Exploring the Potential of the Metaverse to Revolutionize Ecommerce Businesses

The metaverse wave is starting to gain momentum. Businesses that fail to strategize their approach to this enhanced world may be at a disadvantage. In this article we’ll discuss the rise of AR (Augmented Reality) and VR (Virtual Reality), along with the challenges and benefits for ecommerce businesses.
 
Broadly speaking, the metaverse consists of artificial and virtual environments accessed using AR or VR goggles, smart glasses, and portable and desktop devices. These environments allow the shopper to appear as an avatar within the virtual space, interact with other avatars, and most significantly, purchase products and services through a variety of blockchain-enabled digital currencies.

AR/VR Expert Predictions for the Future 

The adoption of AR/VR for shopping is expected to grow significantly over the next decade, with a range of predictions highlighting this upward trend.

• In 2022, about 14.94 million of these devices were shipped. This number is projected to grow to 23.22 million in 2023 and reach 43.87 million by 2025, representing a more than seven-fold increase from 2020 to 2025.
• The market, valued at $19 billion in 2022, is projected to grow to $165.91 billion by the end of 2030.
• The AR/VR market is forecasted to generate $13.8 billion in revenues for 2022 and grow to $50.9 billion by 2026. 
• Specific sectors, including retail, are embracing AR/VR technologies. The retail industry is integrating these technologies to adapt to evolving consumer preferences, such as the ability to provide new branded experiences and “try before they buy” in virtual settings.

Source: Metaverse in Ecommerce Market by Platform and Geography — Forecast and Analysis 2022 – 2026 by Technavio

Challenges of Adopting AR/VR

Although the next decade looks promising for the adoption of AR/VR in shopping and other sectors, there are definitely challenges that need to be addressed to realize the full potential of these technologies. These challenges include:

Create New Revenue Streams

Developing metaverse strategies that deliver new revenue streams and don’t cannibalize or compete with existing ones.

User Experience as a Key Success Factor 

Despite the growth and success of AR/VR, adoption depends heavily on user experience. Technical limitations, performance issues, and bulky hardware remain barriers to widespread adoption. Improving these aspects is crucial for mass-market adoption of AR/VR technologies.

Rising Costs

The high cost of smart glasses means that until pricing comes down, usage will be by early adopters and developers. Despite this, Meta (Facebook) is developing a lower-end pair of AR smart glasses slated for release in 2024, with the ambition to sell tens of millions of smart glasses by the end of the decade. Apple is also planning its own AR and VR products, with an analyst suggesting that Apple hopes to replace the iPhone with AR in ten years.

Benefits of Adopting AR/VR

Ecommerce businesses that solve for the above could experience explosive benefits. This includes:

Blockchain Integration

Blockchain technology can enhance security, trust, and transparency in ecommerce transactions.

Extended Reality (AR and VR) 

AR and VR can offer immersive, branded shopping experiences, potentially reducing return rates and enhancing customer engagement.

NFTs Create Tangible Value

Non-Fungible Tokens (NFTs) can help create unique, exclusive shopping experiences and opportunities for brand engagement.

Mass Personalization and Customization

The metaverse enables deeper personalization and customization options to connect with the customers on a deeper level and build meaningful customer relationships.

Immersive Analytics

The metaverse can provide deeper insights into customer behavior and preferences.

AI with AR is Reshaping the Retail Landscape

The combination of AI to help power AR/VR exponentially increases the potential for success. For example, ecommerce livestreaming with avatars could be a way for businesses to profit from the convergence of these technologies. 

“Livestreaming, particularly livestreaming commerce, is something no country in the world has anything at the scale China has.”
Daniel Zipser - Senior Partner, McKinsey

Tencent

Tencent has launched a product that requires only a three-minute video of a user along with 100 spoken sentences to build a custom avatar. The company also has a “Zen Video” platform that allows people to create simple promotional videos with an AI-human spokesperson. 

Some companies are also combining ChatGPT - like artificial intelligence with livestreaming.

JD Retail

Online retail giant JD.com said its Yanxi virtual anchor product — based on the company’s AI model — was used in livestreaming sessions for more than 4000 brands during Singles Day this year. 

Baidu

Baidu, best known for its search engine and AI chatbot, entered online shopping this Singles Day with the first at-scale use of its AI digital-human livestreaming product on its “Youxuan” ecommerce platform. The company claims digital- humans ran 17,000 streams from October 20 to November 11.

Real-World Use Cases of Metaverse

Many businesses are already integrating metaverse concepts into their ecommerce strategies, showcasing innovative approaches to digital commerce and customer engagement. Here are some use cases and examples of metaverse business opportunities and applications in ecommerce:

Disney

Disney is creating its own metaverse, blending the physical and digital worlds. They have filed a patent for a "virtual - world simulator" and have plans to create virtual experiences that replicate their theme parks. Disney’s MagicBand+ wrist device integrates physical, digital, and virtual elements, offering guests new ways to engage with Disney moments and experiences.

Hyundai

Hyundai launched Mobility Adventure on Roblox, a metaverse space featuring the company's products and future mobility solutions. This virtual space allows users to experience Hyundai’s mobility offerings and customize their avatars, targeting young, tech-savvy consumers.

Nike 

Nike acquired RTFKT, a non-fungible token studio that produces digital collectibles, including digital sneakers. This move follows Nike's intent to produce and sell footwear, apparel, and accessories for use in virtual environments.

Coca-Cola 

Coca-Cola collaborated with Tafi to design virtual wearables for their first-ever NFT collectibles. These digital apparels, auctioned on OpenSea, can be worn in the virtual world of Decentraland.

These examples illustrate the diverse ways in which businesses are exploring and benefiting from metaverse technologies, from virtual world simulations and interactive experiences to digital goods and NFTs. Each demonstrates a unique branded approach to leveraging the metaverse to enhance engagement, customer experiences, and create new revenue streams in the digital and real world.

How Kensium Can Help Businesses Reshape the Future of Digital Commerce With Metaverse

As the metaverse wave and opportunities continue to grow, Kensium recommends that retail, wholesale, and service businesses develop an appropriate, phased strategy to ensure they remain relevant. At Kensium, we keep an eye on ecommerce trends and how industries can best leverage their assets across all ecommerce channels, devices, and platforms. As a leading full-service agency providing world-class ecommerce solutions, we offer expert guidance in mastering the art of building your own metaverse virtual world. Our team can figure out the best AI niches and emerging areas to drive better efficiency and profitability in the ecommerce business. Contact us today to learn more about how we can help your brand thrive in the age of metaverse.