What: A beneficial overview from MAD Luxury Consultancy that seeks to provide an understanding of the web3 and metaverse market predicted to reach 50 billion euros.

Why it’s important: As the landscape of retail continues to change, businesses across sectors are rushing into web3 or metaverses without understanding exactly how to optimize their strategies.

MAD consulting has released this brief covering the difference between web3 and metaverses, some background information on the evolution of these spheres, and the benefits and possibilities of creating a digital strategy using these innovations. The key takeaways for retailers?

The acceleration phase of web3 is in full swing as more influencers, celebrities, and brands create digital collaborations and projects within platforms such as Roblox or Fortnite or Decentraland. The absence of retailers would be dramatic making educating staff and customers on digital initiatives critical for success. It may sound like a goldmine for diversifying revenue, but there are some aspects to keep in mind…

What is it?

Web3 and Metaverses are not the same, meaning a retail strategy will be different depending on which you chose. Metaverses are digital worlds which can be represented in 2D, 3D, or overlayed through augmented reality technology. Some examples provided include Fortnite and Roblox which represent metaverses in a Web2 format, and Decentraland and The Sandbox which represent Web3 metaverses.

Web3 is the next generation of the internet which has been facilitated by innovations in digital hardware and software that improve speed, image capabilities, and 3D imaging. To understand the difference between the different eras of the internet, consider this explanation:

• Web 1 – THE INFORMATION ECONOMY: static, read-only content that has almost no interaction between creator and viewer, and which is driven by organizations and companies
• Web 2 – THE PLATFORM ECONOMY: shared and dynamic content that has interaction between users. Unlike web1 it is more community-based. The advent of social media is deeply tied with this phase of the internet.
• Web3 – THE OWNERSHIP ECONOMY: algorithmically driven content and services, decentralized data architecture, a user-centric and behaviour-driven environment in which individuals have more ownership over their data and information flows. This can be seen in the various kinds of NFTs that offer financial gain, membership, and access to products or services.

What are the benefits?

Luckily for retailers, web3 and metaverses have a lot of applications when considering branding and brand ethos. A key element in web3’s benefits for brands is seen in blockchain technology. Through blockchain technology, brands can take greater control of their brand assets, improve internal and external processes, optimise operations and revenue through smart-contracts, and control more of the client experience. For example, businesses that operate wholesale and are limited in their activities, like Wine & Spirits, have more potential to connect and build client relationships through NFTs and digital assets. These digital assets also have potential within the resale market. By tracking successive owners, the blockchain ensures the authenticity of the product and transaction. In addition to this, brands can receive royalties through smart-contracts that are written into the code of the NFT.

Clients gain value through the reinforcement of social status, style, creativity, scarcity, and if retailers chose to incorporate it, loyalty. Developing rewards systems with NFTs can help target customers and create a closer relationship between them and the brand. By creating levels of membership, protecting waiting lists and event attendance, targeting potential clients through the other digital assets they own and having token-gated websites, brands can reinforce a VIP status for high-value clients.

What not to do?

The first thing to remember is not to panic. There has yet to be a dominant metaverse and interoperability across platforms is still in development. MAD’s report highlights the likelihood that the current metaverses established by brands today will be superseded in the next three years. The technology for AR and VR is still in its ‘gimmick stage.’ Permanence at this early stage is impossible. Retailers are encouraged to incorporate brand values and missions through thoughtful experimentation.

Another tip is to avoid internal dissonance and gaps between the creative standards of digital leaders. This can be avoided by creating an internal web3 team and seeking industry professional advice while ensuring strong communication within the organization. It is important that retailers and brands keep in mind that success in other departments does not transfer over into this new field.

Gaming culture is deeply intertwined with web3 advancements and understanding this can help ensure a successful campaign. Like video games, brands and businesses have their own story, characters, and world that digital technologies can bring to life delivering the most immersive experience yet. Ultimately, with both a digital and virtual presence, brands can reach the customer at all points with entertainment, convenience, utility, and community.

Web3 and Metaverses are the future of omnichannel retail