Shopping in the Metaverse

Identify and understand the metaverse commerce shopping impacts on retail value streams.

Analyst Perspective

The metaverse commerce shopping journey will lead to growth with direct-to-avatar (D2A) models via blockchain, digital twins, and non-fungible tokens (NFTs).

The metaverse will fundamentally disrupt the retail ecosystem and take personalization from evolution to a complete revolution. Although metaverse commerce is still in its infancy, many retail brands are testing applications like avatar-driven customer services, augmented reality, and 3D interaction to entice shoppers through virtual stores, products, and events.

For many enterprises, realizing value in the metaverse is a mystery for now. Ultimately, retailers will need to map out their journey from today to be ready to deliver a metaverse commerce experience that their customers will expect through products, customer services, operating model, and technology.

As technology advances, much consideration will focus on the degree to which retail brands must leverage prospects in the metaverse commerce, or they may have to trade due to the possibility of losing competitive advantage, market share, and profitability.

Retailers must validate their strategy and persistently reinforce the enterprise's core capabilities and construct to capitalize on the value of this new prospect.

Rahul Jaiswal
Principal Research Director, Retail
Info-Tech Research Group

Executive Summary

Your Challenge

• Retailers struggle to adapt to the rise in demands for cryptocurrencies, NFTs, and metaverse from the evolving needs of virtual shoppers.
• Shopping in the metaverse works differently than shopping used to, and requires a new outlook, models, and competencies to remain competitive.
• Metaverse commerce technology transformation requires superior technology journey mapping, and building a cohesive client experience.
• Retailers need a fully comprehensive strategy to address evolving shoppers' needs.

Common Obstacles

• Retailers are reluctant to execute metaverse, which is the key to the success of the retail organization's strategy.
• Most retailers don't know how to begin. Retailers have not taken a structured approach to execute technology in each phase of the shopping journey and have deployed technology before developing a robust strategy.
• Virtual and augmented customer experiences are crucial for retailers to drive value in today's market.
• Most retail brands seek to adopt a well-crafted strategy in technology deployment to master the metaverse commerce domain.

Info-Tech's Approach

• Identify opportunities across your shopping journey to capitalize on the blockchain, digital twinning, infrastructure, and virtual environments to monetize key customer insights.
• Realize the effects of metaverse that are being felt on all entities of the physical and virtual retail ecosystem.
• Learn how the best-in-class retailers are already reaping business benefits from adopting technology demands with the Metaverse Journey Map.
• Visualize consumer, services, operations, and technology components in unison for your enterprise and industry use cases to design a list of initiatives to integrate into the IT strategic plan.

Info-Tech Insight

Many enterprises do not recognize the use of blockchain, digital twinning, AR, VR or MR as vital to their business. Interest in these spaces is quickly increasing as digital currencies, non-fungible tokens, and metaverse commerce generate new outlooks for value creation. Businesses need to develop a holistic strategy and reevaluate business and technology capabilities while planning for the metaverse. Retail brands that do not plan for the future are likely to lose market share to metaverse commerce adopters.

The metaverse is a technological convergence

The metaverse is a platform combining multiple technologies to enable social and economic activity in a digital world that is connected to the physical world.

Info-Tech Insight

A metaverse experience must combine the three P's: user presence is represented, the world is persistent, and data is portable.

Forecast eCommerce to grow progressively in the future by driving an increasing number of online buyers who are willing to spend more

Online Sales Growth

E-commerce as a percentage of total retail sales worldwide from 2015 to 2020, with forecasts from 2021 to 2025

Metaverse will lead the next wave of growth with the direct-to-avatar model through product development, infrastructure, blockchain and product design

Retail brands are building digital products, modelling real physical environments in digital space applying

• Virtual showrooming – Designed to allow customers to take a tour and interact with 3D products.
• Virtual try-on – Assisting customers to tap into augmented reality, try on glasses or makeup, and visualize furniture.
• Customization and co-innovation –3D technology leveraged to let consumers build/design their shoes.
• Gamification – Brands are creating a video game to reach a younger audience with branded NFT collectables.
• Connected wellbeing – Digital treatments such as prescription gaming and VR pharmacies are gaining momentum in the medical world.

Source: McKinsey & Company, Senior Executive Survey, April 2022

Leading retailers and brands are offering metaverse commerce at various stages of the shopping journey

Awareness	Consideration	Transaction	Delivery	Engagement
Burberry is leveraging virtual influencers as key opinion leaders and consumers (KOL and KOCs) in a collaboration with Ayayi, who is the first metahuman in China (hyper-realistic digitized person), She (Ayayi) gained 400,000 followers overnight and nearly 3m views on her first post. Working with Ayayi, Burberry launched a limited-edition NFT linked to a physical collection.	Walmart's acquisition of Memomi, an AR startup would drive virtual try-on for eyewear. Walmart has increased its investments in new technology for virtual try-on, and newly launched a virtual fitting room after acquiring Zeekit.	Nike has struck a partnership with RTFKT Studios, a fashion startup that makes its own NFTs — including sneakers. Nike has filed a trademark for its trainers, which stops anyone else from selling Nike shoes in the metaverse.	Carrefour is leveraging blockchain technology to track its meat, milk and fruit from farm to store. Blockchain technology informs their customers and increases customers' trust in products. It's done via a QR code scannable on any phone, and it gives information about where and when the product was harvested, whether it contains any pesticides, etc.	CVS retail pharmacy is bringing in-store and telehealth services to a virtual setting via digital twins, plus "health care services delivered in virtual and augmented reality environments, i.e., non-emergency medical treatment services, wellness programs, advisory services relating to nutrition, providing health lifestyle nutrition services and counseling.
Fashion house Balenciaga collaborated with the video game Fortnite to release a collection of in-game clothes and limited-edition physical garments. The in-game garments were created through existing 3D scans of Balenciaga's designs.	Lowes launched 'Open Builder', a 3D product library containing over 500 assets from various brands that Lowe's sells in-store. Shoppers can simply explore the library, select the model, and download it. Since these assets are interoperable, they could have built a showroom using Mozilla Hubs, decked out an apartment in VRChat, or thrown a pool party in Roblox.	The Amazon-managed Blockchain system uses Hyperledger Fabric and Ethereum. It's a fully managed transaction system that safeguards that the precise networks work in coherence with each other, and the overhead costs to maintain them are removed.	Together with Microsoft, this luxury group developed the platform AURA. This platform provides product tracking and tracing services using Ethereum. Customers can learn about the origin of the products using this platform.	Disney filed a patent for a "virtual-world simulator," which replicates one of the company's theme parks in a 3D realm. Users can now move in "highly immersive individualized 3D virtual experiences without needing users to wear an AR-augmented reality viewing device.

Source: Open Source, Info-Tech Research Group Analysis

METAVERSE COMMERCE

Source: Info-Tech Research Group Analysis

Metaverse commerce will harness blockchain technology to advance the shopping experience

Awareness and the Readiness

Start the blockchain journey with integration, modernization, and agility at its core

• Legacy Modernization – Integrate blockchain into an existing legacy environment.
• Service Integration – Assist complex integration when integrating blockchain into the current business and technology environment.
• Agile Prototyping – Practice agile prototyping to achieve efficient communication with stakeholders, track design decisions, and manage the implementation of blockchain prototypes.

Retailers must explore blockchain with proof of concept (PoC) for recognized use cases using an agile approach.

1. Leverage Smart Contracts to Execute Commercial Transactions and Agreements – Smart contracts use blockchain to enforce the obligations of all parties in a contract, without the extra overhead of a middleman. They are computer programs that facilitate, verify, or enforce the negotiation or execution of an agreement. Smart contracts often emulate the logic of standard contractual clauses, so many contractual sections can be made partially or fully self-executing, self-enforcing, or both.
2. Enhance Data Portability and Reduced Risk Storing Customer Information – Know Your Client (KYC) Statements can be stored on the blockchain to decrease administration problems and costs while outlining the concerns that still need to be addressed. A decentralized identity management platform would reduce the stress on the current centralized approach to storing customer information. By storing data in blocks and using a tamperproof hash format, retailers can improve the security of the stored identity, improve the portability of data, and reduce the time taken for KYC efforts.
3. Deliver Seamless Direct Money Transfer and Payments – Blockchain technology could be used to overcome the current problem of the correspondent system and international money transfer. The fee-intensive & fragmented cross-border non-cash transaction could be eliminated by excluding third parties, direct money transfers, and efficient interbank settlements. Creating a competitive marketplace of liquidity providers potentially ensures the best exchange rates for international exchange and payment transactions.
4. Use Decentralized Ledger for Trade Settlements – Trade settlement processes usually require two to three days for payments and securities to change hands. Moving this process to a decentralized ledger can have a transformative effect on the markets. This need not be limited to debt, etc., but can also be extended to complex modelling.

Digital twinning will take personalized retail from evolution to revolution

Awareness & Readiness

• Digital twinning aids in applying changes in test mode, fine-tuning the process online, and deploying flawless solutions into reality.
• All hypotheses can be verified within the simulation, which saves time, money, and other resources. Enterprises fundamentally get a trial run for any likely changes online, which significantly decreases errors in the real processes.
• Digital twins can be used to generate computational investigative models for any purpose desired. It embraces operating effects, predictions of conditions, and determining behaviours.
• Models can recommend enhanced actions based on engineering input, ML and AI, sciences like physics, chemistry, statistics, as well as business objectives.

*AR: Augmented Reality; VR: Virtual Reality; MR: Mixed Reality