FAQ about retail and the metaverse

This afternoon I took a stroll through Decentraland. I visited a virtual fashion house and art gallery.

Decentraland is one of several virtual worlds that allow investors to buy and sell virtual real estate, including shopping centers and stores. For now, it’s not as fun as walking along Fifth Avenue, but some investors are betting that eventually the metaverse will be as exciting as Manhattan.

Users congregate on Decentraland.
 

What is the metaverse?

The metaverse is a name for the collection of online universes that are only just starting to become reality. They include virtual worlds like Roblox, Minecraft and Fortnite, plus the virtual layers of augmented reality we might use on smartphones, like the Pokémon Go and on web-enabled glasses in the future.

• Roblox, one of the most popular virtual platforms, has 43.2 million daily active users.

VR headsets are the most immersive way to enter a virtual online world but have yet to find mainstream success. Still, more than nine percent of Americans now use VR headsets, and that number is growing.

U.S. VR Headset Users
 

Does Facebook own the metaverse?

No, the metaverse is a collection of platforms, not owned by a single company. But Facebook does want to be a dominant player in the future of the metaverse. In the fall, Facebook’s parent company renamed itself Meta to signal that ambition.

• Mark Zuckerberg announced that Meta would invest $10 billion to develop the metaverse.

What will retailers and brands do in the metaverse?

For now, the biggest opportunity for retail brands may be in advertising and publicity. Virtual events such as live concerts can be strong avenues for building brand awareness. Gucci celebrated its 100^th anniversary with a virtual event on Roblox.

U.S. Survey of Adults about the Metaverse
 

Brands can also build awareness through branded virtual worlds and games.

• Nike created its own virtual world called Nikeland, where visitors can play games and dress their avatars in Nike gear.
• Chipotle has a virtual restaurant with real-world burrito offers and a maze game to play
• Vans built a virtual skate park
• Gucci sold a digital bag on Robolx for over $4k, more than price of a real-world version of the same purse

Shopping for both physical and digital goods may also be a significant source of revenue as the metaverse matures.

Can investors buy virtual real estate?

Yes, they can. However, the most popular virtual platforms Fortnite and Roblox are focused on gaming and don’t have the infrastructure for virtual real estate transactions. However, investors are buying and selling on the Sandbox and Decentraland platforms. In fact, one investor recently paid $4.3 million for land in Sandbox.

These virtual worlds are made up of retail, office and residential neighborhoods. Users buy land to serve as a virtual home, companies might invest in a virtual branch office and retailers can open stores to sell items, both virtual and physical. In November, Canadian firm Tokens.com Corp paid $2.5 million for land in Decentraland’s Fashion District. CEO Andrew Kiguel said, “This is like buying land in Manhattan 250 years ago.”

But despite Token.com’s hopes for the future, virtual land is seen as a risky investment. While a parcel of land on Earth will likely hold or increase in value, virtual land could easily lose value if the virtual world proves unpopular. Unlike Earth, virtual worlds are quite easy to abandon. Plus, virtual parcels are valued in cryptocurrencies, which are also more volatile.

What should I be doing in the metaverse?

Well, your best bet is to stay informed of the latest trends. But it is early for the metaverse to eclipse our current Internet. At this stage, it might be unrealistic to view the metaverse as anything more than a branding avenue.

• Go deeper into retail and the metaverse on Everything We Know About Retail.
  

It could be more than a decade before we have access to both comfortable and lightweight VR headsets and internet bandwidth that is fast and reliable enough to keep our avatars from freezing up. In fact, analysts say that the Metaverse we saw depicted in the film Ready Player One is still 30 years away.