Luxury Brands Are Taking In Multi-Million-Dollar Opportunity The Metaverse
Before the market becomes saturated, luxury brands are now in a rush in building their real estate in the virtual realm. The CEO of Metaverse, Mark Zuckerberg, has announced last October via a video posted their plans to help brands reach their target market; advertising on the platform has never been easier as they elevated the service they provide. In the video, Zuckerberg was seen using his avatars to try on clothes, pay artists and play cards. Metaverse is offering a virtual marketplace where a person can create a persona on the web and pamper it with clothes and luxuries.
Since the marketplace involved is just virtual, there are no raw materials involved, and the labor for the collections is minimal, which means that the virtual collection released by the luxury brands on the virtual realms is almost 100 profit. In the real world, the fabric used and the making of the product costs money and even takes days to finish.
A British start-up named Dematerialised, which was co-founded by Karinna Nobbs, calls the new innovation in Metaverse the Digital Department store of your dreams. They only sell virtual luxuries and nothing else. It is basically a marketplace for clothing and accessories that will only exist in the virtual realm. The first-ever item that was sold on the virtual marketplace on December 12, 2020, was a silver sweater which was sold for $137 each. In just three hours, the 1,212 digital renderings of the product were sold out.
Dematerialized also worked with a Dutch virtual couture house called Fabricant, where the users can create exclusive apparel for their digital avatars on the social media platforms, which includes a 3D digital world called VRChat which soared in popularity during the global pandemic. The said collaboration with Fabricant has resulted in the priciest sale ever at the store with almost $12,000 price for a single garment. Luxury brands have the opportunity to tap into this new opportunity. Gucci just released their digital collections on the virtual marketplace with their signature goods and clothes in Roblox with the avatar creators Giphy and Zepeto. It was reported that Gucci was selling more digital handbag than their physical store, which says a lot about the potential of the economy of Metaverse.
The avatars are the virtual embodiment of the person in the virtual realm. Almost every product that can be bought in the real world is available in the virtual realm. After a buyer successfully buys something from the marketplace, they will be given some NFTs or non-fungible tokens which can be exchanged for some real money. Currently, three luxury brands have entered the Metaverse, Louis Vuitton, Gucci, and Balenciaga.
Currently, Gucci is among the several brands that offer to clothe to avatars in designer gear. According to the study made by the global director at Wunderman Thompson Intelligence, Emma Chiu, a lot of luxury brands, including Balenciaga, Louis Vuitton, and Gucci, are now creating digital possessions which can be bought in the virtual marketplace, and they are also dropping some limited edition type of NFT. These brands are starting to dominate the virtual space as well, which can bring in new experiences for their consumers both in real life and online.
Other than the luxury brands, NBA is expected to venture into the virtual world as well because they are known to be adept at capturing emerging trends. Tapping into the age-old consumer behavior who collects and traders sports cards and memorabilia, this can be a great opportunity for NBA. The virtual realm was innovated and has progressed into a new age with NFTs. However, there has been some significant discussion about the real value of NFTs and whether they will hold in the future. Although the current marketplace is promising for a lot of brands in terms of profitability, there is very little guarantee about the long-term value of the assets acquired on the marketplace.
With these uncertainties, different luxury brands are still rushing into creating their own NFTs, which they are doing for their own reputation. A lot of movement on the NFTs are from investors and the several luxury brands releasing their own NFTs to have their moment in the history without even thinking about the long-term value of these assets and their strategy around it for a longer-term. Though this might be something to consider, studies show that NFTs hold an exciting and bright future from a wider perspective. With the ability to mold the collectibles and content on the marketplace, the possibilities are endless.
Sources: Campaign Asia, Bloomberg, Business Standard
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