Like any new industry trend, the metaverse has taken on a life of its own — a hype cycle accelerated by buzzworthy campaigns and partnerships. Sure, data from numerous sources indicate that the metaverse has viable long-term potential:
- Vantage Market Research projects that the metaverse will be worth $814.2 billion by 2028.
- Based on Bloomberg analysis, the metaverse is likely to grow at a compounded annual rate of 13.1%.
- 60% of Gen Z shoppers think brands should sell their products on metaverse platforms, according to a survey from Obsess.
But again, like any new trend, there are naysayers — especially in light of predictions that the metaverse will one day completely eliminate the need for physical retail experiences. And while I’m certainly part of the group that believes store environments will always be relevant, several components of the metaverse, including virtual gaming communities, experiences and NFTs, create entirely new opportunities for community activation and engagement.
Non-fungible tokens, or NFTs, can be bought, sold and traded with cryptocurrency. Like a piece of art or a collectable, NFTs can help brands forge a deeper connection with consumers. Through an exclusive NFT collection, brands can give consumers ownership in a completely new way. Brands are realizing the opportunity, which has led the NFT market to see about 10X growth over the past two years.
But what if we took this ownership to the next level by embracing co-creation?
Paraj Mathur, Senior Associate on the Panoramic Ventures investment team, shared a great hypothetical example: “Shoe brands can create NFTs that community members can mix and match to create new shoe designs. If the design is chosen by the community, the brand can manufacture and sell it, with NFT holders getting a revenue share on the new design.” This example illustrates how NFTs and the metaverse can unlock community participation at scale and bridge the gap between digital engagement and physical goods.
Influencer drops and limited collections
Co-creation helps cultivate loyalty — by getting consumers involved, they feel closer to the brand and their fellow community fans. But using NFTs to support influencer product drops and limited-time collections creates scarcity. And scarcity helps generate buzz and, most importantly, demand. When e.l.f. Beauty launched its first set of NFTs in the summer of 2021, creating digital, “gold dipped” artwork of three of its products: Poreless Putty Primer, 16HR Camo Concealer and Ride or Die Lip Balm, they created a surge of demand. With only three of each product available the NFTs quickly sold out.
More recently, MAC Cosmetics put a metaverse spin on its famous collabs and special collections with its Viva Glam x Keith Haring NFT collection. All primary sales from the collection will be donated to the MAC Viva Glam Fund, and 2.5% of secondary sales will also be donated to The Keith Haring Foundation.
Both examples show how powerful scarcity can be in an NFT strategy, especially if it ties to a brand’s already-established value proposition. Both e.l.f. Beauty and MAC Cosmetics are well known for their limited collections, and their NFT drops are a natural extension of that.
Boundary-pushing digital experiences
In most retail-focused discussions about the metaverse, virtual showrooms and shopping malls frequently come up. It’s clear why: it’s the easiest way for many executives to comprehend how the metaverse could fit into their business strategy. But brands are missing out on big opportunities if they simply look at gaming communities like Roblox and Decentraland as venues to simply copy and paste their physical brick-and-mortar experiences in a digital environment. There is a big opportunity for brands to push creative limits by designing spaces that allow consumers to interact with the brand, and its products, in a completely new way.
For example, Gucci rolled out the “Gucci Garden Experience” on Roblox, which allowed users to venture through a series of themed rooms and explore a boutique of virtual items from Gucci, created by Rook Vanguard a Roblox creator. Nike’s Roblox venture, NIKELAND, is also getting its fair share of buzz, largely because of its commitment to creativity. A place “where sport has no rules,” NIKELAND is a space where players can push all the gaming limits. As the description states: “Tag on trampolines? Why not. Floor is lava with a dash of parkour? Let’s go. Explore the world of sport, swim in Lake Nike, race your friends on the track, and discover hidden secrets!” Count me in. Avatars can dive head-first (literally) into the brand experience in a completely new way; a way that is unique to Roblox and that specific community.
We are nowhere close to reaching the metaverse’s full potential, especially in the retail industry. But brands and retailers that see the most gains from their efforts are going to be the ones that focus on bringing their communities of fans, followers and creators into the mix.