How does Web3 and the Metaverse change the relationship between people and brands?

Web3, Metaverse, Blockchain, NFTs, Crypto. Are these hollow buzzwords and passing trends, or is there more to it than that??In our last?article, we looked at the impact of Web3 and the Metaverse on the omnichannel journey. This time, we focus on the relationship between people and brands.?Lisa, as part of our Reframing Retail team,?has taken an in-depth look at what impact the shift to Web3 has on retail.?The conclusion: Experimenting with Web3 and the Metaverse is risky, not doing it is deadly.

Web3 promises to decentralize power on the internet and give users full control over data and digital assets using blockchain technology.?

Blockchain is the force behind Web3, the metaverse, cryptocurrencies, and NFTs. To be fair, there are still hurdles in the way of their breakthrough. To name a few, accessibility, complexity, and concerns regarding environmental impact and ethics. However, companies that miss these emerging technologies risk being left behind and even put out of business by Web3-native brands. To prevent this, companies must dare to experiment, while listening and responding to their communities.

In Web3, Direct-to-Community is the default mode. To remain competitive, established retailers and brands need to reform the way they interact with their stakeholders.

In Web3, the rules of competition have changed. Former competitive advantages such as 'walled gardens’ and network effects, vanished as blockchain technology allows high transparency and direct access to the customers of competitors. It is a new era in which your competitors may “steal” a major share of your customers via so-called Airdrops and better purchase conditions over night.?

With the changing rules of competition, investing in loyal customers becomes increasingly?important. In line with this, we can currently witness the importance of community management. Numerous Web3 pioneers showcase that in the future those projects will succeed which actively involve customers and partners, such as developers, creators, influencers and investors, from day one. The crucial question to ask: how can brands attract and engage communities long-term??

Web3 and the Metaverse are the next iteration of the internet we know. We are building on existing trends such as the increasing importance of direct-to-consumer (D2C) strategies, the shift towards digital assets, the creator's economy, and the desire for more power for users on the internet. Rather than treating the new grounds as something completely alien, brands and retailers should leverage their existing knowledge on how to build meaningful connections by interacting directly with their customers and offering unique experiences and purpose.

Web3 and Metaverse offer brands a great potential to push their?D2C?strategies and customer loyalty to the next level.??

From a marketing perspective, a key advantage of Web3 is that blockchain technology offers the biggest open-source mailing there is. This grants direct access to consumers in unprecedented dimensions. Yet, access alone is not enough. Consumer brands and retailers need to rethink the way they interact with and involve their target groups.

NFTs can be seen as loyalty drivers. They can serve as gate keeper to exclusive communities, events or future Airdrops as well as digital twins of physical goods. This way, NFTs are predicted to drive personalization and customer loyalty. Because, as stated above: People don’t only buy a piece of art, but a promise of community and belonging.

Also, with NFTs brands turn their community members into both, co-creators and co-owners. This fosters engagement and loyalty trough personal relevance and financial incentives. As both brand and customer benefit directly from the value of NFT collections, their relationship to one another is changing. This includes more alignment, closer bonds, and higher involvement.

Next to tokenized assets, the Metaverse offers unique experiences that strengthen emotional ties between consumers and brands. In line with this, the massive growth of the immersive tech market, including AR solutions and VR googles, will continue. Fueled by the pandemic-induced touch deprivation, we will see more and more use cases that elevate touch, smell, taste and hearing to create rich sensorial spaces that invite people to stay. Excelling in?digital engagement design?will set brands apart from their competition, as it adds value that goes beyond their product offering.?

Finding the right mix: Leverage Web3 features to enrich your existing product portfolio and strengthen your brand’s purpose

For traditional brands and retailers, D2C cannot be operated exclusively with the existing product portfolio. Rather, new, innovative products are needed that tie customers directly to the brand and evoke uniqueness. NFTs may help to take the product portfolio to the next level. Brands can thus offer products that are purely D2C and dedicated to this channel only.

In terms of Brand Management, the positioning and community management in Web3 offer a great opportunity for brands in strengthening their purpose and being meaningful for customers. This is crucial for the relationship between brand and customers and a main factor for driving loyalty.

StockX?is an online marketplace where users can buy and sell sneakers, streetwear, watches, and collectibles. The sneakers that are up for sale on StockX are not just shoes, they are part of a cultural phenomenon. The desire to be part of this cultural movement turns sneakers into holy grails and resellers into serious investors. StockX wants to reward top-dollar spenders and collectors by holding exclusive raffles for NFT owners. Among their indicated plans are more collaborations for handcrafted masterpieces and expanded offerings, personal wallet withdrawals, crypto payments, and crypto payouts. Our thesis: In 5 years, we will spend more on digital than physical sneakers.

Adidas:?“Into the Metaverse” is the name of Adidas’ first NFT collection,?a collaboration with three key NFT players: Bored Ape Yacht Club, Pixel Vault’s PUNKS comic, and crypto investor Gmoney. With?virtual wearables?that buyers can use in online platforms and the physical clothing to match, Adidas aims to engage with fans.?

Gucci:?NFTs can be used as a gate to exclusive customer communities that will drive personalization and customer loyalty.?People don’t only buy a piece of art, but a promise of community and belonging – a concept that high fashion brands like Gucci also rely on. Gucci’s first NFT collection features the luxury brand’s signature design elements, and it was accompanied by their?new experimental online space?“Gucci Vault” including a special metaverse sale.

Larva Labs: From the beginning, Larva Labs’ vision was to provide a completely free-of-charge and decentralized marketplace with no risk of censorship or regulation from centralized authorities. According to Web3 experts, NFT projects will shift towards DTC marketplaces like Larva Labs, where managing user experience is critical for retention and eliminating 3rd parties doesn’t hurt.

Sound.xyz: Artists, music labels, and enthusiasts start collaborative movements in the Web3 – to co-create and co-own music. The New York-based start-up Sound.xyz serves as a platform for music collaboration and discovery, which which?empowers a new generation of artists?and their communities.?

Royal.io?x Nas: Stock market trading sounds boring? Well, now you can invest in your favorite artists. On royal, a?music NFT marketplace,?artists can sell partial ownership in a song's streaming royalties directly to their fans, raising money to fund their music projects. Fans then receive a share of the streaming revenue and other benefits such as Discord access, exclusive merch and VIP concert tickets. The platform has already secured a prominent supporter in rapper Nas.

Let’s build a better Metaverse!

These are just a few examples of how Web3 pioneers have pushed their D2C approach to the next level with the use of NFTs and community-based approaches. Again, it bears risks to move into the unregulated and fast-moving space, but it will be exciting to see what the future holds. Web3 and the Metaverse have only just begun.?

As indicated earlier, in order to make Web3 as safe, accessible and sustainable as possible, collaborative exchange and discourse are vital: Have you had any experience with Web3, NFTs and the Metaverse at this early stage? Please let us know in the comments!

Let’s use our existing knowledge to build meaningful connections and sustainable solutions. Let’s build a better Metaverse! To get access to the full report and find out more about the way we shop has changed, check out reframing-retail.com.?

Stay tuned for more content in the future.