BY MADELEINE SCHULZ November 29, 2022
Virtual shopping — a new feature of the holiday season in recent years — has matured. Many brands are shifting to standalone digital stores to boost purchases and data insights, while embracing gamification and social shopping.
Stores are open for the holidays, and virtual shopping — a critical tool at the height of the pandemic — is getting a rethink.
Brands aren’t giving up the medium entirely, even as customers are expected to return to stores en masse to do their holiday shopping. Of 2,000 US shoppers surveyed by customer feedback platform Usertesting, 42 per cent said in-store Black Friday shopping holds more importance than it did pre-pandemic. And, while footfall is still down in the US compared to 2019 levels, according to software company Springboard, it expects gifting and the will to enjoy the festive atmosphere to provide a strong pull for consumers to shop in-store over the 2022 festive trading period.
Still, while the need for virtual shopping experiences is perhaps less urgent this year, they offer a way to spruce up e-commerce playbooks, and can be used as a promotional tool to link holiday campaigns across mediums.
Coach and Charlotte Tilbury are both offering standalone virtual store experiences, with multiple rooms and spaces that push physical products and gamified activities. Swarovski is hosting live video shopping. American Eagle and Givenchy Beauty are opting to plug into platforms including Roblox to tap audiences where they already are.
It’s an extension of the many ways brands leaned into “metacommerce” during the pandemic. Ferragamo is launching a “World of Ferragamo” space, following last year’s “House of Gifts” virtual space, while Ralph Lauren opened a shoppable Roblox winter experience last year. Now, virtual shopping is evolving, with more brands investing in their own experiences. In addition to selling products, virtual shopping experiences provide data insights to apply to 2023 strategies, and can boost community engagement via gamification and social shopping and sharing.
This time, brands have shifted from replicas of existing physical retail stores toward more imaginative virtual experiences, which uses the technology to more of its potential, says Neha Singh, founder and CEO of Obsess, the platform used by Ferragamo, Charlotte Tilbury and others. This year, about 80 per cent of clients (compared to 60 per cent last year) are diverging from direct replicas, she estimates. These experiences are more immersive in that they’re not confined to a “traditional” retail space, so they offer more opportunities for consumer engagement and exploration, promoting longer dwell times and product clicks.
Unlike the familiar grids of e-commerce, virtual shopping offers storytelling possibilities, such as the ability to guide shoppers through various brand-themed rooms, that drive sales and engagement, says Olga Dogadkina, co-founder and CEO of virtual reality developer Emperia, which has built virtual experiences for Burberry, Harrods and Dior. “Virtual stores enable discovery and exploration with the ability to tell a true brand story, educate, entertain and push not only for online purchases, but also contribute to an increase in in-store purchases” — as long as the story is engaging enough to create stickiness and drive repeat visits, she cautions.
While many brands launch these experiences during the holidays, they can become a starting point for evergreen virtual flagships, Dogadkina says.
Standalone experiences push physical product
A key consideration is whether brands should tap into the heavily engaged communities of existing metaverse platforms or if they should create a standalone approach, meaning the customer visits through a custom web destination, often linked from the brand’s website.
A standalone experience requires more upfront planning and promotion, but tends to be more compatible in driving physical product purchases because the brand can enable in-experience checkout or link out to specific e-commerce product pages; they also tend to offer more data. Existing platforms such as Roblox are seeing less early activity this season because they are typically more about brand-building than getting a present under a (physical) tree on time. Four holiday-themed experiences have launched on Roblox thus far, most of which are updates to existing experiences: Alo Yoga’s Alo Sanctuary, Givenchy Beauty House and Vans World (all with winter redesigns) and American Eagle (though a holiday village in virtual city Livetopia). More are in the pipeline, according to Roblox.
Standalone doesn’t have to mean just one brand. Bloomingdale’s is launching a virtual store, created by Emperia, with Chanel, Ralph Lauren and Nespresso. It’s Chanel’s first foray into virtual retail spaces — on a virtual moon — while Ralph Lauren shifted from Roblox to a Bloomingdale’s-hosted ski chalet. Bloomingdale’s and the participating brands will be able to measure product engagement, demographics, stock demand and layout effectiveness. Dogadkina notes the importance of cohesion to guide shoppers through the various spaces while allowing each brand to tell its own story.
Physical product sales are a key performance indicator for cosmetics brand Charlotte Tilbury’s virtual store, says chief growth and technology officer Corinne Suchy. Following successful digital holiday shops the last two years, Charlotte Tilbury — a long-time Obsess client — is back with a “holiday wonderland”. Visitors can customise avatars to wear the beauty looks of supermodels such as Kate Moss and Jourdan Dunn, and shop the brand’s full holiday collection. During the holidays, customers are looking for gift ideas, she says. “They’re in that browsing mode.”
The option to purchase physical goods in-experience is a key aspect of many of this year’s holiday stores. “The World of Ferragamo” — less explicitly “holiday” — is open until 30 November, while Coach opened its first vintage-inspired virtual store to promote a shoppable holiday collection. Lacoste’s first virtual store also showcases its Christmas range. Similarly, Fendi just offered virtual renderings of vintage Baguette bags linked to the physical originals, and Barbara Sturm’s first virtual space invites consumers to learn about and purchase products.
Some brands who want to directly promote physical products within an existing ecosystem have turned to social media platforms. New Balance is integrating with Snap for a Holiday Gift Concierge, tapping into the company’s augmented reality capabilities; Snapchatters can answer questions about the person they’re buying for, before flipping the camera to “unbox” the suggested gifts in AR. “For a major retail moment like the holidays, AR is a useful shopping tool, helping increase purchase confidence and product discovery, while reducing the rate of product returns,” says Sharon Silverstein, head of US verticals at Snap, citing Snapchat research that 92 per cent of Gen Z shoppers are interested in using AR for shopping. “Browsing through long lists of gift guides can be tedious, so we wanted to create an experience that would be both useful and fun.”
In it for the insights
Virtual shopping can offer in-depth insights into user behaviour. Obsess clients “can see how many users are going to each room, how much time they’re spending there, what products they’re looking at, clicking on, adding to cart”, Singh says. It allows brands to improve future worlds accordingly; Charlotte Tilbury adapts its spaces based on how customers respond to and journey through experiences, Suchy says. Virtual experiences can also be adapted in real-time. “Data tracking and the ability to react accordingly, in real time, plays a big role in this ever-dynamic time of year,” Emperia’s Dogadkina explains. “[It allows] retailers to course-correct when it comes to stock availability and pricing.”
Media company Betches opened a Holiday House with Saks Off 5th that offers TikTok video integrations, a scavenger hunt to unlock an exclusive promo code for Betches.com, and user-generated “holiday confessionals” to strengthen bonds between members of its audience and with the brand, says Betches founder and CEO Aleen Dreksler, adding that the experience marries the company’s “fun and funny content with commerce and gifting opportunities”. People can shop a virtual closet via Saks Off 5th. This experience is planned to continue into 2023.
“To have the data, understanding and learnings from Q4 to bring into the new year, we know will be largely helpful in bringing on additional partnerships,” says Randi Windt, VP sales and partnerships at Betches. “We are aiming to bring utility to our audience — so the opportunity to offer product recommendations as our community is in-market seeking holiday gifts felt like a win-win.” Windt notes continued traffic growth since the space’s 14 November launch, and continued content engagement, clicks on product hot spots, and add to cart buttons.
Gamification for engagement and data
Brands are encouraging engagement via gamification, rewards and quizzes. Almost every virtual store now has at least some gamified elements, Singh of Obsess says, because it improves engagement, increases conversion rates and increases the return-on-investment on the store; it can also help collect data.
However, games have to be introduced intentionally and the flow must feel “branded”, Singh advises. Coach’s virtual store, for example, challenges visitors to collect hidden versions of the house’s mascot Rexy, then prompts them to share their phone number or email to receive a discount code reward. Once all of the Rexys are found, they’re able to unlock a secret room that takes them into (a virtual) Central Park. In jewellery brand Stephanie Gottlieb’s store, customers have to complete a bracelet with coloured gems scattered around the store.
Charlotte Tilbury was one of the early adopters of gamification, and it’s worked well in the past, Suchy says, citing earlier key collections to win prizes. This year, Charlotte Tilbury is giving POAPs for those who visit to offer ongoing utility rather than immediate, one-off rewards. Holders can look forward to exclusive product launches and “more surprises”, Suchy hints. It’s a “magical digital ‘wristband’ that unlocks deeper access to my Beauty Realm”, founder and CEO Charlotte Tilbury says. “It gives you exclusive access to the very best product releases and one-of-a-kind beauty experiences.” A notable utility offering for customers who struggle to get their hands on the brand’s consistently sold out highlighter wands.
Lacoste is also incorporating NFTs. The brand is offering extra utility to its existing Web3 community by granting Lacoste NFT holders access to a third token-gated “VIP room” (developed in partnership with Arianee) with daily prizes.
Shopping with friends
Even in virtual spaces, people still want to shop with friends. Live-stream shopping — one popular approach to virtual holiday shopping — has long been popular in China, but has been slower to catch on in the West. Still, the live-stream shopping market is on track to grow from $20 billion this year to $57 billion in 2025, with US use cases accelerating, according to estimates from Coresight.
The engagement is there: live-stream shopping startup Firework co-founder and CEO Vincent Yang cites 19 per cent product click rates (versus a 1.1 per cent industry standard) and 17-minute average watch time (versus an average four-minute global retail website viewing time). “By bringing live-stream shopping capabilities to their own digital properties, retailers can capture and retain eyeballs for longer, turning holiday shopping from a to-do list activity to an engaging, entertaining process,” he says.
On 2 November, Swarovski partnered with Meta for an Instagram Live shopping session from its flagship Soho store while influencers Cindy Mello and Jessica Wang picked out their favourite pieces to style for the holiday season. It’s a differentiated way to connect with US-based customers, says Swarovski chief digital officer Lea Sonderegger, and the campaign led to a 306 per cent increase in visits to the brand’s global Instagram account, according to the brand.
Retailers can [turn] holiday shopping from a to-do list activity to an engaging, entertaining process.”
In addition to its virtual store, Bloomingdale’s is hosting a six-week series of live streams from its outlet stores with live-stream shopping app ShopShops, also used by Fendi, Chloé and Max Mara. The twice-weekly streams feature products from brands such as Gucci, Ferragamo and Balenciaga. ShopShops founder and CEO Liyia Wu likens live-stream shopping to having a personal shopper, with the added bonus of flexibility. “We’re providing access to exclusive discounts and deals that — unless you live in the area — you’d otherwise never have access to.” Its easy-access nature also makes shopping easier at a time when the general consumer feels busy and overwhelmed, she says, making gift shopping less of a burden.
Live-stream shopping is also making its way from social platforms to metaverse destinations. Obsess is introducing the capabilities into a host of its stores, so that brands can introduce influencers and sales reps to those visiting the store. Coach is offering live-stream shopping with influencers throughout December.
Charlotte Tilbury is adding Obsess’s branded avatar tool, which enables shoppers to explore with friends in avatar form, or at least share the experience with other people. A key draw is the chance to make virtual shopping less of a solo experience. “Around this time of year, especially when everyone isn’t in the same physical space — the idea that you could have a shared experience was important to us,” Suchy says.