swim.
