Explore the potential impact of the "Metaverse" on e-commerce and how businesses can use this trend to create business opportunities. Metaverse provides a new sales channel for brands and retailers to engage with customers more personally and immersively. These brands and retailers can create virtual stores in the Metaverse, showcase new products, host events, and more to attract new customers and increase customer loyalty. The article suggests that enterprises should start to pay attention to the trend of metaverse e-commerce, and explore how to establish business models and business strategies in the metaverse.
The metaverse is everywhere. This emerging virtual world is driving the evolution of the internet, with consumers increasingly seeking more immersive experiences and demanding to interact with products and brands before purchasing. This enthusiasm is expected to create a value of $5 trillion by 2030, and leading companies are actively trying to apply metaverse commerce to various fields such as home, food, fitness and clothing.
But do they really know what consumers want?
McKinsey’s latest Metaverse Consumer Survey (October 2022) tests consumer interest in various Metaverse use cases. Interviews with over 1,000 U.S. consumers aged 18+, filtered by internet access and device ownership Conditions) found that while many metaverse initiatives are pushing the boundaries of technology, they often miss the consumer mark. In fact, winning in the metaverse is often about fulfilling a more mundane need: providing consumers with value-added products and services that they can use today, either alone or in conjunction with the physical world. Even in the virtual world, the key to driving Metaverse Commerce adoption and creating value is engaging target consumers with the use cases they are most interested in.
Consumers already know what they want at the intersection of virtual and physical retail. It depends on how the company formulates its innovation strategy to capture growth and long-term value.
What consumers want in 5 major categories: experience based on reality
There is no doubt that the metaverse e-commerce script is still being written. A quarter of executives believe that more than 15% of company revenue will come from the Metaverse within the next five years, and approximately 60% of consumers who already use the Metaverse prefer immersive activities over physical world alternatives Taste. We also see companies trying to gain a foothold in the space by meeting consumers, where they are, and where they may be soon.
But while about 60% of respondents to our survey had heard of Metaverse, they revealed nuances of how they approach the technology and their interest in the product by category and use case.
- Consumers seem less interested in more futuristic products. Consumers are more willing to pay for products that are somehow connected to the physical world than for those that are purely virtual. For example, within the fashion and beauty category and the home category, consumers ranked virtual events and virtual homes as the last two use cases.
- Consumers want real-world applicability. They're also less excited about products or services in the metaverse that have no connection to everyday real-world activities. For example, approximately 30% of consumers attribute their lack of interest in a specific fitness use case to a lack of interest in the same application in "real life". Instead, they prefer use cases such as "try on at home" that bridge the physical and digital worlds.
We asked consumers which use cases they were most likely to try or pay for in retail categories, from fashion and beauty to food and fitness. Across all categories, consumers generally show greater interest in experiences and products that enhance existing real-world experiences, even if they have to pay for them. While this may change as Metaverse understanding, adoption, and technology continue to grow, companies have an immediate opportunity to ease consumers into their Metaverse products by bridging the physical and digital worlds.
Fashion and Beauty Still Unexpected
While roughly 50% of consumers rank fashion and beauty as the top two categories for Metaverse eCommerce, current offerings fail to capitalize on this enthusiasm. Many brands are investing in creating immersive, digital-only Metaverse experiences (especially when it comes to apparel and beauty shopping), but consumers are not as excited about browsing digital stores as they are about Metaverse apps that enhance the physical world shopping experience get excited.
Consumers are most excited about experiences that enhance and complement their physical world experiences, especially those that assist them in the fitting process. The virtual try-on scenario doesn’t just leverage Metaverse engagement: Helping customers find the perfect fit can help alleviate the costs and complexities associated with a record number of product returns.
For all the talk about letting consumers "express themselves" through avatars in the Metaverse, that's not the main reason consumers want to participate virtually. Avatar usage is primarily considered fun if it improves the purchase or experimentation of a product in the real world, or if it's entertaining in the moment. This reflects our overall finding that consumers are drawn to metaverse use cases that are fun or entertaining – just maybe not in the way brands expect.
Difficulties of virtual home experience
As with fashion and beauty, appetite for fully immersive digital experiences is low in the home category. Virtual open houses or property tours and product demonstrations saw the highest interest in this category, with around 40% of consumers ranking these use cases in their top three and around 50% saying they were very or very likely to try them. However, the ability to build, buy or rent property ranked almost the lowest: just 21% placed this opportunity in the top three, and fewer than 40% of respondents were very or extremely likely to try these opportunities.
Metaverse social interest wanes
When it comes to experience categories like entertainment and media, consumer interest in socializing in virtual environments appears to have waned. Travel to new destinations and to different times or spaces has the highest interest among consumers, likely due to consumers' interest in using the Metaverse "just to have fun" or "entertainment." But nightlife and affinity or affiliation groups using the metaverse rank lowest in this category.
The virtual experience of food and drink is still being explored
Cooking classes and virtual hangout spaces rank highest among consumers in the food category, with over 50% ranking among the top three use cases. On the surface, this might seem to run counter to consumer sentiment in the experience category. However, this may be due to general consumer confusion about translating the food category use case into a virtual environment; unsurprisingly, about a third of consumers need clarification on what it means to “consume food” in the Metaverse. More consumer exploration may be needed to discover how best to engage users.
Passionate about sports and fitness
Given consumers' relatively high familiarity with online fitness products, it makes sense that group exercise classes and biking or running rank highest among consumers in the fitness category across locations. Other use cases, such as virtual games and digital sports memorabilia, may require more consumer education and imagination to get behind, with up to 20% of respondents ranking them in the top three.
3 Actions to Stay Ahead
Given the uncertainty and complexity of the Metaverse, agility, flexibility, and adaptability are critical to extracting maximum value from an organization's Metaverse commerce. Metaverse players who lead the way to victory are most likely to demonstrate the following three best practices:
1. Gain insight into who your consumers are and where they are on their metaverse journey. Depending on consumer demographics and psychographic profiles, their level of understanding, adoption, and interest in the Metaverse may vary. Their desire to connect the physical and digital worlds can vary by category, use case, age, psychology, and more. Identifying your target consumers and their metaverse preferences will help determine metaverse priorities.
2. Identify priority use cases and build consumer-first products. Priority use cases will vary by retail category. Drilling down on priority use cases for your category (or industry) will help prioritize metaverse experiments and product offerings. It will also help uncover key consumer concerns about your category in the Metaverse, which can provide powerful insights for product development and resource prioritization.
3. Test and learn, scaling high-adoption use cases where available. When exploring uncharted territory, organizations can still take a test-and-learn approach to product development through rapid experimentation, re-prioritization, and agile operations. This can include increasing high-adoption use cases that show promise for adoption to consumers, crowdsourcing product development ideas from across the organization in a grassroots fashion, and operating during product validation with different profitability expectations than the rest of the core business metaverse products.
Regardless of the consumer category, it seems clear that the foundation of successful Metaverse commerce lies in four things: maintaining an open line of communication with consumers, refining the product, eliminating bad items, and adjusting quickly. While some metaverse experiments may be more compelling than others, the best first step into this emerging opportunity may be to experiment with real-world applicability.
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