“Think now, think virtual, think customized, think immersive.” – that’s the pitch metaverse is making to every savvy business under the sun.
The global metaverse in retail and e-commerce market was valued at USD 8.3 billion in 2021 and it is estimated to reach over USD 125.7 billion by 2030. While brands like Coca cola, Gucci, Nike, and Samsung, have had the first mover’s advantage, there’s a lot under the hood waiting to be explored, especially in the e-commerce realm.
Pavel Zaslavsky, co-founder and General Manager of Lisuto AI in a tete-a-tete with Krishna Tewari, Director (the USA and the UK) at Netscribes, unveiled the current state of metaverse in e-commerce from his lens.
Krishna: Metaverse is not yet a word in the dictionary and hence the enigma behind it. What according to you is the definition of metaverse?
Pavel: First of all I must say that the metaverse reality is highly speculative. We all understand the concept of metaverse. It’s a virtual world that we can experience. It can be immersive depending on the medium we use to engage with it – via a VR headset, it can be much more immersive than viewing it on a screen. For those of us who have played digital games, or have kids who do, we have a fair idea of what metaverse is all about, and what it looks like. Roblox and Fortnite serve as great examples. Now while these games are mission-oriented, metaverse in their context is a reality, a type of virtual life. Time in this world moves on just like in the real world. So, when I head out of the metaverse, things continue to move within it, and when I get back, the time has moved on. Therefore, the notion is quite similar to reality.
Krishna: Do you think metaverse will have a significant role to play in e-commerce as an industry?
Pavel: There is no doubt that metaverse, if it starts to become a significant part of our lives, will become a major platform for e-commerce. There are tons of projections, including those by Netscribes, that testify to it. There are estimates that the market potential of metaverse in e-commerce will reach USD 1 trillion, according to Business Insider. There are also estimates by JP Morgan. To say the least, even in the primitive virtual reality we currently have, last year saw USD 50 million spent on virtual goods. That’s amazing!
Something to the tune of USD 80 million has been doled out to digital creators of NFTs. The general forecast of the current market potential of NFTs is $40 billion. It can be more. But all of it depends on what will become of NFTs in the near future. Therefore, in terms of impact, we could say this is moving into a trillion-dollar economy.
Krishna: From an adoption standpoint, will metaverse have an impact on B2B as well, the way it’s influencing B2C?
Pavel: When we look at adoption, especially in e-commerce, B2C firms are the first to jump onto the innovation bandwagon while B2B players seriously lag behind. Investments in such solutions have always been low. For instance, while online marketplaces have been around for twenty years,t if you search for B2B high-quality, feature-backed marketplaces, you will almost not find any. Also, I think metaverse is a lot about communities. B2B is much more focused. It’s less about communities and therefore has less of a need for metaverse.
Having said that, metaverse is going to produce a new kind of economy – digital-only. We will have employees who will work on metaverse only, we will have goods relevant to the metaverse only. Therefore we will see marketplaces for digital goods and we will also see the convergence of traditional B2B and B2B for metaverse only. For instance, if a business is into designer clothing or real estate in the metaverse world, then it may not be geared towards the end-users, but businesses. Like Nike’s recent acquisitions are companies that design models for metaverse only. So, I think B2B adoptions will happen but at a slower pace compared to B2C.
Krishna: We have already seen the likes of Gucci experimenting with gaming platforms like Roblox. Their creation, Gucci Garden, had about 90 million visitors. In your view, are there certain criteria that brands need to fulfill before they dive into the metaverse?
Pavel: So here’s the thing – we all know these examples of Gucci and Balenciaga and their existence in some kind of metaverse. But these are more of gimmicky marketing rather than actually offering their services in the metaverse. So, coming to the point of when a company should enter the metaverse, it’s important to first check if they have services that are relevant in the metaverse.
Second, are there customers for the service? If you are going to create virtual environments or apartments in the metaverse do you already have people or avatars that are ready to live in these environments?
Next, you need a proper service model on how exactly this is supposed to work. And this is important – when we talk about metaverse, all the products and services that can be offered there can be either pure-play metaverse or oriented metaverse, or they can be designed for selling actual physical services. That’s where figuring out the service model is important. The same goes for ensuring proper payment models.
While there is a possibility to pay via traditional payment methods like credit cards, most likely metaverse is not headed in that direction. Even today we are aware of the existence of both digital goods and digital wallets. Therefore payment methods like these need to become more convenient and widespread.
Last, but not least, is the availability of talent. Talent that can build and serve these environments. Talent that can become avatars and provide digital services. You need people. Basically, the availability of services, customers, the creation of proper business models, and payment methods are the prerequisites for e-commerce to start becoming mainstream in the metaverse.
Krishna: Do consumer brands have an opportunity to create communities, contextualize performance, value, and quality of their products, and increase loyalty in the metaverse?
Pavel: Yes. I think there’s a huge opportunity for them. In fact, I think this is the first time brands can interact directly with their customers. And I mean directly. Because even though today, brands are digitally present, the way customer engagement takes place is asynchronous. It’s not like this very second you can walk up to your favorite brand’s store and talk to a representative. But in the metaverse, I think it’s possible. So yes, there is a possibility for brands to build a community-oriented business.
The only thing to remember is that any kind of community-oriented business is a double-edged sword. I can tell you this as an ex-eBay person. eBay has a very strong community, and at one point the community was dictating what should happen next, and even if eBay thought otherwise, it didn’t dare go against the community. So it’s obviously good and bad. On the one hand, you are community-driven and you know what people think but on the other hand, it gets really difficult to make decisions. Because there are so many voices in a community, it’s hard to get a majority. Such situations can be very limiting and sometimes even crippling for a brand.
Krishna: Is hyper-personalization an area where metaverse can play a much better role for brands than their current forms of online engagement?
Pavel: Yes, I think it’s basically what metaverse is being built for. It’s easy to build and personalize things in the metaverse. In the real world, if you are creating physical shoes, every kind of shoe costs a lot of effort and money – and even more money to produce, and distribute. Plus, you have no idea how well it will sell.
For instance, if I decide to produce yellow shoes, I really need to think through my decision. At the end of the day, will it sell? In the metaverse, you have no such qualms. The next challenge for metaverse and reality is crossing into the real world. In the metaverse, you can buy a hyper-personalized pair of shoes with a promise to receive similar physical shoes. This is really cool as it allows the customer to keep their identity both in the metaverse and in the real world.
But such customizations can be a real-world cost issue. Although, if this can happen in the real world it would be amazing. From a sales perspective, it can work really well, because as people if we see something we like we tend to make a copy. For example, if my wife sees someone wearing a piece of clothing that piques her interest, she would say “Oh! This is nice. Where did you find it?” Similarly, in the metaverse, it would be great if we could have a personalized sales representative who understands our tastes.
Krishna: In your view, which business verticals will become early adopters of the metaverse?
Pavel: I think the show business is really going to benefit from the metaverse and this is already happening. Huge concerts were conducted in the metaverse with millions attending. This is a real breakthrough as it’s not viable in the real world to have a million people attending a concert all at once. When it comes to the e-commerce world I think fashion will really benefit from it. It’s not easy but it’s very visual to enable it.
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Krishna Tewari has successfully grown and managed businesses in the field of Publishing, Industrial Automation & Ecommerce for leading companies such as The Times of India group, Network18, and Emerson process management. Currently, Krishna is associated with Netscribes as a growth mentor as well.
Pavel brings over 15 years of executive experience in driving successful product and marketing operations, business development, and partnerships in e-commerce. He also teaches e-commerce innovation, theory, and practice as the Faculty of Industrial Engineering and Management, MBA Program at Technion - Israel Institute of Technology.