The metaverse, a new frontier for mass distribution

The latest evolution in the digital landscape, the metaverse is attracting the attention of distributors who wish to offer their customers a unique and personalized experience.

The Metaverse is a set of 3D virtual universes created by multiple entities and focused on social connections where real and virtual environments merge. Thanks to the tools of virtual reality and augmented (VR/AR), the metaverse aims to offer a new place where consumers and brands can work, learn, play, shop and create an Internet incarnate.

The potential of the metaverse is such that Mark Zuckerberg renamed Facebook’s parent company Meta to position this new universe at the center of everything the company produces, to provide an ever-evolving virtual world to its 3.6 billion people. monthly active users in its various social applications, and at the same time transform the experience of the commerce mobile (m-commerce).

This shift has of course not escaped the brands of large retailers. According to statistics from the Federation of e-commerce and distance selling (FEVAD), e-commerce has grown strongly in France during the COVID pandemic. Online sales have indeed gained nearly 4 points, going from 9.8% in 2019 to 13.4% in 2020. For its part, the online sale of products recorded a growth of 32%. In summary, the possibilities of providing all kinds of users — new and existing — with exhilarating and never-before-seen shopping experiences in a new dimension of e-commerce seem endless.

But given the potential of the metaverse to transform the way brands interact with their customers, what are the opportunities—and of course the risks—for retailers looking to replicate their customers’ experiences in brick-and-mortar stores virtually? and on current e-commerce sites?

The metaverse at the service of customer experience (CX)

It’s a fact, more and more brands are looking to deepen their relationship with their customers by reproducing in the metaverse the experience lived in store. Renowned brands such as Ralph Lauren, Zara and even the Walmart chain have recently announced the launch of virtual stores where customers can interact with clothes and try them on, before continuing to shop in person or online.

The merging of the physical and digital worlds has led to a new definition of shopping: for example, Samsung unveiled its virtual store last September, built on the model of its store located in New York.

The virtual universe offers brands a space where they can test new products, styles or colors in a familiar environment in order to gauge consumer interest before launching the production of an article. Connecting digital and virtual spaces, as well as improving the customer experience across all channels, has major benefits: placing more accurate orders, reducing excess inventory, or responding with a more high accuracy to consumer expectations.

Digital twin technology makes it possible to create a virtual version of a home, store, office or even customers, thereby creating seamless connections between the physical and virtual worlds. For example, consumers will be able to view and interact with products such as furniture IKEA without leaving their couch, but also visiting paired outlets and testing the products before physically acquiring them. Such an evolution will allow companies to significantly reduce their return rates and improve the broader customer experience by streamlining the real world through virtualization.

Beyond digital twins, metaverse users will also have the ability to create potentially different avatars of their users, whether in identity, style, behaviors and societal choices, as is the case in Roblox or Fortnite. This ability to use multiple identities in the metaverse allows merchants to interact with a growing audience with varying individual needs. The appearance of new groups of consumers goes hand in hand with the invention of new methods to better target them. Brands will then have 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 discover the tremendous possibilities offered by this experimental playground, the next step in their e-commerce roadmap, despite the predictably high cost.

Uncertainty does not spare the metaverse

However, this new digital frontier is still largely uncharted territory. Some consumers want to test exciting and innovative technologies, but brands have a responsibility to minimize the risks they incur as they would in the physical world, otherwise they expose themselves to the risk of attacks and fraud.

The ability to create multiple identities in the metaverse allows scammers to create fake profiles or upsell items on fake items. Automated bots can be used to impersonate legitimate users, generating unnecessary digital traffic that can slow down the functioning of these virtual spaces, much like the activity of resellers in the real world.

Bots can also intentionally 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 scooped up by the rogue resellers. These fraudsters can also intentionally increase the price of NFTs by replacing tokens with a bis smart contract that circumvents the usual sale rules, then reselling the items at a higher price in a secondary market.

This technique is used to give the impression that the value of items is higher, but it also creates artificial market trends, which underlines the magnitude of the phenomenon that e-commerce is already experiencing in the metaverse. Exploitation of such vulnerabilities could damage brand reputations and discourage users from visiting these sites. At a time when uncertainty is pervading the metaverse, merchants must ensure they maintain a high level of trust with their customers by encouraging them to explore new environments without fear and in complete safety.

While it’s still unclear how fraudulent activity will develop and how it will be monitored in the metaverse, merchants are well advised to be proactive and anticipate different eventualities. For brands to continue innovating for the customer relationship and experience, retailers need to understand and recognize users by connecting real-world personae to digital personae through the use of automated, user-driven technologies. ‘identify. This approach will empower merchants to respond quickly and proactively to new and emerging threats. As things stand, however, cybercriminals benefit from the absence of regulations.

Payment and regulations in the metaverse

Blockchain technology combines the security and scalability needed to power a secure global network for over-the-counter payments. However, this situation is not without challenges for regulators. A system of interconnected nodes that process transactions around the world necessarily raises questions about how a virtual environment such as the metaverse can be regulated. Will companies have to comply with the laws and regulations of multiple jurisdictions? Who will govern this virtual reality?

Authentication is another bone of contention: how will users be able to identify legitimate retailers and products? This is where NFTs can provide an answer. A patent filed by Nike in 2019 combines the Ethereum blockchain with comma shoes and clothing, providing proof of authenticity for physical goods. In fact, in addition to proof of authenticity, this method could allow brands to link physical and digital merchandise.

According to a study by Finder, 8% of French people owned cryptocurrencies in March 2022. Cryptocurrencies are a priori the preferred method of payment for the metaverse, which highlights the real issues that companies will have to respond to. Even though it is an emerging currency and still far from widespread adoption, retailers who choose to use cryptocurrencies exclusively as a form of payment risk alienating mass consumers, with some not being able to — or not wanting — to adopt these virtual currencies.

If incumbent payment service providers decide to operate in the metaverse and offer consumers the option to pay for their purchases with real currencies, how quickly will the entire payments ecosystem be able to adapt and authenticate transactions? For example, Mastercard has already announced its intention to extend its payment processing system to the metaverse.

Furthermore, will this development concern the traditional means of authenticating payments? Will automatic identity-based solutions be able to bridge the gap between real consumers and their digital twins? Either way, 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 main disruptive technology that the retail market has seen since the explosion of digital commerce and the start of the pandemic. The fact that this environment is still largely unknown opens up a world of possibilities, but also of potential dangers.

While it is still too early to fully assess the impact of this revolution, the winners of the metaverse will not necessarily be the first to arrive, but probably those who know how to create a safe environment while offering their customers a unique and personalized experience.

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