Chapter IX: Top retail technology trends to watch out in 2023 - Part 01

Metaverse and gamification of shopping

The idea behind the physical and virtual convergence isn’t particularly new in retail. With the rise of e-commerce, consumers started experiencing digital shopping with unprecedented convenience, speed and access. Metaverse and gamification of shopping are now taking it to the whole next level. With a combination of new technologies like NFTs, personalized digital avatars, and AR/VR devices, metaverse will enable newer ways for consumers to interact, with brands and retailers.

While the initial push has been towards consumer engagement, increasingly brands are pushing the boundary towards commerce on Metaverse. Brands are leveraging virtual concerts (digital events), virtual ambassadors and virtual merchandise for building engagement. Many brands and retailers have bought spaces in the metaverse but some of them have gone a little further. A multinational luxury fashion brand has launched a full range of NFT collectables and is introducing metaverse wearables. An Indian e-commerce brand is piloting gamified, interactive and immersive experiences for consumers in their metaverse offering where the customers can collect loyalty points and digital collectables from partner brands as they make purchases.

Brands have started blending offline and digital experiences in shopping by leveraging AR/VR shopping experiences - With virtual fitting rooms, enhanced in-store AR navigation, consumers are discovering richer engagement opportunities in their offline journey. Apart from selling and collecting digital products, metaverse also allows co-creating digital content with enhanced collaboration opportunities with influencers and even consumers.

Video commerce and ad monetization 

Retailers are fast adopting livestreaming, video commerce and assisted selling as means of improving conversion online. While the initial journey with e-commerce has been about substituting human experience with digital and always on commerce, now increasingly it is moving towards providing human led experience to drive to commerce. As per eMarketer research report, social will outpace total e-commerce in 2023, growing 13.2% year-over-year (YoY) in China which is currently the leading country in video commerce. Also, livestreaming via social media will grow fastest of all, by 23%. Notably, virtual influencers have grown by 285% in market scale over the last three years in China. Also, sales conversion via social influencers is witnessing two-to-three-fold growth compared to brand communication. Major brands including beauty and luxury brands are successfully livestreaming their major fashion events on their e-commerce sites. The key premise here is to reduce the gap between consumer demand generated via content with the actual act of conversion. 

Knowing that retailers have their customers coming back for more content and assortment, also opens the opportunity for retailers to build additional revenue stream by providing additional services to brands, such as ad targeting capability and consumer insights. In retail world, where there is a constant pressure to be competitive in terms of pricing while providing leading experience, ad monetization opens a much-needed additional revenue stream. A multinational e-commerce giant has reported nearly 7% to 8% of their revenue as ad revenue and currently is the third largest ad network in the US. Another Chinese e-commerce leader has the largest ad network and reported 34.3% of the total net digital ad revenue in China a few years back. 

However, building such ad network and competing requires specialized capabilities around – technology, managing consumer consent, consumer data and AI/ML led segment creation. 

Watch out for the next two trends in the second article.