The metaverse is an expansive network of interconnected virtual worlds that enable highly immersive experiences and social connections🌐. Due to its intrinsic nature and exacerbated by 5G and Web 3.0, the metaverse will drastically drive up data usage, unregulated social interactions enhanced by Augmented Reality (AR) / Virtual Reality (VR), and the evolution of video and live streaming content💻.
This explosive growth has immense implications for Trust and Safety (T&S), including threats to user security, increased abuse, the proliferation of objectionable content, and financial fraud❌.
📢Watch this session as our speakers present the T&S challenges brought on by the metaverse’s rapid growth, risk mitigation strategies for these challenges, and what this means for the third-party T&S services market.
Our experts will explore:
T&S use cases for the metaverse
Risk mitigation strategies for challenges that arise
Implications for the third-party T&S services market
Web 3.0 and Metaverse: Implications for Sourcing and Technology Leaders
The next evolution of technology is upon us, and business leaders are racing to understand new concepts like Web 3.0 and Metaverse – both generating strong reactions from hype acceptance to extreme cynicism. Regardless, organizations that explore the business benefits, experiment early, and work with the right partners are bound to see the full potential of both.
In the coming years, we expect to see business adoption of Web 3.0 and Metaverse in some form or another, as they evolve and expand business boundaries.
Watch this on-demand webinar as our experts deliver their perspectives on Web 3.0 and Metaverse and provide actionable insights to enterprises, service providers, and technology vendors.
What questions will the webinar answer?
What is Web 3.0 and Metaverse?
How are these relevant to your business?
What should you do to source services and technology for these?
Metaverse is here to stay, and it’s going to play a significant future role in how we experience brands virtually. Industry giants are investing big in this space, and it is creating new opportunities for service providers to build feature-packed solutions for their customers entering the Meta world. Read on to learn about the potential and pitfalls of Metaverse eCommerce and why gaining a first-mover advantage is critical.
Digital commerce owes its maturity to the ever-evolving technology ecosystem – starting with the first online dial-up transaction on a modified television to a plethora of innovations over the past decade like mobile commerce, voice search, and social commerce. Emerging concepts such as gaming commerce and recommerce or reverse commerce are further defining the ecosystem.
Digital commerce is also witnessing an era of hyper-personalization powered by Artificial Intelligence (AI). According to Everest Group research on the Top 15 Start-ups Redefining Shoppable Experiences, 70% of the start-ups in the ecosystem are leveraging AI to offer enhanced solutions.
Enterprises are offering immersive buying experiences through Augmented Reality and Virtual Reality (AR/VR). To continue progressing on this trajectory, technological alignment is inevitable for a futuristic eCommerce strategy, and the next logical step for attaining this is Metaverse.
Defining metaverse and its significance in eCommerce
Exhibit 1: Definition of Metaverse
In simple terms, Metaverse is an extension of technologies such as AR, VR, blockchain, cryptocurrency, and social commerce coming together to form a virtual world, where customers can shop, play games, and socialize with friends.
Popularized by video games and fiction novels, the idea of Meta has been around since the early 90s, but recently, the industry has become extremely bullish on Metaverse primarily due to two major contributors. Firstly, technologies backing the concept of Meta (blockchain, crypto, and affordable VR) have attained significant headway in the past decade. Secondly, the idea has gained mainstream momentum because industry giants such as Facebook (Meta), Google, and Microsoft are pouring huge investments into Meta-platforms. Experience management leader, Adobe, has also put its best foot forward towards the Meta world by offering tools specific to 3D content creation, experience delivery, asset management, and commerce.
The Meta wave began in the early 2000s with games like Second Life and World of Warcraft, which were based on centralized economies where the value of owned assets was limited to those games. Aiming to overcome this deficiency, Decentraland came into existence in 2020. This platform offered a decentralized economy, where along with building virtual worlds, trading assets, and hosting events, users could transfer purchases to other Meta platforms like The Sandbox. Although the latest version of Meta provides numerous opportunities for users, we are still far away from creating an Omniverse like the movie “Ready Player One.”
Despite the technology being in its infancy, Metaverse holds significant potential in the digital commerce space. In the current 2D eCommerce model, information is consumed rather than experienced, restricting brands from creating physical connections with users.
Metaverse can solve this problem to a very large extent. In Meta-commerce, shoppers can truly experience a company’s culture, design, and branding elements. This will create huge brand differentiation beyond what is currently limited to logos and banners.
Although the technology backing Metaverse is still at a nascent stage, it holds immense potential to build an immersive commerce platform where products will come alive and personalized customer engagement will create brand loyalists.
Brands advocating metaverse are already pioneering virtual commerce
Envisioning the macro future implications of a single worldwide Metaverse, forward-looking brands have already started creating virtual commerce experiences at the company level. Here are some examples:
DRESSX – Designers and fashion enthusiasts can enter their Metaverse and create clothes from scratch. Users can try clothes on through their avatars and convert their fashion non-fungible tokens (NFTs) into actual garments
Gucci Garden Metaverse and Louis The Game – Gucci and Louis Vuitton have each launched their own NFTs where everyone has the freedom to create and modify their apparel
Charlotte Tilbury Virtual Beauty Gifting Wonderland – Users can connect with make-up artists in virtual rooms to discuss their skincare concerns and also invite friends to help them find the right product through an integrated video feature in the same session
Potential challenges in realizing metaverse
Exhibit 2: Challenges pertaining to Metaverse implementation
To make Metaverse a reality, several challenges need to be overcome. These include:
Consistent user experience and interoperability – A singular global decentralized Metaverse with shared data, computation, and bandwidth can only be achieved with collaboration between several global parties. Unless features are aligned and intellectual property is shared, we’ll never get a true Metaverse
Dearth of skilled talent – Talent for developing design tools and headless systems for businesses to prepare their stores for different media and virtual formats is in high demand and short supply
Cybersecurity and privacy – Metaverse users could experience incidents related to fake NFTs and malicious smart contracts that access personal data and crypto-wallets. Since personalized virtual experiences will create an endless need for countless customer data points, industry giants will likely prioritize competitive advantage over user data privacy
Along with these obstacles, challenges related to hardware, use-case identification, slow adoption, lack of capital, a fragmented tech landscape, unpredictable Return on Investment (ROI), and legal implications will surely make it difficult to turn the virtual world into a reality.
But on the brighter side, the foundational infrastructure is already in place in the form of a sophisticated global blockchain network, ergonomic VR design, scalable AI, and last-mile internet connectivity in most parts of the world. Therefore, Meta is no longer a far-fetched dream. And with most industry giants strategically investing in the concept, the challenges associated with it will get mitigated very soon.
Opportunities for eCommerce service providers in this meta wave
This new world is pushing IT service providers, consulting firms, and design agencies towards attaining Metaverse eCommerce capabilities. These industry players will be able to add several new digital service offerings through Metaverse. A few of these services include:
Metaverse consulting – With Pwc buying land in The Sandbox, it is evident that consulting firms will play a pivotal role in the world of Meta. Enterprises entering Metaverse will need significant hand-holding and a relevant knowledge base about the concept to formulate their Meta-business strategy. Consulting firms can leverage their expertise to advise and direct clients who wish to embrace Meta with its full range of challenges
Metaverse applications – Exclusive applications will be required for users to interact with the Meta world for virtual shopping. IT providers will need to build development expertise in the AR/VR technology stack to deliver these capabilities
Design and NFT – Design agencies will be essential for creating 3D models of virtual artifacts in the Meta world. Along with that, designers also create NFTs that play an extremely vital role in the Meta economy. Therefore, Metaverse will bring a plethora of lucrative business opportunities for design agencies around the world
NFT marketplaces – With the increasing popularity of cryptocurrencies, from digital paintings to Twitter hashtags, NFTs are being bought and sold everywhere. Since sellers will have the power to tokenize everything in Metaverse, a marketplace that supports NFT transactions through blockchain will be needed. Because of this, demand for IT service providers specializing in the NFT marketplace and blockchain development technology will rapidly increase
An exciting future
Brands are already implementing core technologies essential for Meta in silos. Soon, we will witness their integration to create an alternate world full of endless possibilities.
Metaverse is here to stay, and it will bring a multitude of opportunities for service providers to build feature-packed solutions for their customers entering the Meta world. Enterprises need to seize the first-mover advantage now by swiftly evaluating the future impact of Metaverse on their businesses.
Over the last decade, the subscription economy has become synonymous with how we consume everything from music to beauty products and videos. Could the same type of customer-driven model work for Original Equipment Manufacturers (OEMs) to rent or provide access to their machinery and industrial equipment to users for a recurring fee? The rise of devices connected by the Internet of Things (IoT) and sensors might make this the right time for Equipment-as-a-Service (EaaS) to take off but let’s look at the obstacles that first need to be overcome.
Subscription-based e-commerce has been the biggest gainer in recent years, with firms like Birchbox providing monthly beauty samples and Spotify providing access to millions of songs at one go. The winners of this phenomenon have been Netflix which forced giants like Blockbuster to close shop and led Disney to change its operating model.
The subscription model demand has been resonating with manufacturers around the world who would like to shed their capital expenditure (Capex) heavy model of acquiring assets instead of directly purchasing outcomes. OEMs typically ramp up production to meet demand or look to slash costs when sales are down.
With the pandemic onslaught, OEMs specifically catering to the travel and hospitality industry as well as certain sectors in manufacturing saw a steady decline in production. This makes the case for creating new sales models that generate more consistent revenue streams for OEMs – and EaaS could provide a needed solution.
Decoding the EaaS phenomenon
EaaS represents a business model that aims to reduce the Capex for enterprise customers while the OEM retains ownership of the asset and charges the customer subscription rates. This helps the OEM create a recurring revenue stream while ensuring the asset ownership remains in-house. EaaS was pioneered by Rolls Royce when it trademarked “power by the hour” as a notion to sell power jets based on performance. This model further allows airlines to pay for their engines based on their usage, such as the number of flight hours.
IT has witnessed this model with firms like Dell, Hewlett Packard Enterprise, and Cisco selling IT equipment through an “as a service” model. Hyperscalers like Amazon Web Service, Azure, and Google Cloud Platform have also been selling their infrastructure services on a pay-as-you-go model where these data center operators continue to own the physical servers. However, IoT-enabled solutions in manufacturing would not be as easy of a transition as seen in IT.
With the onset of the Internet of Things (IoT) across the manufacturing landscape, it has become easier for any manufacturer to measure equipment usage or performance, which can then be used to compensate in the EaaS model. While giants like Caterpillar have initiated EaaS, more time is needed for industry-wide adoption.
Role of IoT in propagating EaaS
IoT devices have rapidly grown across the ecosystem, finding applications in the industrial space as well as in our homes in the form of voice-enabled Alexa. IoT in the industrial area generates large volumes of data collected from smart meters, delivery trucks, and equipment. This has given rise to IoT analytics. IoT analytics can help organizations by monitoring and alerting them in case of anomalies, identifying problems, and answering pertinent questions to make better forecasts and future decisions.
IoT also is being used across devices for flexible pricing and billing. As the IoT sensor captures pertinent data, it can help create pricing models based on consumption patterns.
How can OEMs provide EaaS?
With the success this model has seen on the IT side, EaaS looks attractive and has the potential to be a sure-shot success, or does it? EaaS is plagued with a few fundamental flaws that inhibit its spread across the manufacturing industry, with only a few large players opting for it.
OEMs need to figure out these two key issues before jumping on the EaaS bandwagon:
Pricing model – OEMs must determine the pricing models they want to offer to customers. A simple usage-based model can be followed that measures the output generated by the machines. This, however, presents a problem if there is a pandemic-like situation or a strike that halts operations across factories, wiping out the recurring revenue mandate. The other is an outcome-based model. These outcomes can be operational or financial, such as a reduction in Capex that results in financial benefits. This is a riskier model because of the uncertainty in determining the value generated by the machine. Each factory is optimized in a certain way, making it extremely difficult to provide an exact benchmark stating performance levels without sourcing the factory data. OEM suppliers would have little or no control over factors such as market demand, making this model more difficult
Organizational change – Moving from a product formation selling equipment to providing continuous services to customers would require organization-wide change across various departments from sales to product development. A revamp in hiring strategy also would be needed to go beyond providing technical support to developing collaborative relationships and providing customer service for this type of business arrangement. On the product side, the equipment would need to be equipped with IoT sensors making it easier to maintain, repair, and measure the outcome
The way ahead
Of course, no enterprise can shift overnight from a product selling model to services. Some companies have found success in making this change. For example, German-based manufacturer Heller offers HELLER4USE, which provides customers with pay-per-use of their machinery and insurance during equipment downtime. Companies specifically focused on coffee vending machines and 3D printing have moved significantly towards the services space.
As OEMs move into this space, it would open a completely different revenue stream in the form of IoT integration, data analytics, and system design. These high-value add-on services would ensure OEMs maintain a constant stream of recurring revenue rather than a one-shot sale of equipment. OEMs initiating the EaaS model would gain a first-mover advantage in making close relationships with buyers as they get entrenched into the data ecosystem generated from the industrial unit, making them much more valuable partners. We predict these first movers will become key players in grabbing the full-service models that will float in the future.
If you have any questions about how an enterprise can go ahead with EaaS, or if you would like to share how your organization has used EaaS or any other innovative business model, please write to me at [email protected]
Imagine a utopia where minimum human intervention is needed to run an entire shop floor. In this world, manufacturers have total control and visibility of all products, machines predict equipment failures and correct them, shelves count inventory, and customers check themselves out. While such a supply chain model seems improbable and far into the future, the likes of Amazon, Walmart, and Toyota, are already on their way to achieving this vision. At the center of their supply chain initiatives making this possible is the Internet of Things (IoT.)
The supply chain is considered the backbone of a successful enterprise. However, firms find it increasingly challenging to establish a robust supply chain model. The disruptions caused by COVID-19 have further made matters worse as ‘disconnected enterprises’ struggle to gain complete supply chain visibility. The pandemic has established that supply chain disruptions and uncertainties will become more frequent going forward.
Supply chain challenges
The current supply chain landscape faces numerous challenges that need to be addressed. These issues are illustrated below:
Future-proofing the supply chain using IoT
As enterprises strive to develop a resilient supply chain, IoT will occupy the center stage. An interconnected supply chain will bring together suppliers/vendors, logistic providers, manufacturers, wholesalers and retailers, and customers dispersed by geography. The technology ensures improved efficiency, better risk management, end-to-end visibility, and enhanced stakeholder experience.
A seamlessly connected supply chain provides advantages at every stage of the value chain for each of the stakeholders. The exhibit below showcases a connected supply chain ecosystem:
Let’s look at how some companies are capturing the benefits IoT:
Real-time location tracking
Using real-time data (captured from GPS coordinates) tracking the movement of raw materials/finished goods, IoT technology aids firms in determining where and when products get delayed. This helps managers ensure route optimization and better plan the delivery schedule. IoT, in combination with blockchain, helps secure the products against fraud. For example, Novo Surgical leverages IoT for optimally tracking and tracing its ‘smart surgical instruments.’ This has reduced errors, decreased surgical instrument loss, increased visibility and efficiency, and improved forecasting of demand for the firm.
Sensors on machines constantly collect information around the functioning of the machine, enabling managers to monitor them in real time. By analyzing parameters such as machine temperature, vibration, etc., manufacturers can better predict machine downtime and take necessary actions to mitigate this. For instance, Toyota partnered with Hitachi to leverage the vendor’s IoT platform and use the data collected to reduce unexpected machine failures and improve the reliability and efficiency of equipment.
Smart inventory management
IoT sensors in the warehouse assist in tracking the movement of individual items, providing an efficient way to monitor inventory levels and prevent pilferage. Smart shelves contain weight sensors that monitor the product weight to determine when products are out of stock. Walmart has been leveraging smart shelves in its retail stores to manage its products more efficiently and improve the shopping experience.
IoT technology uses sensors that can monitor and adjust warehouse parameters such as humidity, temperature, pressure, and avoiding spoiling of items. Leading e-commerce players like Amazon and Alibaba have been pioneers in leveraging IoT to optimize warehouse management.
Charting the journey for a connected supply chain
As enterprises aim to future-proof their supply chain, they will need a structured path following these five steps below:
Develop a business case: Enterprises need to determine the current gaps in their supply chain and identify the extent of digitization of their supply chain to develop the business case for a connected supply chain.
Secure buy-in from supply partners: Successful implementation of IoT in the supply chain requires the various partners to collaborate and adopt the technology together. Securing a buy-in from each member of the value chain – vendors/suppliers, OEM players, logistics operators, and retailers – is imperative for firms to realize the complete benefits. Compatibility of the technology platforms leveraged by the various supply partners is essential to develop a seamless supply chain.
Invest in security: Invest in security and data protection initiatives early on to avoid supply chain breaches. Performing regular security and vulnerability assessments across the value chain and investing in next-generation technology-based security solutions is essential.
Leverage other technologies: While IoT has a plethora of benefits across the supply chain, consider leveraging next-generation technologies such as blockchain, artificial intelligence, and edge computing in confluence with IoT to further enhance the capabilities of the use cases.
Partner for implementation: To overcome concerns around skills and address data reconciliation challenges, consider partnering with IoT providers with expertise in the supply chain arena. Service/solution providers also are instrumental in bringing a security layer that can aid in addressing data security concerns and governance issues.
Since IoT is an interplay of multiple devices and machines, a successful IoT implementation requires firms to invest in sensors, cloud/edge infrastructure, IoT connectivity networks, data management and analytics solutions, and application development and management. Enterprises can accelerate their IoT supply chain journeys by partnering with solution providers with strong expertise in IoT products and services capabilities in the supply chain arena.