Member Article

The Metaverse, retail and brand protection

When first confronted with concepts such as cryptocurrencies and NFTs, it took most of us quite some time before we felt it was “safe enough” to make our first online purchase.  For some, it was a case of calling a friend to find out if their experience was legitimate before taking that leap! 

Well, safe to say this is no longer the case.  The era of the Metaverse is here, and seeing how well previous developments in the digital space have worked for the likes of Amazon, Alibaba and eBay, many retailers are now keen to explore the opportunities presented by this new and exciting environment.   

We have discussed the Metaverse previously, but in this article, we’ll be looking at it step-by-step specifically in the context of retail.  

The Metaverse is?

By definition, the Metaverse is “a virtual reality space in which users can interact with a computer-generated environment and other users.” It is a virtual and immersive digital world that parallels our own, containing digital representations of people, places and things and  it allows users to interact in the digital world as we do in our physical world.

3D representations of ourselves, known as avatars, can actively engage in the Metaverse by socialising, selling and purchasing virtual goods, participating in virtual marketplaces, entering virtual showrooms and stores, engaging in virtual reality (“VR”) and augmented reality (“AR”) gaming and even attending virtual concerts and live events. This essentially allows for a host of virtual experiences and an opportunity to monetise virtual reality content.

An evolution - from browsing to inhabiting

An article by Forbes describes the metaverse as “an evolution of the internet that enables a user to move beyond ‘browsing’ to ‘inhabiting’ in a persistent, shared experience that spans beyond the spectrum of our real world to the entirely virtual and in-between.  The necessity for remote and engaging shopping became all the more apparent after the pandemic, and with the sophisticated technology available, the metaverse was born” – a natural progression!

Buying space in the Metaverse

The BBC reported that  several major brand owners have already bought space in the Metaverse. Brands such as Adidas, Burberry, Tommy Hilfiger, Nike, Samsung, Louis Vuitton, HSBC and JP Morgan. But how do you buy space in the Metaverse? Well, you approach a “space provider”, such as Decentraland, The Sandbox, Voxels, Somnium Space and Meta’s Horizon World.

Within the African context, MTN and Nedbank were the first in their respective telecommunications and banking industries to purchase virtual property in Africa’s first Metaverse – Ubuntuland.  Of course, you won’t be surprised to hear that purchases of land in the Metaverse are only done by way of cryptocurrency. 

Retailers in the Metaverse

The Metaverse is rapidly integrating into e-commerce,  both on the consumer-facing and back end of operations.  eCommerce in the Metaverse presents a great marketing and sales opportunity, especially when seamlessly linked to the real world. 

Some innovations include:

• Nike hosting a virtual shop on the Roblox platform allowing users to try virtual products on their avatars when playing games online.
• VKET Mall, a Japanese virtual mall offers a virtual reality shopping experience. VKET Mall has more than 300 stores, over a million global users at its August 2022 Summer Market, and has ambitions to replace conventional e-commerce.
• ADA is a South Korean luxury marketplace where avatars can try on virtual outfits in their showrooms and then purchase real-life versions.
• Samsung launched a new smartphone at its virtual store in Decentraland which was attended by over 100 000 users.
• Ferragamo has an NFT creation booth for VIP shoppers only which allows them to mint their NFTs using digital artwork to create unique products.

At the back-end, we have seen companies allowing employees to choose to receive their salary or a portion thereof in cryptocurrency.  In addition, platforms such as Meta Horizon Workrooms can be used for employee onboarding and training.

Remote shopping: the benefits

To increase customer engagement and sales, brands are embracing the Metaverse to create enhanced and unique experiences for their customers. 

Looking at two international giants in the retail sector, Amazon and Walmart:

• AR View created by Amazon uses AR technology to allow customers to view products to scale in their home before making a purchase, giving them a feel for size and compatibility to their living space.
• Showroom by Amazon also allows shoppers to redesign rooms by changing colours, swapping products etc.
• Zeekit, created by Walmart, is a virtual fitting room platform that allows customers to try on items and help them understand how a particular piece of clothing would fit them.

eCommerce in the Metaverse bridges the gap between traditional in-store shopping and online shopping through the “experience” factor.  Statistics have shown that shoppers are more likely to buy a product if they can test it first through AR or VR as it helps them make informed purchasing decisions, which ultimately leads to an increase in customer engagement with the brand and sales. In addition, a customers’ participation in the brand’s virtual activities enables companies to understand how to satisfy their customers. 

Remote shopping works for retailers as well as consumers

An article by Forbes says that retailers ‘have the advantage of tracking what products users like to engage with, what product placement is most effective for sales and what space layout works best’. They can ‘tailor experiences for their audience demographics’.  

Another article by Morgan Lewis states that  “this new sales channel for brands has the potential to solve some of the biggest issues facing online retail today, such as … sizing errors… return rates between 20% and 30% of all products sold… the hope is that by using digital avatars with true-life measurements, users will receive more accurate fit and size recommendations than by relying on sizing charts ultimately helping retailers reduce the huge cost and waste generated by dealing with returns.  There are still significant barriers to entry with this approach, given the upfront investment required to achieve any material engagement with the metaverse. This includes investment in the necessary cloud infrastructure to set up a metaverse storefront that has the same essential function as retailers’ online websites”.

Trade mark considerations

We have discussed these in previous articles. The main point that we want to make here is that companies who are considering entering this brave new world should make sure that they have the right trade mark protection and, if they don’t, they should be filing new applications in the key markets of interest.

The first step is to conduct a trade mark search to determine whether your Metaverse trade mark is clear for use and registration. Submitting your trade mark applications as soon as possible is key given that the registration timelines vary across different jurisdictions. For instance, it can take up to two years to secure a trade mark registration in South Africa.

Obtaining trade mark protection not only provides the owner with a valuable asset, but also creates a rebuttable presumption that the owner holds the exclusive right to use its trade mark for its goods or services, and puts the owner in a stronger position to enforce against any unauthorised use in both the virtual or the real world.

The trade mark classes you should be looking at include classes 9 (covering software and downloadable virtual goods authenticated by NFTs), 35 (online retail services; providing online marketplaces for buyers and sellers of goods), 36 (financial services, namely providing a virtual currency), 38 (telecommunication services including electronic transmission of virtual and augmented reality content), 41 (entertainment services and non-downloadable content) and 42 (providing temporary use of non-downloadable software for enabling members of an online community to receive, access, spend and trade NFTs).

The Metaverse has arrived and is reshaping the retail landscape much like online and mobile shopping did just decades ago, bringing countless opportunities for growth and innovation.  Brands are embracing eCommerce in the Metaverse to create enhanced and unique experiences for their customers. However, as users' demand for Metaverse shopping experiences increases, obtaining trade mark protection is crucial, – so don’t miss out, and protect your brand!