Welcome to The Yellow Summarin - collecting the most interesting ideas, topics, and tweets from the past week at the intersection of tech, media, and commerce.
In today's edition (15.1.22):
Rethinking commerce in the metaverse
Luxury X Crypto
Read and listen :
Barriers to Entry
By Marin Gerov, 15.1.22
Brands, jumping on the metaverse bandwagon, are doing it as an option on a potential future payoff, in case we all end up hanging out in the digital world. The most well-known players that provide the infrastructure for a metaverse experience right now are games such as Decentraland, The Sandbox, Roblox and Fortnite. Today, there is a rush from brands to acquire space, digital plots of land, and to build their presence there. Developers and investors have spotted this opportunity and are buying digital land with the hopes of founding digital malls where those courageous, early-adopter brands can feature.
Will Brands Buy Into a Virtual Version of Rodeo Drive? (BoF)
Speculators are dropping millions of dollars on digital plots of land, in a bet these empty patches of virtual real estate will someday be home to thriving online shopping districts. Read story
There are a few problems with these experiences though. For one, they are catering to those who are already set up to participate in these environments. For newcomers, it is much harder to enter - they need to figure out how to register, access and operate in these worlds. Then, there is also the possibility that marketers and developers overestimate how much time people will be willing to spend in a metaverse. If people don’t have the patience to walk around a metaverse whether in VR or AR, how are they going to discover your brand. The push so far has been towards skeuomorphism - the recreation of physical experiences in a digital format. In this case, a 3D version of a brand’s store.
A virtual world pioneer has doubts about the metaverse (Axios)
Early metaverse architect Philip Rosedale is no longer confident the metaverse will be a huge hit, despite the surging interest from Meta (aka Facebook) and many other companies. Read story
But is that convincing enough for customers? If people are not going to retail locations in the real world, why would they enjoy the same experience but in a virtual environment? If the rise of online shopping has taught is anything is that people enjoy the convenience. Younger generations are used to social shopping and quick, 1-click checkouts. They don’t have to go to a store to see and try out an item. If they are not satisfied with the product they can easily return it without any extra cost or questions asked. Other than speculating on the latest marketing trend, the approach to build a digital version of a physical retail store does not make much sense.
Let’s say the goal of brands is to target the existing participants of metaverse platforms (the games mentioned above) and those eager to explore (usually either a tech- or marketing-curious bunch). To appeal to these groups, brands need to first obtain the digital property rights on the platform which is like buying land in the real world to build a store or signing a lease to open shop. Then, the retail experience inside such a store must be designed to fit the game’s dynamics. Essentially, brands have to build their own games tailored around a shopping experience. Even then, unless these virtual stores are designed as spaces to hang out and host virtual events (again enthusiasts probably overestimate the time people are willing to spend in the metaverse), it is hard to see why a skeuomorphic shopping experience would attract the attention of the players. Using gimmicks to attract shoppers to enter a store may work up to a point but it is not a sustainable solution (as I am writing this I am reminded of all the brands putting DJs in their stores with the hope of attracting foot traffic… that’s cringy and just lazy).
In my opinion, a more interesting take on the retail experience in the metaverse is to try and mimic e-commerce. Skip all the barriers attached to going to a store and point shoppers directly to the product or story the brand wants to share. Basically, replace the website with the metaverse experience. Instead of pointing people to the brand’s web store, point them to the coordinates of the virtual shop where the product they have just seen worn by their favorite influencer can be experienced in a way native to the metaverse medium. Then, if the customer wants to, they can choose to hang out in the brand store and extend the social experience by connecting with the other shoppers in the space.
Luxury x Crypto (The Sociology of Business)
Perhaps, the best example we have so far of making the most of the metaverse comes from luxury brands. As they are master storytellers and crafters of desire, the luxury industry has been paving the way for all of commerce in coming up with some intriguing concepts that show potential. This article explores the building blocks on which a strategy for brands entering the metaverse can be build. Read story
If an experience like this can be provided without the barriers of creating an account, logging in and all that, the metaverse can become a viable alternative to e-commerce as we know it today. Think about it. Today, in most web stores you don’t need to register an account or login to shop. The goal of every retailer that sells online is to eliminate barriers to entry - to reduce the clicks from landing to purchase. The less friction the better. The tools built around the use of social platforms (web 2) have been optimized to address these issues and to provide the shortest way to complete the transaction. Therefore, it makes no sense to introduce an experience that reintroduces friction and makes the customer work more. Unless brands build out their retail experiences in the metaverse to serve as showrooms, there is not much sense in creating a carbon copy of the shop as it exists in the real world.
Tweets
(* winner of Best Tweet Of The Week award 👆)
That’s a wrap for this week. Have fun!
Marin