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With all the hype around the metaverse, you might think we’re just days away from plugging in and living in the Matrix. More seriously, the metaverse will be transformative and an enormous opportunity for ecommerce, but we’re only at the beginning of that journey.
Many of the foundational technology components of the metaverse stack — including artificial intelligence (AI), augmented reality (AR), virtual reality (VR), nonfungible tokens (NFTs) and bots — are available today. And merchants are spending aggressively on them.
IDC estimates that retail spending on AI is expected to grow at a more than 25% compound annual growth rate between 2021 and 2025. It is estimated that from 2019 to 2023, AR/VR will see a 77% compound annual growth rate. This year alone (2022), experts estimate $1.8 billion in retail and marketing spend on VR. The consumer sector alone is more than 50% of spending in AR and VR.
Research shows that deploying even simple AI, AR or VR can substantially grow customer engagement and conversion. These technologies also reduce the staggering $428 billion in product returns annually. In addition to their immediate benefits, these foundational technologies serve as a great stepping stone to the inevitable popularity of the metaverse — but only if you can properly tune them to capitalize on fundamental human behaviors.
Humans demand personalization, new experiences and less friction
No matter what “verse” it operates in, ecommerce has always depended on matching technology to basic human desires (that rarely change). We have an insatiable demand for experiences — new experiences that stimulate us and are personalized and practical. And we are growing increasingly impatient, demanding almost instant satisfaction and as little friction as possible. The best applications of these new foundational technologies are directly aligned to satisfy these basic desires.
For example, 60% of people want to visualize how a product fits into their lives. AI, with advanced algorithms, can watch for patterns in our lives and make suggestions from inventory about what products to start with, based on data from past purchases, browsing, geography, etc. AR/VR can then — effortlessly — provide a visualization in the context of the user’s environment.
IKEA’s popular Place is an AR app that meets much of these criteria by showcasing the company’s products and helping consumers choose and place furniture in their homes. Not only does this app deliver personalization and a simple, custom experience for consumers in their homes, but it cuts down on returns.
In fashion, several similar applications provide virtual try-on and sizing experiences. Simple technology like FitFinder technology helps buyers personalize their sizing experience by taking the data of a brand or item they know fits them and using an algorithm to compare the measurements accurately. Stoney Clover Lane (which just collaborated with Target) offers VR renderings of its designs to customers on its website. More advanced 3D modeling technology opens more inclusive shopping experiences for buyers who don’t fit into stereotyping sizing. Merchants who add 3D modeling to their sites already see it.
Where foundational metaverse tech struggles
Some of the most popular applications of these technologies bridge physical and virtual experiences. But the technologies still fall short on many fronts.
Geographical and age-old habits of the physical world still cause stumbles across the tech stack. It’s still hard to navigate the diversity of sizing in both geographies and individual brands. Understanding the differences between the EU and the U.S. sizing still challenges most buyers and even size “large” can vary significantly between manufacturers in the same country. If such baseline data is not normalized and standardized, AI, AR and 3D modeling will recreate what consumers already experience. Anyone who’s ordered the identical size shoe from different vendors hoping to find a fit knows the pain of this experience.
Bots are another prime example of foundational technology that still isn’t meeting the critical match between basic desires and technology. Sure, it’s efficient for merchants to deploy bots, but they are rarely helpful and consumers hate them. Research shows that a single bad experience can easily drive away even the most loyal customer. Merchants are just sorting out the moments when bots are best and those when it’s better to prioritize the consumer experience and get a human on the line.
And finally, sensory experiences still can’t be replicated in the virtual world beyond basic haptic responses. You can’t “feel” the fabric, smell the spices or engage in other sensory experiences. Nothing in the virtual world comes close to matching the evaluation and enjoyment of touching those fabrics or sitting on that couch.
Deploy the tech with best immediate impact
Opinions and estimates vary on how big and fast the metaverse ecommerce gold rush could be. There’s still significant work to distinguish the metaverse as more than just another sales channel. But don’t wait to get started. Pick the technologies that both power immediate ecommerce gains today (i.e., customer experience and satisfaction) and will also be inevitable building blocks of the metaverse. The pioneering merchants who do this will gain huge competitive advantages, regardless of when the metaverse emerges as a full-blown commerce environment.
Just be sure to match the bits and bytes of the technology to baseline human desires — otherwise, you’re just creating another bad bot.
Zohar Gilad is the cofounder of Fast Simon, Inc.
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