2022
The metaverse is defined as the future of the internet, a shared 3D virtual universe that users can exist in perpetually. Platforms for social interaction like Roblox, Decentraland and The Sandbox have become more popular among Gen-Z users. And the introduction of wearables like the Meta Quest 2 headset mean that virtual environments can now be built with more advanced hardware and expanded capabilities.
As a result, the metaverse is becoming a significant area for brands to invest in now, in preparation for the future.
Intro
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Glossy's Guide to the Metaverse
NFTs, or non-fungible tokens, are digital collectibles that sit on the blockchain. All NFTs are non-fungible, meaning their digital signature makes them unique and impossible to be exchanged for another. NFTs can be created from anything, including art, videos, collectibles, virtual avatars, fashion and music. NFTs became a hot topic in May 2021 when the Bored Ape Yacht Club (BAYC) was one of the first big NFT projects to sell out, inspiring multiple collections. BAYC NFTs have sold for 61.80 ETH ($77,916) to 190.00 ETH ($239,550). Launching an NFT can be as simple as turning a digital image into an asset by minting it on the blockchain. However, as the NFT space has developed over the last year, it has become more evident that NFT launches need thoughtful planning.
NFTs: What are they and how are they changing
How fashion brands are navigating NFTs
FULL STORY
As is common with new technologies, misconceptions about the metaverse have been repeated throughout — namely, that NFTs are very energy intensive. The truth is that NFTs do not use up any energy, but their verification does, especially if done with blockchain platforms like Ethereum, that used to run on a proof of work consensus algorithm. A standard Ethereum transaction used to use roughly 48 kilowatt hour, equating to roughly the amount of energy used by a U.S. household for 1.5 days. As much of the NFT processing happens in areas of the world that are reliant on coal, the process also adds more CO2 to the environment. However, Ethereum transitioned to a much less (by 99.95%) energy-intensive proof of stake mechanism in late 2022. This may lead to more brands launching their projects using Ethereum, the most popular blockchain.
Both the fashion and beauty industries heavily rely on physical product output, necessitating high energy use across shipping, production and manufacturing. As the industries reckon with their climate impact, NFTs and other aspects of the metaverse, like AR, digital fashion and avatars, could provide a way for brands to keep engaging with trend culture while addressing the overproduction of goods. Through NFTs, digital goods can be created quickly and easily, with no physical waste and a significantly lower environmental cost, especially as the technology improves. Brands should still consider social and environmental responsibility for digital garments, but this shift to digital could lead to fewer physical purchases.
Why the metaverse is an important sustainability play for brands
NFTs:
A non-fungible token, or a unit of unique data stored on the blockchain system that can be traded and sold. Most digital files can become NFTs, but in the fashion industry, most NFTs have been in the form of imagery.
Glossary
How fashion brands are navigating NFTs
FULL STORY
The Metaverse Glossary
For fashion and beauty businesses, NFTs offer a way to create a community. Pioneers, like collaborators Nike x RTFKT and Gucci x Wagmi-San, use NFTs as a membership granting access to exclusive drops, collections and previews. For brands that see NFTs becoming a large part of their future strategy, NFT launches should be connected by a common thread or theme, offer exclusive access and perks, and center on a story. Nike and RTFKT have made a habit of connecting digital garments and avatars around themes. Brands should also spell out a roadmap of what NFT holders can expect, or have a clear plan in place. There are still many avenues brands can explore for NFT launches. In the future, brands could sell plots of land as NFTs in their digital worlds, where customers could build up their own apartments and spaces and inhabit the digital world. They could also use virtual ad spaces and build out virtual lifestyle product offerings.
At the height of the pandemic, as the industry swiveled away from physical events and gaming became a key pastime, virtual fashion grew in popularity. As a result, brands have wanted to do more than just release collections and integrate with physical fashion weeks for exposure and brand awareness. In March 2022, Decentraland, a virtual social world that runs on MANA, its own cryptocurrency, put on its first Metaverse Fashion Week. Only the second virtual fashion event of this scale after Crypto Fashion Week, it connected real-world fashion brands like Dolce & Gabbana and Tommy Hilfiger together with digital fashion brands like Republique. The event was focused on brands’ catwalks, presentations, virtual event spaces and shops on the platform. Users could walk around and purchase NFTs and digital fashion pieces.
Since Metaverse Fashion Week, which saw a mixed response from the press and industry, the efforts to bring digital fashion and physical fashion together in a shared space have diminished. For example, London label Roksanda has given proof of attendance NFTs (POAP) as gifts for those attending its physical fashion shows, instead of launching digital fashion shows to bring its community into the web3 space. Fashion weeks that integrate digital elements have proven a good way to showcase new innovations and engage with the crypto community, which holds a new target audience for fashion. Brands are taking the time to educate their customers about crypto through websites, webinars and Discors, and offering existing crypto customers exclusive access to drops and events with designers like Richard Quinn.
Digital fashion has joined the fashion week calendar
With virtual fashion significantly growing over the last couple of years and crypto communities engaging more with fashion and beauty brands in the virtual space, new social media channels and other opportunities for marketing have emerged. For brands, marketing in the metaverse looks different compared to the current social media landscape. Growing web3 communities can sense when NFT plays are only focused on profit, so engaging storytelling and roadmaps are needed for brand loyalty.
Currently, the key social media platform is Discord, which brands like Kenzo and digital fashion brand RTFKT are actively using to engage with NFT communities. As of September 2022, Discord has 300 million registered users, who want to engage with interesting projects on the platform. The platform is used for announcing new NFT drops and troubleshooting, bringing communities together through shared interest channels, and outlining roadmaps for NFT projects.
Another form of marketing in the metaverse ties to community-building. This has been fueled by virtual influencers, who have been mainstays in the fashion industry even before virtual fashion came onto the scene. In 2016, virtual influencer Miquela Sousa, or @lilmiquela, posted her first Instagram post, cementing the entrance of virtual influencers. Since then, others have launched, bringing more diversity to the playing field. They include Black virtual influencer Shudu and Cami, a virtual influencer with Down’s Syndrome. Virtual fashion influencers have not yet engaged in popular gaming worlds. But brands can leverage the concept by creating their own digital influencer, like Prada with “Candy” or LVMH with “Livi,” or by partnering with existing ones for campaigns.
Marketing 101 in the metaverse
For fashion and beauty brands, web3 communities likely do not encompass large percentages of their customer bases — yet. Everyday consumers connecting with brands through traditional shopping channels may not understand the metaverse, at this point, but they are seeing it appear more often on social media and at events, as well as through their new interest in gaming. In fact, according to a survey by Wonderman Thompson, nearly three-quarters of surveyed consumers have heard of the metaverse, as of March 2022. To prepare for a younger customer base that is more well-versed in web3, brands would be smart to become educated on web3 now.
With many companies looking for higher customer acquisition rates, web3 offers access to a new consumer group, which is both challenging and exciting. Current web3 users are less focused on buying goods for utility and more interested in collectibles and rarity, as proven by the buzz surrounding projects from Gucci and RTFKT. The metaverse is also popular with Gen Z and Gen Alpha consumers, who will drive more of the market in years to come. For brands to connect with these demographics, considering their elevated understanding of web3, backing exclusive drops and world-building will serve them well. Brands will earn trust and long-term value among Gen Z when they reach the consumer in environments they know.
Building brand worlds online and engaging with communities
As is common with new technologies, misconceptions about the metaverse have been repeated throughout — namely, that NFTs are very energy intensive. The truth is that NFTs do not use up any energy, but their verification does, especially if done with blockchain platforms like Ethereum, that used to run on a proof of work consensus algorithm. A standard Ethereum transaction used to use roughly 48 kilowatt hour, equating to roughly the amount of energy used by a U.S. household for 1.5 days. As much of the NFT processing happens in areas of the world that are reliant on coal, the process also adds more CO2 to the environment. However, Ethereum transitioned to a much less (by 99.95%) energy-intensive proof of stake mechanism in late 2022. This may lead to more brands launching their projects using Ethereum, the most popular blockchain.
Both the fashion and beauty industries heavily rely on physical product output, necessitating high energy use across shipping, production and manufacturing. As the industries reckon with their climate impact, NFTs and other aspects of the metaverse, like AR, digital fashion and avatars, could provide a way for brands to keep engaging with trend culture while addressing the overproduction of goods. Through NFTs, digital goods can be created quickly and easily, with no physical waste and a significantly lower environmental cost, especially as the technology improves. Brands should still consider social and environmental responsibility for digital garments, but this shift to digital could lead to fewer physical purchases.
Why the metaverse is an important sustainability play for brands
At the height of the pandemic, as the industry swiveled away from physical events and gaming became a key pastime, virtual fashion grew in popularity. As a result, brands have wanted to do more than just release collections and integrate with physical fashion weeks for exposure and brand awareness. In March 2022, Decentraland, a virtual social world that runs on MANA, its own cryptocurrency, put on its first Metaverse Fashion Week. Only the second virtual fashion event of this scale after Crypto Fashion Week, it connected real-world fashion brands like Dolce & Gabbana and Tommy Hilfiger together with digital fashion brands like Republique. The event was focused on brands’ catwalks, presentations, virtual event spaces and shops on the platform. Users could walk around and purchase NFTs and digital fashion pieces.
Since Metaverse Fashion Week, which saw a mixed response from the press and industry, the efforts to bring digital fashion and physical fashion together in a shared space have diminished. For example, London label Roksanda has given proof of attendance NFTs (POAP) as gifts for those attending its physical fashion shows, instead of launching digital fashion shows to bring its community into the web3 space. Fashion weeks that integrate digital elements have proven a good way to showcase new innovations and engage with the crypto community, which holds a new target audience for fashion. Brands are taking the time to educate their customers about crypto through websites, webinars and Discors, and offering existing crypto customers exclusive access to drops and events with designers like Richard Quinn.
Digital fashion has joined the fashion week calendar
The Metaverse Glossary
NFT:
A non-fungible token, or a unit of unique data stored on the blockchain system that can be traded and sold. Most digital files can become NFTs, but in the fashion industry, most NFTs have been in the form of imagery.
Cryptocurrency:
Different currencies that are used to trade digital items. The most popular are defined by three verification systems: proof of work like Ethereum, which has come under fire for using large amounts of energy until recently; proof of stake, where a person with a corresponding number of network coins verifies a block of information; and proof of authority, where users are required to make themselves known to the network. The most popular cryptocurrency is Ethereum, although many others exist that are tailored to specific value environments.
Blockchain:
The system that allows NFTs to be verified through a record of transactions across several linked computers. What makes the blockchain unique is that records cannot be altered, making it a perfect system for traceability and transparency.
Proof of work/proof of stake:
Blockchains typically run on one of two types of consensus algorithms: proof of work (PoW) and proof of stake (PoS).
Skins:
Digital garments that exist in-game. Unlike NFTs, skins are rarely transferable through metaverses. They encompass anything that an avatar (online persona) is wearing.
With virtual fashion significantly growing over the last couple of years and crypto communities engaging more with fashion and beauty brands in the virtual space, new social media channels and other opportunities for marketing have emerged. For brands, marketing in the metaverse looks different compared to the current social media landscape. Growing web3 communities can sense when NFT plays are only focused on profit, so engaging storytelling and roadmaps are needed for brand loyalty.
Currently, the key social media platform is Discord, which brands like Kenzo and digital fashion brand RTFKT are actively using to engage with NFT communities. As of September 2022, Discord has 300 million registered users, who want to engage with interesting projects on the platform. The platform is used for announcing new NFT drops and troubleshooting, bringing communities together through shared interest channels, and outlining roadmaps for NFT projects.
Another form of marketing in the metaverse ties to community-building. This has been fueled by virtual influencers, who have been mainstays in the fashion industry even before virtual fashion came onto the scene. In 2016, virtual influencer Miquela Sousa, or @lilmiquela, posted her first Instagram post, cementing the entrance of virtual influencers. Since then, others have launched, bringing more diversity to the playing field. They include Black virtual influencer Shudu and Cami, a virtual influencer with Down’s Syndrome. Virtual fashion influencers have not yet engaged in popular gaming worlds. But brands can leverage the concept by creating their own digital influencer, like Prada with “Candy” or LVMH with “Livi,” or by partnering with existing ones for campaigns.
Marketing 101 in the metaverse
For fashion and beauty brands, web3 communities likely do not encompass large percentages of their customer bases — yet. Everyday consumers connecting with brands through traditional shopping channels may not understand the metaverse, at this point, but they are seeing it appear more often on social media and at events, as well as through their new interest in gaming. In fact, according to a survey by Wonderman Thompson, nearly three-quarters of surveyed consumers have heard of the metaverse, as of March 2022. To prepare for a younger customer base that is more well-versed in web3, brands would be smart to become educated on web3 now.
With many companies looking for higher customer acquisition rates, web3 offers access to a new consumer group, which is both challenging and exciting. Current web3 users are less focused on buying goods for utility and more interested in collectibles and rarity, as proven by the buzz surrounding projects from Gucci and RTFKT. The metaverse is also popular with Gen Z and Gen Alpha consumers, who will drive more of the market in years to come. For brands to connect with these demographics, considering their elevated understanding of web3, backing exclusive drops and world-building will serve them well. Brands will earn trust and long-term value among Gen Z when they reach the consumer in environments they know.
Building brand worlds online and engaging with communities
Why the D&G NFT
stands out
FULL STORY
3 ways to launch
an NFT
FULL STORY
Why the D&G NFT
stands out
FULL STORY
Why the D&G NFT
stands out
FULL STORY
Why Ethereum’s
update matters
FULL STORY
Digital fashion’s sustainability impact
FULL STORY
Inside competing metaverse fashion weeks
FULL STORY
How brands are
tackling NFTs
FULL STORY
Brands embrace metaverse retail innovations
FULL STORY
Metaverse Fashion Week’s lessons learned
FULL STORY
Decentraland is becoming a beauty hub
FULL STORY
DressX launches Roblox collection
FULL STORY
Virtual influencers could impact inclusivity
FULL STORY
Roblox’s clothing
attracts brands
FULL STORY
Rebecca Minkoff launches more NFTs
FULL STORY
How fashion brands are using Discord
FULL STORY
49% of people don’t know the metaverse
FULL STORY
Marketers prepare for
the metaverse
FULL STORY
FULL STORY
Metaverse:
The future of the internet and a shared 3D virtual universe in which users can perpetually exist. The next generation of this online reality will be across many metaverses with unique characteristics and communities.
02
01
03
04
05
06
02
Why Ethereum’s
update matters
FULL STORY
Digital fashion’s sustainability impact
FULL STORY
03
Inside competing metaverse fashion weeks
FULL STORY
How brands are tackling NFTs
FULL STORY
Brands embrace metaverse retail innovations
FULL STORY
Metaverse Fashion Week’s lessons learned
FULL STORY
Decentraland is becoming a beauty hub
FULL STORY
04
DressX launches Roblox collection
FULL STORY
Virtual influencers could impact inclusivity
FULL STORY
Roblox’s clothing attracts brands
FULL STORY
Rebecca Minkoff launches more NFTs
FULL STORY
How fashion brands are using Discord
FULL STORY
05
49% of people don’t know the metaverse
FULL STORY
Marketers prepare for the metaverse
FULL STORY
READ MORE
Cryptocurrency:
Different currencies that are used to trade digital items. The most popular are defined by three verification systems: proof of work like Ethereum, which has come under fire for using large amounts of energy until recently; proof of stake, where a person with a corresponding number of network coins verifies a block of information; and proof of authority, where users are required to make themselves known to the network. The most popular cryptocurrency is Ethereum, although many others exist that are tailored to specific value environments.
Blockchain:
The system that allows NFTs to be verified through a record of transactions across several linked computers. What makes the blockchain unique is that records cannot be altered, making it a perfect system for traceability and transparency.
Proof of work/proof of stake:
Blockchains typically run on one of two types of consensus algorithms: proof of work (PoW) and proof of stake (PoS).
Skins:
Digital garments that exist in-game. Unlike NFTs, skins are rarely transferable through metaverses. They encompass anything that an avatar (online persona) is wearing.
Metaverse:
The future of the internet and a shared 3D virtual universe in which users can perpetually exist. The next generation of this online reality will be across many metaverses with unique characteristics and communities.
For fashion and beauty businesses, NFTs offer a way to create a community. Pioneers, like collaborators Nike x RTFKT and Gucci x Wagmi-San, use NFTs as a membership granting access to exclusive drops, collections and previews. For brands that see NFTs becoming a large part of their future strategy, NFT launches should be connected by a common thread or theme, offer exclusive access and perks, and center on a story. Nike and RTFKT have made a habit of connecting digital garments and avatars around themes. Brands should also spell out a roadmap of what NFT holders can expect, or have a clear plan in place. There are still many avenues brands can explore for NFT launches. In the future, brands could sell plots of land as NFTs in their digital worlds, where customers could build up their own apartments and spaces and inhabit the digital world. They could also use virtual ad spaces and build out virtual lifestyle product offerings.
Brands and retailers are increasingly tapping into the various opportunities in the metaverse.
Glossy is examining how different “metaverses” will have varying characteristics and communities, and how they will be key points of engagement for brands as people's online reality shifts. According to Gucci, it’s “only a matter of time” before other major fashion houses get into non-fungible tokens (NFTs) and other aspects of digital fashion. Gucci, one of the earliest metaverse adopters, has already launched augmented reality sneakers and the Gucci Garden experience in Roblox. Brands across industries, including sports, beauty, art and fashion, are investing in metaverse experiences for their customers, focusing on bringing in a unique and authentic take on digital worlds.
In addition, many brands have started compiling digital copies of their garments to create digital garment repositories they can later use in the metaverse. Nike, for example, is creating dedicated spaces for selling its digital fashion within the virtual environment Nikeland in the gaming platform Roblox to engage users.
According to a March 2022 report on digital fashion conducted by the Institute of Digital Fashion and Vice’s digital agency Virtue Worldwide, 76% of 3,000 global respondents are willing or are actively planning to engage with a metaverse-related brand or platform in the next 12 months.
With fashion brands like Rebecca Minkoff and retailers like U.K.-based Selfridges already creating NFT collections and appearing in digital worlds like Decentraland, consumer engagement is on the rise. Decentraland currently has 300,000 monthly active users.
Brands are also seeing a spike in consumer engagement through gaming. A 2021 gaming research study by the University of Glasgow found that 71% of respondents increased their gaming time during the lockdown as a form of escapism and a way to boost their mental wellbeing. Gaming has become an important component of the metaverse. It is where consumers can interact, try on digital outfits and battle for prizes in a virtual environment. The most popular metaverse gaming platforms are Decentraland and The Sandbox, with 300,000 users and 200,000 monthly users, respectively. However, non-blockchain related platforms like Fortnite and Roblox are also very popular with younger users.
Fashion brands that are newly accepting blockchain-based currencies are also accelerating the transition into the metaverse, with Gucci, Off-White and Phillip Plein now accepting crypto payments online and in-store. Cryptocurrencies are a form of currency that can exist online, and their transactions are secured through cryptography, with some of the most popular being Ethereum and Bitcoin. Cryptocurrencies have become a more commonplace integration for brands in recent months, with brands seeing the growth of crypto communities in places like Discord.
Community is the building block for web3, the next iteration of the internet. Defined by a decentralized structure, where ownership passes to individuals instead of companies, web3 will change the relationship between brand and consumer. Web3 community involvement and ownership will become a key part of how consumers will interact with brands, like with L’Oréal, which is already planning to launch new community-building brands within its metaverse plans. For brands and retailers, early involvement in the decentralized economy will allow them to get a foothold in the space and understand how it will change the way brands relate to their customers.
As brands begin to claim stake in the metaverse, the primary focus will be targeting and marketing to Gen Z, who are going to be spending four hours a day online and in immersive environments using AR and VR over the next five years, according to McKinsey. Virtual events such as Metaverse Fashion Week, AR integrations via Snap and gaming platforms like Roblox have fueled interest for fashion in the metaverse. Digital worlds are impacting the way Gen-Z thinks, acts, socializes and spends money, making them valuable playgrounds for brands. The younger, more tech-savvy generation is also quick to call out brands for missteps, so brands understanding what value their company can bring to the metaverse is key to engaging their Gen-Z customer in an authentic way.
The metaverse is not going to be limited to gaming like it is now, with games like Roblox and Fortnite. It is transforming into a community, a workplace and a downtime environment as more users shift their time online. The pandemic has shifted the workplace into the home and interactions through a screen have become standardized. With so many facets of modern life shifting in the direction of web3, brands across industries can greatly benefit from understanding what role they can play in building the metaverse.
INTRODUCTION
BACK
Brands and retailers are increasingly tapping into the various opportunities in the metaverse.
Glossy is examining how different “metaverses” will have varying characteristics and communities, and how they will be key points of engagement for brands as people's online reality shifts. According to Gucci, it’s “only a matter of time” before other major fashion houses get into non-fungible tokens (NFTs) and other aspects of digital fashion. Gucci, one of the earliest metaverse adopters, has already launched augmented reality sneakers and the Gucci Garden experience in Roblox. Brands across industries, including sports, beauty, art and fashion, are investing in metaverse experiences for their customers, focusing on bringing in a unique and authentic take on digital worlds.
In addition, many brands have started compiling digital copies of their garments to create digital garment repositories they can later use in the metaverse. Nike, for example, is creating dedicated spaces for selling its digital fashion within the virtual environment Nikeland in the gaming platform Roblox to engage users.
According to a March 2022 report on digital fashion conducted by the Institute of Digital Fashion and Vice’s digital agency Virtue Worldwide, 76% of 3,000 global respondents are willing or are actively planning to engage with a metaverse-related brand or platform in the next 12 months.
With fashion brands like Rebecca Minkoff and retailers like U.K.-based Selfridges already creating NFT collections and appearing in digital worlds like Decentraland, consumer engagement is on the rise. Decentraland currently has 300,000 monthly active users.
Brands are also seeing a spike in consumer engagement through gaming. A 2021 gaming research study by the University of Glasgow found that 71% of respondents increased their gaming time during the lockdown as a form of escapism and a way to boost their mental wellbeing. Gaming has become an important component of the metaverse. It is where consumers can interact, try on digital outfits and battle for prizes in a virtual environment. The most popular metaverse gaming platforms are Decentraland and The Sandbox, with 300,000 users and 200,000 monthly users, respectively. However, non-blockchain related platforms like Fortnite and Roblox are also very popular with younger users.
Fashion brands that are newly accepting blockchain-based currencies are also accelerating the transition into the metaverse, with Gucci, Off-White and Phillip Plein now accepting crypto payments online and in-store. Cryptocurrencies are a form of currency that can exist online, and their transactions are secured through cryptography, with some of the most popular being Ethereum and Bitcoin. Cryptocurrencies have become a more commonplace integration for brands in recent months, with brands seeing the growth of crypto communities in places like Discord.
Community is the building block for web3, the next iteration of the internet. Defined by a decentralized structure, where ownership passes to individuals instead of companies, web3 will change the relationship between brand and consumer. Web3 community involvement and ownership will become a key part of how consumers will interact with brands, like with L’Oréal, which is already planning to launch new community-building brands within its metaverse plans. For brands and retailers, early involvement in the decentralized economy will allow them to get a foothold in the space and understand how it will change the way brands relate to their customers.
As brands begin to claim stake in the metaverse, the primary focus will be targeting and marketing to Gen Z, who are going to be spending four hours a day online and in immersive environments using AR and VR over the next five years, according to McKinsey. Virtual events such as Metaverse Fashion Week, AR integrations via Snap and gaming platforms like Roblox have fueled interest for fashion in the metaverse. Digital worlds are impacting the way Gen-Z thinks, acts, socializes and spends money, making them valuable playgrounds for brands. The younger, more tech-savvy generation is also quick to call out brands for missteps, so brands understanding what value their company can bring to the metaverse is key to engaging their Gen-Z customer in an authentic way.
The metaverse is not going to be limited to gaming like it is now, with games like Roblox and Fortnite. It is transforming into a community, a workplace and a downtime environment as more users shift their time online. The pandemic has shifted the workplace into the home and interactions through a screen have become standardized. With so many facets of modern life shifting in the direction of web3, brands across industries can greatly benefit from understanding what role they can play in building the metaverse.
INTRODUCTION
BACK