Metaverse shopping 101, from the creator of Forever 21’s Roblox store

The metaverse – a virtual world where people replicate their real identities or are free to live as someone completely different – is coming. For retailers, it can be a revenue center where virtual merchandise can help metaverse dwellers realize their vision for themselves.

But as Meta has shown in its recent financial statements, it also carries financial risk. Its metaverse division, Reality Labs, recorded billions of losses over the past two years.

Most potential Metaverse users, retailers, and marketers have many questions about how this all works. We asked Justin Hochberg, Founder and CEO of Virtual Brand Group, to explain how this emerging technology will work. His agency has built Forever 21 Shop City, a virtual retail setup in Roblox, which is itself a social gaming environment — not technically the Metaverse, but a prototype that will give retailers a taste of things to come.

In Shop City, customers purchase virtual clothing for their avatars and create their own Forever 21 stores. In the Roblox environment, customers receive coupons for purchasing the same physical item – for those who wish to pair with their avatar Roblox in real life.

Describe the metaverse for retailers and marketers who haven’t yet grasped the concept.

Justin Hochberg: Let me describe it to you on a visceral level. The #1 thing about “metaverse” isn’t whether it’s Roblox, Fortnite, Meta, Layer2, crypto, or NFT.

Justin Hochberg

Marc Andreessen invented the Mosaic browser 25 or 26 years ago. Then you started seeing URLs on billboards.

People were like, “What is this?” and they were like, “Can you explain the Internet? What is it?”

I would say, “That’s whatever you want it to be.”

“Well, who does it belong to?”

“Nobody.”

“What can you do with it?”

“Anything.”

None of these answers were helpful at all. Now 26 years later insert the word metaverse and we are in the same place. Three years from now, you won’t be wondering what the metaverse is, just like you won’t be wondering what the Internet is. Internet, who cares? What interests you is Facebook, Amazon, Netflix, whatever. That’s what people understand. People don’t understand it because they haven’t used it yet. It’s just this idea, and it’s not “Hey, can I get a book cheaper, faster?” It’s the Internet.

Let’s go back a bit. So what is a Roblox experience for CX managers who might be wondering whether to go in that direction.

Hochberg: Any type of brand – whether it’s fashion, TV, film – if you’re selling to consumers, you want to be where your consumers are. For many people, that means you have a form of store, whatever that looks like. You have some form of e-commerce, you do some form of social media, maybe do a bunch of other things – omnichannel – to meet your customers wherever they are. The Metaverse is a very complicated thing, but all it is is another place where many consumers already exist. But it’s – and here’s the trick – better than your store, your e-comm and your social media. It’s the most effective sales channel since the advent of selling things you’ll never find.

Why?

Hochberg: Let’s approach it in three ways: the first thing is that it’s a frictionless customer experience. Going to a store is kind of a flawed business model. I have to go – now is the time. I have to park. I have to find the store. I have to walk in the store. I have to find the article. I have to queue. I have to reverse everything. The average time people spend in a Home Depot store is 5.9 minutes — that’s the time they actually spend buying outside of the shop. You want to get out as soon as possible. E-commerce removes a lot of that friction because I don’t have to do half of it. If I search Amazon, they have it or they don’t, I buy it or not, and that’s fine. So in terms of transaction efficiency, it’s great but not sticky. A transaction is inbound and outbound. I have no affinity for the transaction.

Roblox forever 21 takes time – in a good way. It’s insanely sticky. Its marginal cost is zero. So it’s the most profitable thing you can sell. We emulated the #1 retail store in the world: Disneyland, which is just a very fancy retail store. You’re actually only on a trip about 18% of the time. Most of the time it’s about extracting money – when you buy a pass, the mug, the t-shirt, the lunch. Not only do I want to spend time there, but I will spend all day there giving you my money. I’ll spend the whole week cruising to give you my money. It’s sticky. Stores have been pursuing experiential retail for decades. Barnes & Noble started by getting comfy sofas for you to read on. Starbucks has given you free Wi-Fi. Chanel offers you champagne and Evian water. This is all about experiential marketing. It’s still not that sticky. Disneyland is sticky.

We’ve taken the Disney model and the experience you want to keep. We transform a retail brand into an entertainment experience. People come to Roblox because it’s social.

Forever 21 Virtual Clothing
Forever 21 offers its customers coupons to discount physical clothing items that resemble the metaverse shopping clothes they have purchased.

Why Gen Z wants to buy pixelsas opposed to physical stuff?

Hochberg: Why do you want to buy something? Take the average person. They buy a lot of things. They buy t-shirts, sneakers and sweatshirts. Maybe buy suits and ties or whatever they buy for their daily life. Why doesn’t everyone dress like Mark Zuckerberg, wearing the same hoodie every day? Most people don’t do that. They have an outfit for going out on Saturdays and an outfit for cleaning the yard. They could wear the same outfit, but they don’t. Why is that? Because as human beings we want to present ourselves a certain way in certain circumstances.

The #1 attribute of Gen Z is self-expression. How do I feel? How do I want to express myself? In the real world, we are constrained. …into the virtual world. You can be whoever you want and you are expected to express yourself as you wish. I can wear a dress, I can be a fry, I can share. I can be cyberpunk. I can do it differently every day, or with different groups of friends.

Here’s the other thing: the real world is tough. Most people can’t visit the Grand Canyon, let alone buy a pair of Nikes or even Guccis. In the virtual world, we can recreate the Grand Canyon, the Eiffel Tower, the Taj Mahal or an NFL game. You can own Nike sneakers, Forever 21 wardrobe, Gucci wallet. So the reason the metaverse is so powerful is that it has massive scale, it taps into the aspirational, and it has a world where you socialize, instead of transact. That’s why people spend time there and buy things there – they want to present themselves in their own view of how they want to be perceived.

Let’s say Roblox went offline, either by choice or by necessity. Is there a way that people who bought things on it can take them to another platform, or does the virtual clothes go down with the ship?

Hochberg: People think Roblox is the metaverse. This is not the case. It is a social gaming platform. Facebook is a platform, and you go there, you build your profile. I can’t do anything with it except put it on Instagram and WhatsApp. It’s closed.

Roblox is a 3D version of it, where there are games, houses and toys. It’s not technically part of what we call Web 3.0. Web 3.0 is about the consumer’s ability to own the item, not the platform. That’s why when you buy something in Decentralized or Sandbox, when you go to other platforms, you own them and no matter what happens to those worlds, you still own them. Just like when you buy Nike sneakers, if Nike goes bankrupt, you still own the sneakers. It’s Web 3.0. The infrastructure allows you to bring it anywhere, it’s on a generally transferable blockchain technical protocol that allows you to own the asset.

How do NFTs get there?

Hochberg: It’s just a digital asset on the blockchain. That’s all it is, whether it’s a piece of art, a sneaker, a movie clip, a LeBron James highlight, whatever. A lot of people now see it as art or digital images or Bored Ape Yacht Club. Much of it is highly speculative, which is why a lot of people lose money. Sometimes what they see is the title such as “Snoop Dogg sells NFTs for $44 million“, but most NFTs don’t sell.

For marketers and technology leaders, what is the real opportunity of the metaverse? To earn income? To increase brand awareness? Both? And how do you get started without spending so much capital that you get fired?

Hochberg: Using the metaverse as a sales channel unlocks entirely new revenue with zero marginal cost. I sell millions of dollars worth of Forever 21 fashion that costs me $10,000 to create a line, and then each item has zero marginal cost. This item can live forever without defects or supply chain issues. No refund. It can live on Roblox as long as Roblox exists, without any degradation.

You cannot leave a white T-shirt in the store. You don’t have the storage space. It will deteriorate, it will get dirty. Virtual objects are inexpensive to create, with zero marginal cost. You want to be where your consumers are: 200 million people play Roblox every month. People spend millions of hours a month in Forever 21 Shop City, which goes beyond social media.

Whatever you build in your metaverse, it could cost you a few thousand dollars to create an NF T or a virtual fashion line, or it could cost you half a million dollars. It’s not expensive stuff compared to what people pay for TV advertising, activations at South by Southwest, or whatever. The key is that if you get in now, it’s relatively inexpensive. Not only can you generate new revenue, but you can also create new consumer connections.

This Q&A has been edited for clarity and brevity.

Don Fluckinger covers enterprise content management, CRM, marketing automation, e-commerce, customer service, and enabling technologies for TechTarget.


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