The latest development in the digital landscape, the Metaverse is catching the attention of merchants looking to offer their customers a unique and personalized experience.
The Metaverse is a series of 3D virtual universes created by multiple entities and focused on social connections, where real and virtual environments merge. Using virtual and augmented reality (VR/AR) tools, the Metaverse aims to offer consumers and brands a new place to work, learn, play, shop and create an embodied internet.
The potential of the Metaverse is such that Mark Zuckerberg rebranded Facebook’s parent company as Meta to put this new universe at the heart of everything the company produces to serve its 3.6 billion monthly active users across its various social networks an ever-evolving virtual world to provide applications while transforming the mobile commerce (m-commerce) experience.
Of course, this shift hasn’t escaped the notice of big retailer brands. According to statistics from the Fédération de l’e-commerce et de la vente à distance (FEVAD), e-commerce in France has grown significantly during the COVID pandemic. Online sales have actually increased by almost 4 points, increasing from 9.8% in 2019 to 13.4% in 2020. Online sales of products, for their part, saw a 32% growth. In summary, the possibilities to offer all types of users – new and existing – exciting and never-before-seen shopping experiences in a new dimension of e-commerce seem endless.
But given the Metaverse’s potential to transform the way brands interact with their customers, what are the opportunities – and of course the risks – for retailers looking to virtually replicate their customers’ experiences in brick-and-mortar stores? -Trade sites?
The Metaverse at the Service of Customer Experience (CX)
It’s a fact that more and more brands are trying to deepen their relationship with their customers by reproducing the in-store experience in the metaverse. Reputable retailers such as Ralph Lauren, Zara and even the Walmart chain have recently announced the launch of virtual stores where customers can interact with and try on clothes before making a purchase in person or online.
The merging of the physical and digital world has led to a new definition of shopping: last September, for example, Samsung presented its virtual store, which was modeled after its store in New York.
The virtual universe provides a space for brands to test new products, styles or colors in a familiar environment to gauge consumer interest before starting production of an item. Connecting digital and virtual spaces and improving the customer experience across all channels has great benefits: placing more accurate orders, reducing excess inventory or responding to consumer expectations with greater accuracy.
Digital twin technology makes it possible to create the virtual version of a home, shop, office or even client, creating seamless connections between the physical and virtual worlds. For example, consumers can view and interact with products such as IKEA furniture without leaving their couch, but also visit coupled stores and test the products before physically purchasing them. Such a development will allow companies to significantly reduce their response rates and improve the broader customer experience by streamlining the real world through virtualization.
Beyond digital twins, Metaverse users also have the ability to create potentially different avatars of their users, whether in terms of identity, style, behavior, and societal choices, as is the case with Roblox or Fortnite. This ability to use multiple identities in the Metaverse allows traders to interact with an ever-expanding audience with diverse individual needs. The emergence of new consumer groups goes hand in hand with the invention of new methods to better target them. Brands then need to convert physical consumers to digital, but also new digital consumers (avatars) to the physical universe.
It makes sense for brands to embrace this innovative technology and explore the tremendous possibilities offered by this experimental playground, the next step in their e-commerce roadmap, despite the predictably high cost.
The metaverse does not spare uncertainty
However, this new digital frontier is still largely uncharted territory. Some consumers want to try exciting and innovative technologies, but brands have a responsibility to minimize the risks they take just like in the physical world, otherwise they put themselves at risk of attacks and fraud.
The ability to create multiple identities in the Metaverse allows scammers to create fake profiles or sell items for fake items. Automated bots can be used to impersonate legitimate users and generate unnecessary digital traffic that can slow down the functioning of these virtual spaces, much like reseller activities in the real world.
Bots can also deliberately lower the prices of Non-Fungible Tokens (NFTs) by placing fake bids and canceling bids that have already been accepted. These items are then re-listed at a lower price and then snapped up by the fraudulent resellers. These scammers can also intentionally increase the price of NFTs by replacing tokens with a smart contract that bypasses normal selling rules, and then reselling the items at a higher price on a secondary market.
This technique is used to give the impression that items are more valuable, but it also creates artificial market trends, underscoring the scale of the phenomenon that e-commerce is already witnessing in the metaverse. Exploiting such vulnerabilities could damage brand reputation and discourage users from visiting these websites. At a time when uncertainty permeates the Metaverse, merchants must ensure they maintain a high level of trust with their customers, encouraging them to explore new environments without fear and in complete safety.
While it is still unclear how fraudulent activity will unfold and how it will be monitored in the Metaverse, traders are well advised to be proactive and anticipate various eventualities. For brands to continue to innovate in the customer relationship and experience, retailers must understand and recognize users by connecting real people with digital people through the use of automated, user-driven technologies. This approach enables merchants to respond quickly and proactively to new and emerging threats. From today’s perspective, however, cyber criminals benefit from the lack of regulation.
Payment and Regulations in the Metaverse
Blockchain technology combines the security and scalability required to operate a secure global network for over-the-counter payments. However, this situation is not without its challenges for regulators. A system of interconnected nodes processing transactions around the world inevitably raises the question of how to regulate a virtual environment like the Metaverse. Do companies need to comply with the laws and regulations of multiple jurisdictions? Who will rule this virtual reality?
Authentication is another bone of contention: how can users identify legitimate merchants and products? This is where NFTs can provide an answer. A patent filed by Nike in 2019 connects shoes and apparel to the Ethereum blockchain and provides proof of authenticity for physical goods. In fact, this method could allow brands to link physical and digital goods in addition to proof of authenticity.
According to a study by Finder, as of March 2022, 8% of the French owned cryptocurrencies. Cryptocurrencies are the preferred payment method for the Metaverse by design, highlighting the real issues businesses need to address. Although it is an emerging currency and still a long way from widespread adoption, retailers who choose to use cryptocurrencies solely as a form of payment risk deterring mass consumers, as some cannot – or do not want to – adopt these virtual currencies .
When established payment processors decide to operate in the Metaverse and offer consumers the ability to pay for their purchases with real currencies, how quickly will the entire payments ecosystem be able to accommodate and authenticate transactions? For example, Mastercard has already announced that it will expand its payment processing system to the Metaverse.
Will this evolution also affect the traditional means of authenticating payments? Will automated identity-based solutions bridge the gap between real consumers and their digital twins? In any case, the general uncertainty surrounding regulations and payments in the metaverse underscores the need for caution and great adaptability.
The future of the metaverse
The Metaverse is the single most disruptive technology the retail market has seen since the explosion of digital commerce and the onset of the pandemic. The fact that this environment is still largely unknown opens up a world of opportunities, but also potential dangers.
While it’s still too early to fully appreciate the impact of this revolution, the winners of the Metaverse won’t necessarily be the first, but likely those who know how to create a safe environment while offering a unique and personalized experience to their customers .
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