The metaverse – a virtual world where people imitate their true identity or are free to live as a completely different person – is coming. For retailers, it can be a revenue center where virtual sales can help metaverse residents realize their vision for themselves.
But as Meta has shown in its recent financial statements, it also carries financial risk. Its metaverse division, Reality Labs, recorded billions in losses in the last two years.
Most potential Metaverse users, sellers, and marketers have a lot of questions about how it all works. We asked Justin Hochberg, Founder and CEO of Virtual Brand Group, to explain how this new technology would work. His agency is building Forever 21 Shop City, a virtual retail setup at Roblox, which is itself a social gaming environment – not the technical Metaverse, but a prototype that will give retailers a taste of what’s to come.
At Shop City, customers buy virtual clothing for their avatars and create their own Forever 21 stores. Around Roblox, customers will receive coupons for purchasing the same physical item – for those who want to pair their Roblox avatar in real life.
Describe the metaverse for retailers and marketers who do not yet understand the concept.
Justin Hochberg: Let me describe it to you on a visceral level. The #1 thing about the “metaverse” isn’t whether it’s Roblox, Fortnite, Meta, Layer2, crypto, or NFT.
Marc Andreessen invented the Mosaic browser 25 or 26 years ago. Then you start looking at URLs on billboards.
People say, “What is this?” and they say, ‘Can you explain the Internet? What is it? “
I would say, “That’s what you want.”
“Well, who owns it?”
“What can you do with it?”
None of these answers will help. Now 26 years later enter the word metaverse and we are in the same place. Three years from now, you won’t have to think about what the metaverse is, just like you won’t think about what the Internet is. Internet, who cares? What interests you is Facebook, Amazon, Netflix, whatever. That’s what people understand. People don’t understand it because they haven’t used it yet. That’s the same idea, and it’s not “Hey, can I get a book cheaper, faster?” This is the Internet.
Come back a little. So what a Roblox experience for CX managers who might be wondering if that would go that direction.
Hochberg: No matter what kind of brand – whether it’s fashion, TV, film – if you’re selling to consumers, you want to know where your consumers are. For many people, that means you have a storefront, no matter what it looks like. You have a form of e -commerce, you have created a form of social media, maybe you have created a bunch of other things – omnichannel – to meet your customers wherever they are. The Metaverse is a very complicated thing, but it’s all still an area where a lot of consumers already exist. But it’s – and here’s the trick – better than your store, your e -comm and your social media. It’s the most effective marketing channel since it comes to selling things you can’t find.
Hochberg: Let’s approach it in three ways: the first is that it’s a useless customer experience. Going to a store is a wrong business model. I have to go – now is the time. I have to park. I had to find the store. I have to walk to the store. I had to find the article. I have to line up. I had to turn everything around. The average time people spend at a Home Depot store is 5.9 minutes – that’s the time they spend shopping. save in the store. You want to get out as quickly as possible. E-commerce eliminates a lot of hassle because I don’t have to do half of it. If I search Amazon, they have it or not, I buy it or not, and that’s fine. So in terms of transaction efficiency, it’s good but not sticky. A transaction for inbound and outbound. I have no affinity in the transaction.
Roblox Forever 21 takes time – in a good way. Very crazy. Its marginal cost is zero. So this is the most profitable thing you can sell. We emulated the #1 retail store in the world: Disneyland, which is just a very nice retail store. You’re actually only on a trip about 18% of the time. It’s usually about getting money-if you buy a pass, mug, t-shirt, lunch. Not only do I want to spend time there, but I will spend the whole day there giving you my money. I will spend the whole week sailing to give you my money. Close it. Stores have been touting experienced retail for decades. Barnes & Noble started by getting comfortable sofas that you can read. Starbucks gives you free Wi-Fi. Chanel offers you champagne and Evian water. It’s all about experienced marketing. Still not as sticky. Disneyland is so sticky.
We take the Disney model and the experience you want to continue. We transformed a retail brand into a fun experience. People go to Roblox because it’s social.
Why Gen Z wants to buy pixelsas opposed to the physical thing?
Hochberg: Why would you want to buy something? Take the average person. They bought a lot of things. They buy t-shirts, sneakers and sweatshirts. Maybe buy suits and ties or whatever they buy for their daily life. Why isn’t everyone dressed like Mark Zuckerberg, wearing the same hoodie every day? Most people don’t do that. They have clothes to go out on Saturday and clothes to clean the yard. They can wear the same clothes, but not. Why? Because as human beings we want to present ourselves in a certain way in certain situations.
The #1 virtue of Gen Z is self -expression. How do I feel? How can I express myself? In the real world, we are constrained. … In the virtual world. You can be whoever you want and expect you to express yourself if you want to. I can wear a dress, I can be a fry, I can share. I can cyberpunk. I can do it differently every day, or with different groups of friends.
Here’s another thing: the real world is hard. Most people can’t visit the Grand Canyon, especially buying a pair of Nike or even Guccis. In the virtual world, we can recreate the Grand Canyon, the Eiffel Tower, the Taj Mahal or the NFL game. You can own Nike sneakers, Forever 21 wardrobe, Gucci wallet. That’s why the metaverse is so dynamic because it has a huge scale, it taps into desire, and it has a world where you socialize, rather than transact. That’s why people spend time there and buy things there-they want to show themselves in their own vision how they want to be known.
Let’s say Roblox is offline, by choice or by necessity. Is there a way that the people who bought its items could take them to another platform, or did the virtual clothes fall with the ship?
Hochberg: People think Roblox is the metaverse. This is not the case. It is a social gaming platform. Facebook is a platform, and you go there, you build your profile. I can’t do this except put it on Instagram and WhatsApp. It’s closed.
Roblox is a 3D version of this, which has games, houses and toys. This is not the technical part of what we call Web 3.0. Web 3.0 is about the consumer’s ability to own the object, not the platform. So if you buy something in the Decentralized or more sandbox, if you go to other platforms, you own it and whatever else happens in those worlds, you still own it. Just like you buy Nike sneakers, if Nike goes bankrupt, you still own the sneakers. This is Web 3.0. The infrastructure allows you to take it anywhere, it’s in a standard transferable technical blockchain protocol that allows you to own the asset.
How did the NFTs get there?
Hochberg: It’s just a digital asset in the blockchain. That’s it, whether it’s a piece of art, a sneaker, a movie clip, a LeBron James highlight, whatever. Many people now view it as art or digital images or Bored Ape Yacht Club. Most of this is too speculative, so many people lose money. Sometimes what they see is headlines like “Snoop Dogg sells NFTs for $ 44 million,” but most NFTs don’t sell.
For marketers and technology leaders, what is the real opportunity in the metaverse? To make money? To increase brand awareness? The two? And how do you get started without spending a lot of capital to get rid of you?
Hochberg: Using the metaverse as a marketing channel opens up completely new revenue with zero marginal costs. I sold millions of dollars worth of Forever 21 fashion which cost me $ 10,000 to make a line, and then everything had zero marginal cost. This item will last forever with no defects or supply chain issues. No refund. It can survive on Roblox as long as it has Roblox, without any damage.
You don’t leave a white T-shirt in the store. No storage space. It will be damaged, it will be unclean. Virtual objects are inexpensive to make, with zero marginal cost. You want to know where your consumers are: 200 million people play Roblox every month. People spend millions of hours every month at Forever 21 Shop City, which is more than just social media.
Whatever you build in your metaverse, it could cost you a few thousand dollars to create an NF T or a virtual fashion line, or it could cost you half a million dollars. These aren’t expensive things compared to what people pay for TV advertising, South by Southwest activations, or whatever. The key is that if you go in now, it’s pretty cheap. Not only can you generate new revenue, but you can also make new connections with consumers.
This Q&A has been edited for clarity and brevity.
Don Fluckinger covers business content management, CRM, marketing automation, e-commerce, customer service, and technologies available for TechTarget.