December 19, 2022

By: George Thomas, Senior Consultant, LTIMindtree

What comes to your mind when you think of E-commerce models? I am sure, most of us are going to think of either B2B, B2C, C2C, C2B, B2A, or C2A. But is this still the case?

In 1992, Neal Stephenson was one of the initial mainstream influencers to talk about ‘The Metaverse.’ While, in his novel, Snow Crash1, he took the liberty granted to a novelist, little did even he know, how close to reality or ‘Virtual Reality’ his concept is today. Let’s explore further and see how this decades-old brainchild of a novelist has set into motion a new idea that will slowly expand onto the models that we see above.

Setting some context

Now, you might be wondering why this novel is relevant to our earlier point on the models of e-commerce that we started our discussion with. Let’s move forward from 1992 to 2003 when Linden Lab2 launched ‘Second Life.’ Now while some defined and classified it as a game, the lack of an objective, a mission, or even tasks and sub-tasks meant that this was a chance for people to have what the game itself stands for; a ‘Second Life.’ You could have a virtual existence parallel to your real life where you could be who you want – your ‘Avatar’ didn’t even have to be human as a matter of fact. You could be a part of a virtual existence, living, growing, interacting, and moving around almost exactly like you did in the real world. Linden used a virtual currency to build an entire economy in this simulated world, thus actually building a new virtual economy. One can actually buy this virtual currency3 using real-life money.

So basically, what this game, and others after it, did was allow people to build a virtual economy, which was a big e-commerce platform. Now while it was a virtual platform with a virtual economy, the fact remains that real money was being injected into the platform and trade was happening amongst Avatars to buy virtual commodities in a virtual world.

The Metaverse for everything commerce

With Facebook Inc. or rather, Meta, betting big on the metaverse, others4 have also joined them in building a more comprehensive and global virtual platform that builds upon the concept envisioned by Stephenson and brought to life by Linden. To name a few, Microsoft, Google, Nvidia, and Shopify, among others. Using Non-fungible Tokens (NFTs), wallets, and crypto, and aided by blockchain, we see a more stable and viable platform that is more than just a virtual escape and actually its own existence.

What it means for e-commerce

Let’s start by looking at some key changes in the last two-three years.

• With people being more connected than they were in 2003, the metaverse is far more accessible.
• Also, a pandemic meant that people were using virtual modes of interaction far more than would have normally been expected.
• NFTs and crypto have taken off and are now, for lack of a better word, ‘The IN thing.’
• Security with blockchain means a far more secure experience
• VR and AR technology have also seen massive growth, making the experience more immersive

While the initial investors in the Metaverse were mostly focusing on it as an alternate gaming platform, that’s just the tip of the iceberg. According to a quote from Gartner, “25% of People Will Spend At Least One Hour Per Day in the Metaverse by 2026⁵.” This is definitely not going to be only gamers for sure. A Google survey also shows that “66% of people say they are interested in using AR for help when shopping.⁶

The benefits of such a platform are of course obvious. To state a few:

• Advent of a new platform/channel
• A channel that will not be bound geographically
• Ability to use AR and VR for a more engaging experience
• Digital payment options

The below infographic showcases some of the key use cases that the Metaverse brings in:

For retailers, the biggest advantage of the Metaverse will be the ability to test and evaluate products in a virtual setting, which would help them collect feedback and garner interest at a fraction of the cost before launching the real product. For companies, this could be a game-changer when it comes to following the equivalent of an Agile process by being able to deliver and test prototypes with a large audience and incorporate feedback at great speeds. Studies show that consumers are willing to pay up to 40% more for a product that can be tested in 3D, thus adding a powerful weapon into a retailer’s arsenal⁷.

Retailers also have virtual showrooms in the Metaverse, which enable users to view and experience their entire range of products in a far more engaging way. We saw this with Samsung as well.8 Companies have experimented with AR and VR previously but what the Metaverse means is far more significant. It brings in a level platform that is owned by no one, but accessible to all. It’s basically the perfect marriage of e-commerce and the brick-and-mortar experience. Most customers do harbor a feeling⁹ that the ability to try and see and touch is what keeps the in-store experience paramount, with e-commerce becoming a channel of convenience. This no longer needs to be the case. The ability to provide hyper-personalized experiences that will take the ‘browse and buy’ phenomenon to a whole new level is an ability most retailers will grab with both hands.

What the pundits are saying

According to Citi, “The Metaverse May Be Worth $13 Trillion.¹⁰” Similarly, Goldman Sachs has also followed suit and billed the Metaverse as a $8 trillion opportunity¹¹.

Nike, Balenciaga, and Gucci as some of the top names when it comes to the fashion and lifestyle industry. They have all bet big on this trend and made significant investments and expansions to prepare for this new wave. Gaming and retail have been two of the first industries that have jumped on board this bandwagon.

NASDAQ¹² also did their own analysis and came up with a rather interesting article on the course adopted by several of the pioneers already making headway into this segment.

What are the challenges?

• The basic tenet of the metaverse means that it will have varying levels of engagement and immersive experiences based on the scale and level of hardware and technology available to a user. This also brings in the element of the cost of accessing the platform
• Fear of identity theft and security and closely followed by privacy and data security concerns
• Legal and jurisdiction issues, given the global nature of the metaverse
• Mental and physical health concerns
• Platform interoperability – due to multiple platforms

What LTIMindtree is doing in this space

LTIMindtree has a dedicated state-of-the-art experience center called ‘Immersive Aurora,’ where we showcase the art of possible to enable immersive experiences for our clients. Learn more about LTIMindtree’s Immersive Experiences capabilities.

What next?
The fact that the metaverse for everything commerce-related is the next big thing is beyond doubt. But what remains is the question of how ready companies and people in general are. With the latest layoffs in Meta, speculations are rife that the trend is premature. But the fact remains that the potential is immense, and investments made by the leaders and pioneers support this belief. Also, the use cases for the Metaverse, both retail and in other sectors as well present an argument, which also leads us to the same conclusion. While it may start as a technology that will initially target a certain audience, adoption is just a matter of time. Or as someone put it, the genie is indeed out of the bottle and there’s no putting it back. The challenges and opportunities it presents are going to make for a rather interesting and exciting future.

And finally, to come back to the question we started with, the way things are going, we are in for a new set of models where your end customer and seller are ‘Avatars,’ or a “Meta Entity.” With the Metaverse, the possibilities are endless, and the sky is the limit.

References:
https://www.amazon.in/Snow-Crash-Novel-Neal-Stephenson/dp/0553380958
https://www.lindenlab.com/
https:// lindenlab.freshdesk.com/support/solutions/articles/31000138105-buying-selling-linden-dollars
https://www.makeuseof.com/companies-investing-in-metaverse/
https://www.gartner.com/en/newsroom/press-releases/2022-02-07-gartner-predicts-25-percent-of-people-will-spend-at-least-one-hour-per-day-in-the-metaverse-by-2026
https://www.thinkwithgoogle.com/consumer-insights/consumer-trends/ar-shopping-interest-statistics/
https://eminence.ch/en/metaverse-ecommerce/#gref
https://www.samsung.com/us/explore/metaverse-837x/
https://www.livemint.com/opinion/online-views/metaverse-has-potential-to-revolutionize-ecommerce-11658743775928.html
https://www.barrons.com/articles/metaverse-web3-internet-virtual-reality-gaming-nvidia-51648744930
https://www2.deloitte.com/us/en/pages/consulting/articles/metaverse-for-the-future-of-retail.html
https://www.nasdaq.com/articles/retail-brands-enter-the-metaverse