50 billion dollars. This is the potential revenue that the metaverse can generate from luxury brands. If buying a skirt, book, or plane tickets online is a common thing today, will it be the same tomorrow thanks to the metaverse? Fond of innovations and immersive experiences, more and more brands are evolving in the digital universes, to the point that sometimes we forget the physical selling points.
Stéphane Bourliataux-Lajoinie, Lecturer at CNAM Paris, discusses the use of the metaverse and, more broadly, AI, in a brand’s sales strategy.
Big Media: Today, we’re seeing more and more brands – whether prestigious or mainstream – stepping into Metaverse, but isn’t this going against some of their values?
Stephane Borliatox Laguine In fact, digital has always been a complex tool for brands, especially luxury brands. Between them, there is a kind of “I love you, me too.” Signs are well aware that digital is a great means of transportation, but are so afraid of insulting their image that they feel their own way. We must not forget that their entire model is built around the customer experience, a concept that is difficult to reproduce in a digital world. The latter is not emotional but cognitive.
BM: Some take advantage of metaverses like Fortnite or The Sandbox while others choose to create their own universe, why?
SBL : Today, many “mainstream” brands are turning to “open definition” like The Sandbox or Fortnite. The big difference between these two worlds – which are the origins of games – is their audience. With the advent of metaverses, Sandbox quickly left the gaming side to position itself as “meta-generic,” like Second Life, which was created ten years earlier. Hence this bias has given brands more flexibility in their proposition. As in the real world, they buy a plot of land there and set up their own flagship store. Freedom we find less on platforms like Fortnite. Unlike The Sandbox, the medium has chosen to maintain its “players” mode but offers brands the possibility to create media stunts, such as the Travis Scott concert. A profitable recipe that highlighted the diversity of brands on the web 3. This in particular allows them to reach a target they would not normally touch.
For their part, luxury brands choose more “identifiers,” i.e. the platforms they have designed and managed. LVMH, for example, has its own metaverse which is a beta supplement for visiting the store. A real bubble that is controlled by the brand from the ground up. Something that is impossible to do when developing on Fortnite for example. Today, the development of luxury in the metaverse even extends to the sale of digital clothing or champagne bottles.
BM: But doesn’t the metaverse, in the long run, risk killing the physical selling point?
SBL To me, the digital—and all the capabilities it provides—is a complement to the physical experience, but it will never replace the point of sale. You know, when TV came, everyone said it was going to kill the radio, and so did the cinema, which, according to some, risked making the book disappear… Decades later, we’ve obviously never sold so many books and radio still attracts a very good audience. The only difference is that AI or the metaverse gives buyers a much wider range of options. Therefore, we should not fear digital technology, but rather take advantage of what it can offer in addition.
BM: So tomorrow, trying to buy a pair of shoes in the metaverse would be totally feasible in your opinion?
SBL : There I have my doubts. I’m not sure that physical products benefit much from moving into the metaverse. See what happened with the drive. When it started to develop, many supermarkets used this new formula to circumvent certain restrictions such as setting alongside another competitor. However, today’s big brands are starting to follow in their footsteps because with leadership, the average customer basket is often less important. There are too many routine purchases, too few impulse or pleasure purchases, and fewer products in stock.
On the other hand, digital technology – and in particular the metaverse – can be very fertile ground for service companies such as banking, insurance, tourism or music. Concerts are a good example of this. During the pandemic, spectators paid money to watch shows on a computer screen! So, if tomorrow you offer them a 360-degree immersive experience with a 3D or virtual world, there is a good chance they will respond. AI also makes service more flexible and responsive to customers. The perfect example is the Grocery Store 4.0 launched by Amazon. Once inside, the customer is recognized by facial recognition and when they choose a product, the AI again analyzes it to determine if it’s a packet of spaghetti or a bunch of tomatoes and determines how much each product will cost to ship to the customer’s account without the need to checkout. So it’s a sign that can work 24 hours a day!
BM: In your opinion, are the metrics not yet mature due to privacy issues related to data sharing?
SBL : Honestly, I think this is the problem that will explode in our faces in a few months. Most cell phones are security sieves. In terms of data management, it is now very easy to access your saved browsing history or passwords. Especially since the majority of the public does not encrypt their phones to prevent this type of attack. But imagine what tomorrow would look like if inside the metaverse or via a VR headset we could visit an online sales site. Take the helmet, it is certainly very immersive, but we must not forget that it can also capture all the movements of the face, the reactions of the eyes, the dilation of the pupil … a whole range of details that can give indications of the feelings that this or that article gives us. So brands have to be very careful with this type of tool beyond the marketing challenges of the metaverse.
BM: What’s the next step?
SBL : The next step is “easy” recognition. Today, Google knows me better than I do. He is able to anticipate my tastes and desires. However, this data analysis is no longer entirely profitable for brands.
Take, for example, a ready-to-wear brand like H&M. If she wants to analyze all the information she can collect in order to push the products according to each of them, individually, separately, this is a great calculation time and above all a very low margin for selling an average basket that rarely exceeds 40 euros . It’s not fun enough. But on the day when computer time will be less expensive, we will be able to drive analysis by neighborhood — by grouping people by category, according to their tastes, ages, and purchasing power — and then by individuals because we technically know to do that.
BM: What advice would you give a brand that is reluctant to launch into Metaverse?
SBL : Web3 has become in mass consumption a powerful marketing tool. The important thing is not to miss the boat! After that, it is not just metastases or metastases. Today, many of the more mature technologies are accessible.
Augmented reality or virtual reality are at the heart of real communication and sales strategies, and there, we’re not in the forecast, telling ourselves “in 3 or 6 years, it’s going to be profitable”. These are simple tools to use with a real return on investment and they are already widely democratized.