Crypto, NFTs and the concepts that are associated with Web 3.0 are also gaining weight in the luxury market, as Luis Carvalho of FARFETCH explains.
Web 1.0 began by linking, in the 1990s, the information of several computer systems distributed geographically, through the navigation of links, texts and images, primarily used by academic institutions, and given its genesis, military.
Web 2.0 has gradually evolved towards a model of centralization of information, where currently a group of “big tech” companies offer services within the reach of a screen, at a touch. Smartphones, social, cloud are terms that have entered the vocabulary. The convenience and perceived advantages of applications that have changed our day-to-day lives generally overshadow the dependency created on privately managed services. This dependence gains moments of clarity in the frustration of the temporary impossibility of making posts when a social network is down, or decides to ban someone.
Now comes Web 3.0, the next iteration based on blockchain technology, incorporating principles of financial decentralization and token-based economies. Unlike Web 2.0, the principles and technology of Web 3.0 dictate that information and content are not tied to any large entity or central system, their ownership being determined in a distributed way via blockchain. Most of us will have heard of the first major Web 3.0 product, cryptocurrencies – or the shorter crypto version. Bitcoin, Ethereum and other fungible tokens have gradually entered into conversations, first on anti-system-motivated forums, recently widening to the general public.
More recently, new waves of Web 3.0 have become more visible, first through NFTs and more recently the Metaverse. NFTs, or non-fungible tokens, have brought the much-needed concept of ownership of unique items to the concept of individuality, unlike cryptocurrencies which in essence can be replaced – any instance of bitcoin has the same value.
Starts the Metaverse
Metaverse creates different and unique experiences that allow consumers to interact and use Web 3.0 concepts and products. It is in the context of the evolution of the Web that some of the differences that Metaverse offers are highlighted; among others, the customer becomes a shareholder of the network, cryptocurrencies gain prevalence over fiat currencies, property registers are distributed and not centralized, selfies are replaced by avatars.
The term Metaverse appeared in 1992 in the book “Snow Crash” by Neal Stephenson. In this science fiction work, a story is told in which the characters use the metaverse to escape a dystopian reality. Decades later, the term prevails, moving from the universe of literary fiction to the real-digital universe. The Metaverse at its core describes a paradigm shift in how we interact with technology. I believe that, even if the term gradually disappears, the culture and way of being it brings with it will prevail in one format or another. Any company that intends to enter this universe will do well to ponder this: the change is not about the technology; it’s about the culture, perception and principles that support the Web 3.0 movement. Of course there are technological changes.
The technical challenges from hardware to software are significant, and being myself in the technology area, I feel my mind expanding whenever I think about these challenges and the possibilities that open up. But even here the technical challenges are not necessarily new, but the context – culture, perception and principles – in which the technology becomes useful and interesting, brings a different color palette to the final picture.
Many companies are native to the Metaverse, other Web 2.0 companies ponder the evolution and may suffer the fate of their decisions, or non-decisions. Others have already decided to take the next step, the most publicized case being Facebook with the name change to Meta in 2021 in an evident affirmation of acceptance of the new paradigm.
Metaverse and Luxury
During the pandemic, there was an acceleration of online consumption, more specifically an acceleration of online learning. With this learning, expectations of what online is, and understanding of what it could still be, also grew. The virtual world is becoming a place where customers are learning to express themselves creatively and individually.
Metaverse also uses principles that have gained expression in the video game world, in particular those that revolve around cooperation and socialization components, avatars, skins and exclusive items. In Metaverse these principles gain another dimension beyond online play, and become a bridge between the real world and the virtual world. In Metaverse creativity is limited only by the imagination of creators and consumers. Once intangible universes come to life on screens, in virtual reality helmets, and in the future in new forms of interactivity. These Web 3.0 values of creativity, individual expression, community power are well present in Gen Z, showing the alignment of this generation and the Metaverse and Web 3.0 movement.
Web 3.0 is accelerating luxury fashion. Fashion companies are increasingly looking to the Metaverse. Loyalty programs, art possession, skins, gain other possibilities via NFTs and 3D interactions. Our avatar can appear in exclusive virtual events with unique NFTs. The same avatar can cross paths with our character in games, and with personal shoppers who suggest the right outfit for our avatar, which could also be the right outfit for us in the physical world. The exclusively online presence, and the link between online and offline presence are powerful tools for luxury brands.
Some of the luxury brands that have already been investing in the creation of virtual goods for avatars are Gucci, with one of its stores selling a single bag for more than 4 thousand dollars, and Balenciaga, which launched a collection of clothing items. for Fortnite in-game characters purchased with V-Bucks (Fortnite’s virtual currency). Burberry has also created several NFT’s intended for games with characters equipped with accessories such as armbands and pool shoes. The collection quickly sold out for nearly $400,000.
Currently, Web 3.0 and Metaverse users are still specialized consumers and market penetration is low compared to potential. Barriers to entry for other consumer groups are still strong and current experiences do not provide a transition between Web 2.0 and Web 3.0. Companies that are able to offer the services and experiences that make this transition possible in a simple and effective way will be able to collaboratively design the future of Metaverse with communities.