Do You Need to Shower in the Metaverse?

Do You Need to Shower in the Metaverse?: And other concerns for the retail industry in a whole new paradigm

While I don't foresee the future becoming a disconnected dystopian scene like out of the Pixar film Wall-E, I do believe Web3 is primed to change how we live in ways we can't yet anticipate.

Companies such as Ralph Lauren, Tommy Hilfiger, Nike, and many MANY more have already jumped into the Metaverse with apparel and accessories. They’ve done so through acquisitions, collaborations, and product launches. Apparently, you need designer clothing in the Metaverse, but what about towels for showering? Bedding for sleeping? Real estate is being bought in the Metaverse. Are there ‘homes’ and if so, how will they be furnished? Where does it end and what does it even mean?

What are the key terms and defining features?

Web3: To start, the Metaverse and Web3 are sometimes referred to as one in the same, but that’s not correct. The internet we commonly use today is called web2. Web3 is the essentially an evolved decentralized version of the that, using blockchain technology. Web3 is the platform enabling connectivity for the Metaverse.

Metaverse: The Metaverse has been defined as a place where physical and digital worlds can converge. It is a digital world. I’ve come to define it as a 3D version/evolution of the internet. There are potentially an infinite number of metaverses, yet only a few are projected to become dominant. The potential for many ‘worlds’ identifies the need for the digital products to be transferable, which is currently not common. Along with this are touted infinite possibilities, such as advertising space, meeting spaces...more on this later.

NFTs:?Non-Fungible Tokens are essentially the digital rights to designs and products. The rights to these items, and the traceability is tracked via the blockchain.?

Blockchain: This is the framework for it all.?It is how web3 is able to be decentralized as it is a digital record of all the data, spread out across an independent network of computer systems which makes it incredibly secure. Imagine saving a database on a bunch of independent flash drives.

Crypto: Crypto or cryptocurrency is the digital currency used and tracked via the blockchain system. I consider this more like a stock than a currency as shares can be tied back to a currency valuation. It makes it less complicated to wrap my head around this way. Crypto also has growing real world applications. Notable instances include professional athletes accepting salary in blockchain, the country of El Salvador using Bitcoin as a form of currency, and other real world transactions occurring through the exchange of Crypto.??

Crypto Wallet: This is basically your stock portfolio. It is your account linking to your information stored on the blockchain. This carries the info of your crypto investments, NFT purchases and more.

How big is the market potential?

Estimates are all over the place, but the most notable projections that stand out come from major investment banks Goldman Saachs and Citi. In a podcast in early February, Goldman Saachs experts estimated the Metaverse to be an $8 trillion opportunity, while Citi released a report early April projecting a range between $8 to $13 trillion. These estimates encompass all revenue streams – including gaming, advertising, real estate, merchandise and more.

Although Ralph Lauren, for example, launched in the Metaverse with Roblox fashion, it could just as easily add fashion bedding for residential or hospitality real estate to the Metaverse. The practical approach, which McDonald's appears to be taking, is for online ordering. This plan was outlined across multiple applications filed with the United States Patent and Trademark Office (USPTO) in early February. Major retailers could follow this model with home products being included in the fold.

What are some indications this isn't just a fad?

Aside from major trend setters joining the expansion, and the significant market estimates coming from such reputable financial institutions, there have been other cultural indicators. With the pandemic, there was a void created in need for social interaction while social distancing. Although the pendulum is swinging a bit with ecommerce, social media and gaming culture remain strong.

• Gaming Rise - Gaming has become a massive social media category on its own, not just with platforms like Twitch, but through individual games as well. This industry has seen a significant boom during the pandemic, prompting investments and acquisitions in the space by major tech companies like Microsoft's acquisition of Activision. Interactions in the Metaverse can be likened most to gaming, and growth of this industry is in sync.
• Reality TV - Even game shows aren't safe! A reality competition launched on Fox last year called Alter Ego. The show is a signing competition of competing avatars. Competitors sing live but are represented through their 'dream avatar' or 'alter ego'.
• Official Currencies - Governments, like China are exploring development of their own cryptocurrencies, not just examples like El Salvador mentioned earlier. China has banned 'crypto' in its typical form, but launched its own digital currency, the digital yuan or e-CNY, which is managed by the People's Bank of China.
• Emergence in Kids Toys - NFTs are even being used as a GWP (gift with purchase) to promote kids toys. This creates a familiarity with younger generations and is a bottoms up approach that will likely grow. Most notable is L.O.L. Suprise! Doll launched a collector card series, spotted at Walmart that offers potential to win an NFT while collecting digital versions of the cards available for physical purchase.
• Customer Sentiment - There have been several studies about customer sentiment and awareness of Web3. One example as also reported by WWD came from KPMG's Spring'22 Pulse Survey and found almost 2/3 of consumers are familiar with the metaverse, the majority being men at 71% with women at 59%. This is expected to continue to rise.

What are the legal considerations? Regulations? Trademarking, copyrighting, etc?

The Metaverse is not all fun and games. Along with a significant amount of fraud and scams, brands have also already been forced to address issues arising with IP law. For example, Hermès, creator of the Birkin bag, has challenged the NFT MetaBirkins, almost identical digital versions of its luxury bag, created by artist Mason Rothschild, as trademark infringement. Nike has also had its own suit with marketplace StockX. I expect to see more and the outcomes have not yet been decided, which will form future policies.

This topic gives me the greatest pause. The Biden administration signed an executive order in March to basically begin studying cryptocurrency and its risks and benefits. This is in relation to the US dollar as well as other concerns. The executive order however was not a "no" but more of a "will see" from the government. Results of the inquiries could have a larger impact to the Metaverse so jury is still out.

?What are other possible applications for this technology?

• 3D Factory Tour: As a manufacturer…this is the simplest use case for application of the Metaverse. Rather than video which limits engagement to 2D, a 3D tour in the Metaverse would provide a more enhanced experience. This could also be expanded to the end consumer as a method of increased transparency.
• Immersive Brand Showcases & Showrooms: Rather than using AR to see items in your home, the industry could create immersive VR experience with décor showcases. Instead of browsing online, one might browse at products via goggles like an Oculus. What's an Oculus? It's the leading VR headset on the market and a major player in this industry, which together with the Metaverse could have major manufacturer and end user benefits
• Meta Malls: These are already being created – software platforms like Obsess enables brands to create digital stores with 3D experiences; some brands that have signed up include Moncler, Ferragamo, Ralph Lauren, and more
• Increased Control and Revenue for Artists and Creators: Aside from major names acquiring or sponsoring NFTs, such as Justin Bieber's BAYC (Bored Ape Yacht Club) purchase for $1.3M, artists are also using NFTs to release music. Streaming services like Spotify have long been criticized by artists as they only receive a small fraction of compensation for these subscriptions services compared to album sales in the prior industry model. An NFT can be created to provide perpetual royalties or residuals to the creator. For example, if you purchased a vinyl record today and sold it to someone else, under a model of an NFT that artist would receive a royalty on that resale transaction. This could even be applied to something such as studio artwork or even products that end up in the growing resale retail model.
• Authentication:?Tokenization, meaning tracking of the sale of physical items via blockchain, is one method being explored by major luxury brands to verify the provenance of items. This same technology could be applied to resale, such as luxury home products like a Ralph Lauren cashmere throw, or even in transactions across manufacturers tracing raw materials like an Egyptian cotton.
• Supply Chain Transparency for Consumers: Carrefour, an international retailer based in France has launched blockchain technology named Carrefour Bio to provide increased transparency of the full supply chain for its organic produce direct to consumers by scanning a QR code. This practice is also common with select products in China’s Hema stores. Although there are some elements employed today in the U.S. such as Oeko-tex certifications or Oritain's technology with Supima’s origin mapping, the potential applications for blockchain technology are extensive and comprehensive.

The home fashions industry tends to always be a bit (understatement) behind apparel, but the Metaverse is poised to bring a whole new meaning to the term ‘Virtual Market’...or will we be saying ‘Meta Market’? As reported recently by Sourcing Journal, the furniture industry has already jumped in. The question is, when will other categories plug into this trend, or will it be too afraid of 'coMETAment'?

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