A digital transformation is underway in fashion and luxury. Iconic brands, rich in tradition, are looking forward to a new world, where the physical is enhanced by the digital.
That new world is in the metaverse. Many things to many people, the metaverse must be first understood as a work-in-progress, a concept still being developed. And while some experiments will succeed and others will fail, it is exactly this moment of creative freedom that opportunity awaits.
The metaverse presents exciting opportunities, so how can brands leverage this new digital frontier to their advantage?
Next Generation Market
The digitalization of fashion and luxury comes in response to the emergence of Generation Z. These digital native consumers represent a distinct market compared to previous generations. They have grown up in a digital world, with technology permeating every aspect of their lives.
According to a recent study, Gen Z consumers spend twice as much time interacting socially online as they do in real life. They spend up to 13 hours a day in the digital world, and report feeling more like themselves online than offline.
With such radically different attributes, Gen Z’s expectations of fashion also differ significantly. The power that fashion confers to express identity is not only - and perhaps, not even primarily - based in physical clothing. Instead, self-expression now falls under the purview of the digital persona.
Ahead of the competition
Major brands are already moving to meet the changing needs of this new generation of customers. All over the world, fashion and luxury trendsetters have one goal: reinvent the way their customers experience fashion.
According to one US investment bank, customer demand in Metaverse fashion is expected to exceed $55 billion by 2030. Meanwhile, in a 2022 report entitled ‘The Future of E-Commerce,” market intelligence firm CB Insights summarised the business imperative for brands by saying: “to stay competitive, retailers will not only have to make online shopping more immersive, engaging, and relevant, but also to seek out and experiment with the rapidly changing technology that is digitizing more of consumers’ lives.”
How will the metaverse change fashion?
Gen Z consumers are looking for brands to develop virtual stores. Over 70% of shoppers that visit virtual stores in shared online spaces make a purchase, while virtual stores themselves can boost average order value.
Virtual stores represent a new form of customer engagement that offer unique shopping experiences. Brands such as Nike and Burberry have all built virtual stores, interactive 3D spaces hosted on various online platforms. Burberry’s store, a temporary pop-up called Ginza, offered various interactive experiences in addition to displaying Burberry physical wares for purchase.
3 out of 4 Gen Z consumers are guided to make purchases through content, especially audio-visual content. 3D virtual stores represent powerful engagement experiences for this target audience.
Digital natives crave novel experiences and the ability to experiment with fashion. Virtual dressing rooms enable users to try on virtual garments and accessories, allowing them to visualize different looks without physical constraints. Brands like Zara and Ralph Lauren have embraced virtual dressing rooms, providing their customers with innovative ways to interact with their products.
In 2021, Nike acquired web3 tech startup RTFKT, and has since worked with them to sell digital sneakers in the metaverse. Since then, the cultural giant has made upwards of $185 million dollars selling digital products.
What this demonstrates above all else is that, even beyond serving as tools for immersive interactive experiences, NFT-backed 3D assets have become a product class of their own which any brand can take advantage of.
30% of Gen Z are receptive to brands that sell apparel to dress up digital avatars. As the importance of these avatars - representations of the digital self - grows, so too do the opportunity for branding and monetization.
One of the first to capitalize on this opportunity is IL3X, a purely digital fashion brand whose new platform ARdrobe allows customers to buy digital clothes that can then be ‘worn’ or displayed on their social media accounts - such as in a filter for Instagram, Snapchat or TikTok.
Fashion and Gaming
Another industry deeply committed to leveraging the metaverse, Gaming’s focus on virtual worlds and digital avatars make it a promising intersector for ecommerce brands. In fact, 53% of fashion brans are already investing more than $300 billion in the gaming sector, in all the previously mentioned ways.
The gaming and esports audience are blending more and more with the fashion market. 46% of gamers are women, for one thing. Besides that, gamers of all descriptions are increasinly interested in spending real money on in-game products.
Some examples of high-profile brands making the leap into gaming include:
Louis Vuitton / League of Legends
In September of 2019, Louis Vuitton partnered with League of Legends - the world’s most popular eSports game - to release a collection of player character custom skins. The collection, sold through the League of Legend store, also served as cross-promotion for a collection of physical appareil, inspired by the game.
In-Game Clothing for Animal Crossing
The popular game Animal Crossing is a perfect match for digital accessories. The game transports players to a sandbox world, where they amuse themselves by personalizing their avatars and building a virtual life, including designing their own homes and going shopping.
In 2020, the game held its first fashion show, featuring designs inspired by Prada, GmbH, and Loewe. The director of the fashion show, Mumi Haiati, said at the time, “I believe the future of fashion is a broad field, and that anything virtual and engaging - and gaming in particular - are among them. Gaming specifically adds an aspect of community which of course is a most significant factor in contemporary communications.”
Fortnite x Balenciaga Collaboration
Having already launched its Fall-Winter 2021 collection in its own, specially designed video game, Balenciaga went even further by designing virtual outfits for another of the world’s most popular video games, Fortnite, as well as various other accessories, which players can purchase in-game.
The Tech Behind the Metaverse
In order to take advantage of everything the Metaverse has to offer to eCommerce, there are a few new concepts to get your head around.
Called the “key enabling technology” of digital commerce by Index Ventures principal Rex Woodbury, NFTs are reshaping the way digital products, including digital clothing, are purchased, owned and traded. An NFT serves, at its most basic level, as a digital receipt. Other functionality can be added, but in it’s simplest form, it functions as a record of ownership.
This means that NFTs provide a mechanism to prove the uniqueness and ownership of digital assets. In the Metaverse, fashion brands can create limited-edition virtual fashion items as NFTs, allowing users to collect, trade, and showcase these exclusive digital pieces. The best part is that creating and managing NFT collections is actually simple. Venly’s NFT tools allow anyone to get started with this versatile new digital medium.
Collaborations like thise between Balenciaga and Fortnite or Louis Vuitton and League of Legends take place in their own, self-contained game worlds. The digital clothes they create can only be accessed and worn by characters within those worlds. The market is only as large as the player base.
Cryptocurrency and NFT wallets, however, are the means to access a universal digital market. The wallet allows its holder to purchase and trade NFTs linked to digital products from any marketplace. That means that the market for your digital goods becomes as large as the internet itself.
Besides this, making payments in cryptocurrency has emerged as a more efficient method than traditional systems, particulary for international transactions. By accepting cryptocurrency payments, brands can offer users greater speed, flexibility and security in their transactions, with lower fees. Additionally, brands can introduce their own branded cryptocurrencies or loyalty programs, incentivizing users to engage further with their digital offerings.
The Metaverse presents a paradigm shift for the fashion industry, redefining the way consumers interact with brands and fashion itself. Digital natives and Gen Z's demand for personalized experiences, digital identities, and unique connections with brands align perfectly with the possibilities offered by the Metaverse. By embracing virtual shopping, virtual dressing rooms, virtual e-commerce, digital wearables, NFTs, and cryptocurrencies, fashion brands can establish a competitive edge in this new digital frontier.
Interested in learning more about how web3 technology can boost E-commerce sales? Check out Venly’s dedicated E-Commerce page.
Want to sell NFTs from your Shopify Store? Venly has an app for that, too.