The Metaverse is a disruptive development towards unprecedented digital immersive experiences that the user experiences as their personal avatar in a three-dimensional fictional world. For example, in the metaverse, two friends can meet digitally in a café in Paris without having to leave their homes, or in the metaverse, they can go to a car dealership and have the desired model delivered to the physical world.
Metaverse offers completely new possibilities for product presentation and a seamless connection between the digital and physical world. There are already technical solutions for this that build on the advantages of Virtual Reality (VR), Augmented Reality (AR), Blockchain and Nun Fungible Tokens (NFT) and allow the simple implementation of a presence in the Metaverse.
Technically speaking, Metaverse is a decentralized and interoperable platform for programmable digital assets and digital identities, i.e. a rapidly evolving digital environment where people can interact with each other in a 3D virtual space. . The metaverse consists of three components: The front-end represents the base of the experience and is made possible by augmented reality and virtual reality. The mid-range is based on core technology, i.e. blockchain, artificial intelligence and edge computing. The basis is then the technology, i.e. the existing infrastructure and the final device. The basic idea of ”mobile first” also applies to Metaverse. In fact, 5G in particular will form the backbone of platform access, allowing users to experience the Metaverse 3D universe in the highest quality.
Today, Metaverse is at a stage where social media platforms were about a decade ago. No one realized then the power of user-generated content, community-driven commerce, and the importance of online connection for people, business, commerce, and entertainment. According to Bloomberg Intelligence, the global Metaverse revenue opportunity could reach $800 billion in 2024. Especially in e-commerce, gaming, banking, live entertainment and healthcare industry.
Meta Trade revolutionizes purchases
The metaverse is essentially about meta-commerce and, to a large extent, the global technology service providers that offer solutions for it. An example of a solution provider is the Indian IT company Tech Mahindra, which is part of the Mahindra Group and generates annual sales of around $5 billion. The company is currently applying the power of the Metaverse to various sectors of the economy, including DealerVerse (a Metaverse-based car dealership), Middlemist (a marketplace for non-fungible tokens), Meta Bank (a virtual bank), and a gaming center.
For example, a full Metaverse car dealership is being built for a global car and tractor manufacturer. There the customer sees the desired car and its functions, experiences adventures with the vehicle in the digital world, performs the subsequent test drive in the physical world, places the order and purchase in the metaverse and finally picks up the physical car at nearby car dealerships.
Landscapes are currently being set up for virtual driving experiences to perform 3D simulations there. These simulations are said to have haptic feedback to detect road conditions, bumps, and steering angles when a person is driving the car. And when the customer gets into the virtual car to see the car up close, he immediately has access to detailed information about the car, its prices and all relevant technical data. The physical and virtual worlds are intertwined here and offer the customer a completely new shopping experience when buying a car in the metaverse, which is almost impossible to achieve in the physical world.
E-Commerce and Metaverse – 7 advantages for e-merchants
For e-commerce businesses and merchants, the Metaverse offers significant benefits:
- Customers do not have to wait for an appointment with the dealership. The metaverse is always on and accessible at all times.
- In the metaverse, merchants have an opti-channel view if the customer allows it. As a result, customers don’t have to repeat their previous interactions, as the merchant can get a complete overview of customer data, previous transactions, and current status. This saves time for customers and resellers.
- Customers can view and experience the vehicle “live” in a wide variety of configurations, even if the vehicle is not actually available from the dealership.
- In the real world, customer complaints are often not followed up to the extent that they should be. The metaverse, with its non-player characters (NPCs), helps solve the problem before a customer speaks to a call center agent. NPCs often have a primarily narrative and predetermined automated function and are not characters in their own right. With them, the customer can, for example, hold business talks and conclude transactions. He can also send them orders, such as a complaint, which the NPC will then take care of.
- In the metaverse, customer support operational costs are reduced
- Merchants have minimal need for virtual real estate since the Metaverse provides plenty of it.
- The Net Promoter Score (NPS) is also significantly improved.
NFTs as a means of payment
Of course, things in the Metaverse also have to be paid for. There are several options for this. One option is to view the product in the metaverse but pay in the physical world with your preferred currency. The second option is to pay using cryptocurrency. However, the most attractive option is for companies to integrate their NFT marketplace directly into the Metaverse. The user can then scan the desired product in the metaverse and make the purchase via an integrated payment portal.
A non-fungible token (NFT) is a cryptographically unique, indivisible, irreplaceable, and verifiable token that represents a specific object, whether digital or physical, in a blockchain. Companies also use NFTs to uniquely authenticate ownership. This means that a product, such as a rare piece of digital art, receives a stamp of approval which can then clearly prove ownership.
Metaverse and security – a complex subject
As always when dealing with the Internet, Metaverse users should be cautious and expect to use the same security applications as, for example, online banking. This means good password management, two- or three-factor authentication, and high sensitivity to suspicious websites and URLs. From a business perspective, since most metaverse offerings are delivered through cloud environments, businesses must rely on the native security controls that exist or are offered in the clouds.
Confidentiality is guaranteed by the underlying blockchain technology, which enables sovereign digital identity. This digital identity makes it possible to identify oneself while preserving anonymity vis-à-vis the rest of the digital world. For example, when a customer authenticates their transaction, they only need to reveal their identity to the e-commerce company and not to all visitors to the metaverse. This means that it is a transaction-by-transaction identity disclosure. Additionally, visitors to the metaverse identify themselves as an avatar that the visitor creates themselves. Here he can decide whether the avatar completely resembles him or not. But it does not reveal any personal information about the appearance of the avatar.
The thing is, for many, Metaverse is still completely new territory. However, it is becoming more and more popular, especially among the younger generation, and offers huge potential for tomorrow’s trading. It is therefore interesting for brands to establish a Metaverse presence very early on. Here too, the following rule applies: once companies have established themselves, it is difficult and costly for the competition to catch up.
Also read: On the road to meta-commerce – How the metaverse will change e-commerce.
The author Kunal Purohit is Director of Digital Services at Tech Mahindra.