Dynamic duo Renaud Frisé and Matt Newell of creative agencyThe General Store provided an update on all things virtual e-commerce at eTail Australia recently.
According to Matt and Renaud, 40% of Interbrand’s BestGlobal Brands of 2022 have made moves into Web3 channels. Notably, Nike has attracted over 30 million visitors to its Nikeland virtual experience on Roblox. Starbucks Odyssey is experimenting with NFT based loyalty withNifty Gateway. Walmart uses blockchain and has experimented with virtual shopping. Australian fashion retailer The Iconic introduced Web3 to the fashion runway withRunway X last year and fashion label Forever 21 has sold over 1.5 million x 70c virtual beanies through theirF21 Shop City on Roblox.
Payments Consulting Network Associate, Ross McIntyre, caught up with Renaud Frisé, Director of Digital and Technology at The General Store to get an update on virtual worlds in e-commerce.
RM: How big is the Web3 opportunity? Who are the major players?
RF:A good way to look at it is by using the current size of the digital economy compared to the total economy. The size of the global economy is currently about $104 trillion, according to the International Monetary Fund. The digital economy is about 20 per cent of that – that’s immense, especially if we assume that Web3 is the next iteration of the internet and that internet penetration and consumption will continue to grow.
It is worth noting that the size of the opportunity depends on the category. The gaming market is a solid example,witha current record of 3.22 billion gamers worldwide.Almost half are female and the average age is 35. Some of the key players include Meta, Epic Games, Roblox, Nvidia, Shopify, Microsoft and Bytedance. These companies have each made significant contributions to the industry, from developing cutting-edge graphics technology to creating innovative gaming platforms.
RM: Does the virtual world really need virtual currencies? Why? What sort of projects are you seeing?
RF:No, but it depends on your definition of “virtual currency”. Are we talking decentralised crypto or simply in-game digital money like Roblox’ Robux or Fortnite’s V-bucks?
To thrive, virtual worlds need a robust economy.
The attributes of a thriving real-world economy, such as rigorous competition, a large number of profitable businesses, trust in the monetary system, consistent consumer rights,and consumer spending need to be present in the Metaverse.
I don’t believe that the current global economy will completely vanish and that all 8 billion people in the world will depend solely on the virtual decentralized currency.
The latest scandals with huge cryptocurrencies like Luna or crypto exchanges like FTX showed the world that regulation and centralisation are still very much needed for a thriving and healthy economy.
“Virtual worlds won’t take over real life, they will happen alongside it.”
– Renaud Frisé, The General Store
RM: Are virtual worlds and reality converging? How is this impacting omnichannel commerce?
RF: That’s like asking whether reality and the internet are converging. Could we imagine a world without the internet today? No, it is part of daily life. Virtual worlds won’t take over real life, they will happen alongside it. In the same way that the internet operates, some people will participate in it more than others, based on different socio-economic factors and where they are located.
This will definitely impact omnichannel commerce as it will create a lot of new things to consider from commerce channels and payment options to logistics and both physical and digital delivery.
Before we even consider how virtual worlds will impact commerce, in my opinion, the current vision of omnichannel retail – a truly seamless and unified brand experience for customers – has not even been fully achieved.
We still operate very much in a multi-channel approach rather than omnichannel. Some companies do it better than others,but we still see identity resolution issues, broken journey paths, system interoperability, communication issues and more. So, yes, it will impact omnichannel commerce by adding new channels, new customer paths, new payment methods, new delivery and inventory management systems. Interesting and exciting times ahead for sure!
RM: Is Web3 a dangerous place?
For example, businesses face risks like fraud and mishaps. How can they effectively protect themselves and their customers from these possible threats?
RF: In the early days of the internet, we saw many scams and risks or crimes take place. Yet, 40 years later, some of us – even major companies – still get scammed every day, even with regulations and legislation in place. Bullying, identity theft and the black market are all still problems for us online, but in virtual worlds, criminals will get more creative with deep fakes and the use of generative AI.
Having said that, I wouldn’t describe Web3 as “dangerous”, but we do need to be careful, just as we would with any new technology or product that we’re yet to fully understand. I think the answer lies in education. Learn what exists, what is possible, what we need to be wary of and put the right protection processes in place.
RM: Looking back, how did lockdowns and re-openings impact Web3? What have been the positives and negatives? And where do we stand today?
RF: One of the biggest positives was that the world realised that a lot of our daily activities can be done differently. Many companies accelerated their digital transformations within the space of just a few weeks. Similarly, employee digital skills improved by leaps and bounds in a short period of time. But all of that created a lot of hype around the Metaverse. No one was ready, and neither was the technology. And when people realised that, their dreams and high expectations came went bust: there were scandals, companies went belly-up, there were tech lay-offs, tech stocks came crashing down and so on. It went too far and too fast to be sustainable and realistic. For example, Meta beefed its workforce during Covid, then when expectations around the Metaverse went down, it had to reduce it by 13 per cent and lay off 11,000 people, losing $24 billion on its VR Reality Lab in the process.
As Meta founder Mark Zuckerberg admitted in an open letter: “At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”
Now we are at the normalisation point of the classic hype curve. But for me, this is the most exciting moment in time. Who and what will rise from the ashes? Only the real developers and brands are making genuine changes. These guys now have a plan for what needs to happen to become viable, and they will build products and services in that direction. Innovation will be the winner. It is less sexy, less headline-worthy, but it is foundational for the next steps.
RM: How does all this converge with developments in AI?
RF: AI and Web3 are all part of the same technological stack. The internet needed a certain group of technologies to come together. It will be the same for Web3 and the Metaverse.
We tried to build the fully realised vision of the Metaverse with the tech that we currently have and realised that the outcomes were way below our expectations. The hype men left the rooms and the builders entered, rolled up their sleeves, and got to work.
The level of technological advancements that need to come together to make all this possible is staggering and will take a few years and a few breakthroughs to work.
These breakthroughs will need to occur across various domains, such as networking, computing, hardware, standards and protocols, graphics, payment and hardware devices. A few of these things do not exist yet but will need to happen before having a shot at bringing the vision to fruition.AI is part and parcel of many of we need generative AI to create 3D worlds and assets and AI is used in computing, every step of the way.
RM: What changes or trends are you expecting over the next 2-3 years?
RF: It’s always difficult to predict the future. Who would have thought that we’d be having this conversation three years ago? I want to believe that a big breakthrough is coming and will onboard millions of people. Is it a device, new technology or a new experience? I don’t know, maybe all three! Will it come from a tech startup with a revolutionary breakthrough? Or one of the tech giants that we know? I would bet on the tech giants: AI has taught us that the costs of computing are enormous, so if I was to predict the future, it would be on companies that can afford the best people and have the deepest pockets in that space. But history has always proved us wrong.
Author: Ross McIntyre, Associate, Australia, Payments Consulting Network
Ross has more than 15 years of expertise in financial analysis, data science, and developing business strategies and proposals. As a consultant, he has worked on ATM availability analytics and produced data analytics for industry reports PCN’s industry reports.
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