Bloomberg intelligence predicts that the metaverse could be worth $800 billion by 2024. With big brands like Nike and H&M already investing heavily in the virtual world, how will this new communication channels change how consumers interact with brands?

Ever since Facebook rebranded as Meta, the proposition of virtual worlds has captured the imagination of the public.

Australians, locked out of the property market, are buying up big on virtual worlds. The ABC recently reported that virtual real estate sales in the US topped $US500 million ($700 million) last year, and this figure is predicted to double again in 2022.

So how will this brave new virtual world impact small businesses?

Metaverse: Fad or new business model?

Cezar Pereira, strategic account director at Tiendeo, a company that specialises in the digitalisation of the retail sector, kicks off the debate with the following question: Are we facing a fleeting fad or a new world that is opening the doors to a powerful business model?

Pereira believes the metaverse can offer retailers and brands new opportunities to connect with customers. In the metaverse, Pereira says, you’re only limited by your imagination. Consumers connect through devices such as virtual reality (VR) and augmented reality (AR) glasses or helmets, and applications that offer the promise of an immersive experience.

“In this alternative world, everything will be possible through an avatar: buying goods and services, attending concerts, travelling, playing games and even working. The amazing thing about this universe is that you can teleport from one experience to another without leaving your room.

“The development of the metaverse seeks to extend the real world into the virtual world by making everyday actions into a spectacle,” he explains.

In the US, competition to dominate the metaverse is already shaping up to be an epic battle. There are four major companies competing in the race to be at the forefront: Meta (Facebook), Roblox, Fortnite and Microsoft.

How this will play out is yet to be determined.

What’s so great about virtual worlds?

Since the metaverse offers the opportunity for users to escape their everyday reality, Pereira believes it has enormous potential for savvy businesses.

“This introduces a new form of interaction between consumers and brands through the D2A (direct-to-avatar) model, where we will no longer buy clothes for ourselves, but for our representation in the metaverse. The challenge for companies will be to get people to carry out the bulk of their activities in this digital universe, just as we do in the physical world, giving rise to virtual marketplaces that already move large sums of money,” Pereira says.

While this might sound like the stuff of science fiction, Pereira assures us that humanity is already far along the road to embracing a virtual life. In fact, it’s speculated that by 2030 we will spend more time in the metaverse than in ‘real life’.

With this in mind, Pereira believes businesses need to step up if they want to dominate in this new space and control how people interact with each other.

Fashion brands are already selling virtual collections on popular kids’ game Animal Crossing

The metaverse and the retail sector

“The opportunities offered by the metaverse are endless, especially in the field of commerce,” says Pereira.

“Technology company Wildbytes estimates that in the next five years, 70 per cent of major brands will have a presence in the metaverse. By 2023, some companies are already promising to launch a new product, while others are already looking at the possibility of creating shopping centres, boutiques and virtual shops where avatars will be able to buy NFT (non-fungible token) products and pay in cryptocurrencies.”

The retail sector is one of the most heavily invested in the metaverse. For example, Gucci has already started selling its own virtual clothing, the Gucci Virtual 25 trainers, and H&M recently launched its first virtual collection through Nintendo’s social simulation game, Animal Crossing.

Then there is Nikeland

While some brands are dipping their toes in the metaverse, sports brand Nike has gone the whole hog, creating its own virtual universe: Nikeland.

“[It’s] a space that offers access to various sporting arenas, as well as a showroom where users can equip their avatars with Nike shoes to take part in competitions. The brand also uses it as a testing ground so that younger generations can experience its new products through avatars before purchasing them in real life.

In short, the metaverse revolution holds the promise of a digital experience in which the virtual world and the real world intertwine and merge under a single reality. It is now up to brands and retailers to find their place in it and explore its full potential,” concludes Pereira.

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