​​​​​​​Commerce in the Metaverse: How Brands Are Exploring the Web3 Frontier

Virtual 3D worlds built for branding and entertainment are increasingly giving way to true commerce experiences. Here’s what marketers need to know.

The metaverse represents different things to different people. For marketers, one thing it is definitely not is a level playing field — especially when it comes to expectations for Web3-enabled commerce. If your name happens to be Nike or Starbucks, you can arguably afford to take the long view and plant your flag gradually in the metaverse, enticing consumers with immersive virtual experiences without hitting them over the head with a sales pitch.

“We’re not gonna sell stuff right away,” Ron Faris, general manager of Nike Virtual Studios, said last November when the brand announced its new “Swoosh” virtual community. For now, the Web3-based platform is a showcase for Nike’s virtual footwear, apparel and accessories. Users are invited to explore, collect and trade virtual items like jerseys and digital shoes. Some may be able to access exclusive events and collaborate with Nike designers on virtual products.

A similar story unfolded two months earlier when Starbucks launched its blockchain-based NFT platform, Odyssey. A virtual extension of the brand’s loyalty rewards program, Odyssey allows Starbucks loyalty customers to play interactive coffee-themed games (called “Journeys”) to win points that can be applied toward collectible items, entry into virtual experiences and invitations to exclusive events. Free lattes, however, were not part of the program.

It is difficult to place a monetary value on such metaverse marketing. But in this restrictive marketing environment, most brands no longer have the luxury of dipping their toes into the metaverse without being able to monetize it in a more immediate and tangible way (if they ever did). For many brands and retailers, the priority right now is building the necessary infrastructure to create a pathway to the metaverse that ultimately drives sales of real physical goods.

“While brands experimented with a variety of metaverse technologies ranging from NFTs to gaming platforms like Roblox and Fortnite in 2022, they now face more pressure to generate ROI and work with technologies that drive business results, integrate with their systems and provide better data,” says Neha Singh, founder and CEO of Obsess, a New York-based technology company that works with beauty, fashion and CPG brands, among others, to create “photorealistic” 3D virtual store experiences on their own websites.


From Cosmetics to Chocolates, Brands Go Virtual

Brands are increasingly using metaverse tools such as augmented reality/virtual reality technology to create shoppable virtual experiences through extensions of their e-commerce platforms. Global cosmetics and skincare company Laura Mercier unveiled its World of Beauty virtual store (created in collaboration with Obsess) during the 2022 holiday season.

Around the same time, Swiss chocolate manufacturer Lindt launched a virtual store, powered by e-commerce platform ByondXR, that featured a chocolate lab with a virtual candy-making demo from Lindt chocolatier Ann Czaja.

To be sure, these are more integrated experiences than, say, the AR-enhanced virtual dressing rooms that apparel retailers began experimenting with several years ago. But in other respects, they resemble traditional e-commerce experiences in a virtual 3D world. Laura Mercier’s store, which can be accessed through the company’s website, allows users to explore rooms with tools like a virtual shade finder, and to click on buttons to browse product pages and select items for purchase. “In all Obsess-powered virtual stores, customers can add items to their cart within the virtual store and then go through the regular checkout process of the brand,” notes Singh.

While such experiences may give consumers a feel for what shopping will be like in the early stages of the metaverse, they still rely on a traditional web interface and take place in the 2D online world. They do borrow aspects of broader metaverse culture and platforms like Roblox and Fortnite in their gaming elements, such as Lindt’s memory game and Laura Mercier’s hide-and-seek game — both of which reward winners with either discounts or free product samples.

Experts say the next change for commerce will happen once technology advances to the point where these experiences are more broadly accessible, become more interactive, gamified and shareable, and begin to move away from the online world. “Right now, the only metaverses that exist in a scalable way are in the gaming platforms,” says Diana Sheehan, an independent marketing consultant who developed mixed reality applications for brands and retailers in her previous senior roles at Chicago-based VR firm InContext Solutions.

So, what will “real” shopping ultimately look like in the metaverse? “You might take elements of Fortnite where people enter an experience from a banner ad on a retailer’s website,” predicts Sheehan. “Let’s say you hop in and go into a virtual Super Bowl store. You can shop around, there’s ads and recipes. [Meanwhile] friends are coming to parties to join them. Then you decide together who’s making what and what you need to buy. Everybody does their grocery shopping at the same time in different places while ‘gaming out’ the experience.”


How AI Is Accelerating the Metaverse (and Vice Versa)

As of today, most industries deploy the metaverse at scale primarily for commercial use. For retailers, those applications range from creating virtual replicas of retail stores (Lowe’s calls these “digital twin” stores) to testing new ideas for products and packaging, shelf concepts and store layouts. Companies are also using AR and machine learning for audits and compliance, working with shopper marketing teams to ensure that specific items will sell as forecasted. “As the metaverse shifts from these commercial uses to broader consumer uses, you’ll start to have commerce experiences in actual metaverses versus online,” Sheehan says.

Artificial intelligence can help accelerate this process. AI capabilities are now being used to simplify and automate the creation of 3D content and modeling, and to bring those capabilities to the masses. Up until about a year ago, online retailers like Wayfair had to turn to corporate solutions such as Apple’s Object Capture AR tool in order to manually develop 3D models of their products.

Today, any consumer with an iPhone can search the app store for free tools that will essentially do the same thing in a fraction of the time. Scores of smaller technology companies now offer such tools, while larger firms like Shopify provide resources to connect retailers with app developers and to help build 3D content plans. This democratization of 3D content creation will allow brands and retailers to populate the metaverse more efficiently, in the same way that 2D content did for e-commerce.

It is important for marketers to distinguish between these applications and the broader fields of creative AI, spatial computing and computational design — all of which play a role in the transition to Web3 and building out the metaverse. “While Web3 and emerging trends such as blockchain and NFTs are significantly enhanced by AI technology, it appears that Web3 is influencing AI, rather than the other way around,” says Dominik Heinrich, assistant professor for AI Design at the Pratt Institute in New York.

According to Heinrich, it is increasingly difficult for people to differentiate between human- and AI-generated content. However, utilizing NFTs and blockchain technology can help establish transparency by tracking the content’s origins. These issues can spill over from the broader culture (think deep fakes) into the business and marketing world, says Henrich.

“Computational or generative AI can create real-time, hyper-personalized content for the metaverse, defined as the seamless blend between the real and virtual world (XR) accessible through regular glasses,” he says. “AI can map virtual content over reality in real time, without the need for storage, as it is generated and deleted on the fly. In a shopping scenario, this might involve trying on different colors or sizes of clothing virtually through your glasses. Here, the metaverse is essentially another user interface, with AI generating relevant content in real time.”

Creative Commerce: Start Learning Now

Estimates of the timeline for a widely accessible metaverse are largely a function of the available hardware. Tech insiders believe that Apple’s reported mass production of its mixed reality headset this year could rapidly speed VR adoption among mainstream consumers. Another major milestone may come in 2025. That is when Meta (formerly Facebook) plans to release a pair of smart glasses with a display, alongside a neural interface smartwatch designed to control them, followed by its first pair of full-fledged AR glasses in 2027 (according to an article in The Verge).

In the meantime, McDonald Predelus, vice president and creative director of Web3 at VMLY&R Commerce, says that by observing the behaviors of content creators and their communities in the gaming and broader livestreaming space, marketers have a natural incubator for designing rich “creative commerce” experiences in the metaverse.

“As with any new platform or technology, there will be questions around how to create value in the experience that users will pay for: How can brands develop innovative ways to monetize and create engagement in their presence in the metaverse, whether through virtual goods, in-game purchases or other methods?” Predelus says.

Predelus cautions marketers that the way consumers engage in gaming and livestreaming communities, including those hosted by online platforms like Twitch, are very different from the way they shop online or might eventually shop in a virtual 3D world. Those behaviors “have short life expectancies,” he says, and will likely change with the advent of disruptive technologies like spatial computing and computer vision.

For these reasons, Predelus, an avid gamer himself, advises marketers to spend as much time as possible immersed in those interactive communities. “The metaverse represents a new frontier in digital engagement, and it will be important for marketers to understand the preferences, behaviors and needs of their target audiences in this environment,” he says. “This may require new research methods and a deeper understanding of the culture and norms of the metaverse.”


Stamps? Virtual Creations? Just Don’t Call Them NFTs

What’s in a name? When it comes to non-fungible tokens (NFTs), the answer is a lot.

Talk about a blockchain bubble. Two years ago, marketers were tripping over themselves to jump on the digital collectible bandwagon, using “NFT” as shorthand for the trend. But some industry observers were skeptical. “The idea of having unique digital artifacts like NFTs is pretty fundamental to the metaverse, but right now many brands are using them without a clear sense of direction or underlying strategy,” Simon Gill, executive vice president of global client business transformation at MRM, a division of IPG, said in a previous interview given in 2021.

As it turns out, Gill was prescient. Last year, when NFT sales plunged amid the cryptocurrency crash, marketers were scrambling to reset their NFT strategies — and thinking differently about Web3.

Starbucks only once referred to NFTs in its Odyssey program announcement, switching to digital “stamps” — a nod to the past and tangible goods — as the name for its digital rewards. Nike opted for the more oblique term “virtual creations” in the debut of its high-tech “Swoosh” community.

It isn’t just their name, either. Marketers are now looking to create real value out of NFTs for their customers and their companies. Starbucks’ first tranche of 2,000 stamps, each priced at $100, reportedly sold out in less than 20 minutes. Some went on to trade at much higher values.