How consumers engage online is changing rapidly. In a recent survey, 71% of customers said they would shop more frequently with AR. Now, with the arrival of the metaverse, users are exposed to a new alternate world that allows them to experience an immersive and virtual experience, ushered in by advanced technologies such as augmented reality and virtual reality. For users, this allows for seamless transitions between virtual and physical environments. Metaverse is offering many features afforded by blockchain technology, such as non-fungible tokens (NFTs) and other digital assets.
In many ways, immersive commerce is an extension of traditional ecommerce as it creates new and improved customer experience by utilizing new tech.
As the metaverse gains ground as the new shiny thing, the concept itself isn’t new. Back in 1992, Neal Stephenson spoke about the metaverse in his sci-fi novel called ‘Snow Crash’: “This imaginary place is known as the Metaverse”.
Today, the metaverse hype is widely associated with Meta, or Meta Platforms, Inc, formerly known as Facebook.
First mover advantage – or disadvantage?
Meta is its founder Mark Zuckerberg’s big bet on a next digital frontier facilitated by the use of VR and AR devices. As the first mover with endless resources, Meta is striving to be an essential facilitator of the metaverse and all players in the metaverse ecosystem will have to have some touchpoints with the Meta-facilitated world. At least that’s what the company seems to be banking on.
However, much like in all rapidly evolving industries, there are both advantages and disadvantages to being a first mover.. Resource-abundant players can grab a lion’s share of the current market and run ahead of the competition. At the same time, many first movers today are long-forgotten giants in a place where brands go to die.
“Meta, while not even having anything ready – but just a vision – is claiming an area as a first mover especially when you have the resources to attract the right development hires and build almost limitless teams, trying to beat any possible competition and even copying successful platforms. Other players like Salesforce always have worked the same way, claiming to launch a platform, use their marketing engine to claim the area and afterwards start building or buying startups to cover the area,”
On the other hand, there are potential pitfalls.
“First, because it is an unknown world and still a lot of areas need to be discovered. A lot of money is burned on trial and error, and when making a mistake it could backfire eventually. One of the main challenges is and will continue to be the ethical side of the metaverse and virtual worlds. When you can take a lead as a big company to solve these challenges, you don’t experience the disadvantage. But for smaller companies or even startups, the risk as a first mover is much higher and sometimes not worth the shot. Unless you’re backed by sufficient funds and partners. That’s why you see a lot of large investments made in metaverse specialized startups by big companies such as Sony. And also in existing players like Epic Games,” said Bart Veenman, CCO of Humans.ai, a deep tech startup.
The tech industry has had exponential growth in the last 20 years and with it, certain key players have become so big that they now have unprecedented control and influence over the markets they operate in.
“This allows them to pave the way for other businesses that follow and to set the rules for others to follow as well. Meta has bought seven of the most successful companies in the virtual reality market making itself the biggest VR development company in the world. The inconvenience is the fact that it leaves little room for innovation apart from Meta’s vision as all the companies that arise and are promising are quickly assimilated,” said Tudor Vrabie, co-founder and CTO of SeedOn, a blockchain-based solution for conventional crowdfunding.
Due to the scale of financial and technical resources coupled with access to audience and consumer data, Meta will be a significant driver of mainstream adoption when it comes to immersive commerce and metaverse-based shopping.
“While there are risks that Meta will stifle competition and innovation, their ability to speed up mainstream adoption overall poses opportunities in the space. While it is not congruent with their existing model, if Meta is to succeed in Web3 they will need to find a mutually beneficial way to cede control, support portability and interoperability. Without being interoperable and portable, people will choose to spend their time and money elsewhere, which leaves an opportunity for more decentralized, open source players to create a metaverse experience which is more appealing,” said Lili Eva Bartha, founder of GN3RA, an immersive design platform for virtual fashion.
Some express doubt regarding reliance on Meta and its ability to dominate.
“Platforms like Roblox have created a gateway for verch, which is virtual merchandise that provides a link between players and brands in a savvy way. Insights from the last holiday season showed that Robux gift cards, the commerce mechanism for purchasing on Roblox, was at the top of many lists for gifting. I expect this trend to repeat, if not grow this coming holiday season.” said Sasha Wallinger, the Head of Web3 & Metaverse Strategy at Journey.
There are those who question Meta’s focus on VR instead of AR.
“The fact that they are continuing to develop VR, shows me that they’re taking the wrong approach and that we should instead be paying attention to companies that are innovating with augmented reality. It’s easier to imagine yourself shopping in the physical world with an AR filter rather than in a virtual reality world with a headset,” said Benoit Vatere, CEO and Founder of Mammoth Media.
Some even consider Meta an abject failure in terms of tech innovation, but due to an abundance of resources, they are able to buy success..
According to Eran Elhanani, the founder of BullPerks (decentralized venture capital and launchpad) and GamesPad (blockchain gaming, NFT and metaverse ecosystem, “Meta is only dominant in advertising and marketing, but quality is low and they’re not even considered a serious player currently. They failed in development or adoption so far and will most likely end up buying the top players that will emerge.”
The role of NFTs
NFTs might very well be the key to the adoption and value metaverse brings to immersive commerce, whether as long-term loyalty or membership cards unique digital items that convey status. While purchases will include both digital and physical items, interoperability being a key conversation.
NFTs are a foundational technology for digitally-verifiable ownership, but are still in their infancy, and the user experience has to improve before reaching billions of end users, said Linus Chung, VP of Product at Origin Protocol.
“However, with the pace of innovation that’s happening, we’re rapidly accelerating toward NFTs becoming as simple to use as buying a book online. Purchasing and owning digital goods is already an established behavior, with a market size of $32 billion. NFTs have the potential to supercharge this industry by removing the need for central apps to control digital goods.”
According to Ethan Song, the CEO of RareCircles, a revenue and engagement platform for Web3, companies will need to adjust to new avenues of customer engagement.
“All current channels that companies use to engage with their audiences will slowly die and companies will adjust to future developments. This means that email and social media are losing impact when engaging with audiences. NFTs are the latest innovative way that some brands are driving deeper engagement by focusing on their best customers, giving a voice to the brand’s direction, and much more.”
There’s also the question of utility when it comes to evaluating NFT staying power.
“The problem several e-commerce shoppers have with the NFT topic is utility. I would only want to buy an object for keeps when I can make a profit from this item or use this item to perform a reasonable function. If conventional NFTs can transcend this abstract state, they will attract more interest,” said Ganesh Raju, CEO of Akshaya.io.
How NFTs will shape user behavior remains to be seen and many remain skeptical, especially when it comes to mass adoption.
“Currently, NFTs are too complicated for the average ecommerce shopper. I haven’t yet seen anyone truly crack the code when it comes to explaining how NFTs work in a simple fashion to consumers not immersed in the tech space. It’s unsurprising that a recent study showed that only one in four Americans can accurately explain what an NFT is,” said Daniel Anstanding, tech media entrepreneur and founder and CEO of Futuri Media.
“That said, there’s a real first-mover advantage for companies that introduce NFTs as a component of their brand strategy, rather than their entire brand strategy. Nike, while an outlier, has already made nearly $200 million in revenue from its NFT collections. High-end brands like Gucci, Dolce & Gabbana, and Gucci are starting to make serious money as well. And NFTs from media brands from Outside Magazine to Snoop Dogg are doing a lot of the heavy lifting in introducing the concept to their fans and followers. Companies that don’t bet the farm on NFTs, but rather introduce them as part of a forward-thinking marketing strategy, will benefit from others helping educate the public,” Anstandig concludes.
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