The journey from real to virtual has been quite interesting and innovating. Not only the services but commodities and goods have also turned virtual with advancements of augmented and virtual reality. The reality-modification technologies are revamping retail and commerce sector more than any other with such a pace that in few years only we have moved from AR-enabled games to VR-enabled goods that is virtual goods. What was known for only entertainment purpose has turned into a crucial aspect for retailers and e-commerce brands.
In last 10 years, the sale of virtual goods has emerged alongside the exponential growth of social media and gaming, which is resulting in contributing to a multi-billion-dollar marketplace for products that aren’t even real. But the money consumers are ready to pay are absolutely real. According to recent estimates, the annual revenue of virtual products is at more than $15 billion. Notably, the virtual goods could be anything – they can be even a small digital sticker for messaging apps or digital outfits for customers’ avatar to extra lives in on a digital platform.
Today brands are designing digital clothing, shoes and accessories, to attract customers and earn some real money on virtual fashion. For example, Epic Games’s Fortnite which is the wildly popular online game, reportedly earns US$ 300 million a month selling skins, notes Head Topics. Moreover, in May 2019, the most renowned footwear brand Nike debuted two skins for the game that feature Jordan sneakers that are only available to be “worn” in Fortnite.
Over Instagram, people are spending huge sum of money on Gucci for an avatar. According to some customers, “some people cannot afford Gucci in real life, but they can in the digital world.” Stefanos Constantinou, an employee at Vice Media who bought a few pieces of the virtual collection, said the collection was a good way to keep up his Instagram #OOTD (outfit of the day) streak without contributing to fashion’s waste problem.
Additionally, in November 2018, Scandinavian multibrand retailer Carlings released its first digital clothing collection. The 19 genderless, sizeless pieces cost between €10 and €30, each with a limited production run of up to 12. Customers supplied a photo that designers at Carlings manipulated so it appeared that they were dressed in the apparel. They hired several influencers to promote the collection on Instagram and it sold out in a week, notes Vogue Business.
Therefore, without any element of surprise, we can see that as with most new trends, younger consumers are driving the growth of virtual goods sales. Additionally, the market is much more mature in other regions of the world than it is in North America at the moment, particularly in Asia, according to Licensing International.
David Uy, co-founder and CEO of BLMP Licensing Marketplace said, “These digital ecosystems, they rise and fall.” He explains, “there was MySpace, and then it goes obsolete, now there’s Facebook, Instagram, etcetera. You might have the hottest game of the year right now, but there will be another one next year. These companies have to spend a tremendous amount of time keeping their users, because those users are extremely valuable to them. They also need to find ways to monetize. Branded virtual content creates excitement among users and has the added bonus of generating revenue for both the platform and the brand.”
According to him, in fact, virtual goods can become a viable alternative to traditional digital advertising for many brands. It’s not just about the sales of the virtual goods. The virtual good is advertising in and of itself. Just the fact that it’s being on the platform of the store is a kind of advertising.
Therefore, with such level of advertising and innovative offerings, fashion brands can and are generating a hefty sum of revenue benefiting their real profits with virtual goods.