Ahead of their appearance in a new Metaverse pavilion at the NRF Big Show, ReadySet dives deep into the world of virtual reality commerce. ReadySet CEO Steve McLean shares an overview of the Metaverse concept and helps independent retailers explore the ins and outs of the next-gen version of e-commerce.
Rob Stott: All right, we are back on the Independent Thinking Podcast. And kicking off another year of the podcast in pretty cool fashion, a futuristic, I feel. Well, I say futuristic, but for you guys, the future is here. Mr. Steve McLean, the CEO of ReadySet, a virtual reality company that we’re excited do dive into, focuses pretty heavily in the retail space. It’s a new and exciting space to a lot of our listeners. But I don’t want to jump too far ahead. First of all, just appreciate you taking the time and joining us just a few weeks out from a big retail show that, again, we’ll get into and taking the time to chat with us about what you guys are all about.
Steve McLean: Well, I appreciate the opportunity. Delighted to be talking with you today.
Rob Stott: Yeah. Well, let’s start with yourself. Tell us about who Steve McLean is and your background and path to becoming CEO of ReadySet.
Steve McLean: Sure, absolutely. So my educational background is in more on the behavioral science side, so a degree in psychology. Always been intrigued by the behavioral underpinnings, the drivers, what makes us do what we do, which as we go forward in the conversation, you’ll see that maybe manifest a bit in part of what ReadySet is. In 1999, co-founded a company called Wild Blue. Our job was basically to… It’s an experiential design firm with a heavy retail focus. So that company’s still in existence. We work with brands and retailers to imagine what the future of retail could be. That comes in a form of understanding emerging technologies, emerging behavioral trends, dietary trends, whatever it might be, and try to come up with new and unexpected solutions to engage with shoppers, consumers. So as part of that, because your ideas are new to world, we needed tools to be able to convey effectively what those ideas were going to be to stakeholders, and so that they could understand them and experience them.
And so early on, we started leveraging VR a lot as basically a means by which to deliver those immersively. Have the experience firsthand, it’s a much more compelling way to deliver a value proposition around a new idea. And so that was received really, really well. Getting sign off on projects became much, much easier. And it was the start of the world speaking with pictures instead of words, because you could make whatever pictures you wanted in VR. So really effective in that regard. Then what we started talking about and thinking about was really, how can we test and learn from these new ideas more quickly and for less cost? How can we get them into market, prove their viability, get an ROI calculation on this new idea prior to scale? And the old way of doing it, of identifying a test store, identifying a control store that you can compare to, going through all of the necessary steps and disruptions to build that prototype, or that feature, or that new category vision or whatever it was, was just really cumbersome and time consuming.
And obviously, there’s lots of players involved. You have brands involved, you have retailers involved, you have ops involved, you have the disruptions, the store traffic, all of that. And just the time it took to get those things implemented and get your feedback, a lot of times you would run out of traction, I guess, on the idea, because people take on new positions or the excitement wears off. And so what we’ve tried to really think about is, how can we really create, in essence, a time machine, a way to be able to create something that doesn’t exist yet, but get very reliable predictive analysis on how that new idea was going to perform? And as part of that predictive analysis, get a very strong ROI, very strong metrics on how that idea would perform in the real world. And so you could speed that up, because now all of a sudden that’s where your idea lives, that’s what the tool you’re using to explain it.
So if we can augment that with all the interactivity and all of the 100% to scale, high def everything and capture all that data, you’re just migrating that asset into a space for that predictive analysis, and then that same asset gets migrated into, hey, here’s the results. Here’s what people went through, here’s what they experienced, here’s the results. So we built ReadySet really as a means of an extension of what we were doing that then we spun off on its own because it was very well received.
Rob Stott: Yeah. I mean, as you’re talking about it, I’m sitting here in my mind, my mind’s blowing a little bit because it’s something that you realize that virtual reality, I think initially a lot of people are like, well, that’s, to your point, a great space where you can test how a person in that environment, they’re obviously not in the physical environment, but they’re in a virtual environment, how they’re going to interact and engage with that setting as if they were really there. And you’re using it as a way to experiment and see how slight variations and things like that of that environment impact the way they engage. But what started out as a testing tool is actually something that can be done, and recreated and be used virtually, is what you guys found out.
Steve McLean: Yeah, exactly. I mean, the behaviors in the virtual space are hyper similar to what they are in the physical world. Everything’s to scale, super high resolution, completely interactive. If you want something, you reach out and grab it. If you want to put it in your cart, you put it in your cart. The site lines are the same. The locomotion, the path through the store, all of those things. And so we found out really early on it was not a good idea to put chairs and tables and things in VR space, because invariably people within minutes of being in the VR space perceive the environment that they’re taking in as real and physical. And so that’s what makes the predictive analysis so valuable is that hyper realism and people forgetting where they are, that they’re not in a real world.
Rob Stott: Now, as you were building out the testing environments, did you see the natural progression that it could be something that was very able to be picked up and used in the way that ReadySet is? Or did it just come, as I’m sitting here thinking of it in that way where you’re doing it and then all of a sudden you have an aha moment that you could end up having a business like ReadySet?
Steve McLean: Yeah. We’ve always talked about and spent a lot of time, as you know, from a Wild Blue perspective and imagining virtual commerce. That’s one of those emerging taxes, it’s one of the things that we explored and built proof of concepts for. And so we had already were in the mind space of this is going to be another means of commerce. It’s the technology. The technology just has to catch up to the promise, but we’re all going to get there. But this whole idea of a digital twin for enterprise and being able to be multidisciplinary and that single asset philosophy of build it once and leverage it across all of these use cases started to really crystallize.
And then we were saying, well, why can’t we use the same tool for assortment optimization? Why can’t we use the same tool for testing, product development, packaging, innovation, all of those types of things, category, just marketing communications in the box? And then all the way up to, well, stores are constantly evolving, the size of the box, the configuration, the flow, all of those things. So why not be able to test the effectiveness of new store concepts before you pick up a hammer or drive a nail and understand what works and what doesn’t? And iterate until it’s perfect. So yeah, it really came together that that multidisciplinary aspect was such just a huge benefit.
Rob Stott: Yeah. No, that’s awesome. Before we dive any deeper, I want to back up a little bit and go higher level, because I know a lot of our listeners, the independent retailers, they may have heard things like metaverse thrown out there, virtual reality. I want to give you the chance to set the stage for them of what this is when you’re talking about virtual reality, virtual commerce. I mean, down to the basics. I think the understanding they have is, all right, virtual reality, yeah it’s the headset that we put on and that sort of thing. But I mean, can you walk us through what virtual commerce is or what the metaverse is? How would you explain that to an independent retailer that might not have heard the term before?
Steve McLean: Sure. So believe it or not, there’s no universal consensus as to what our definition of the metaverse, what it is. In fact, in some cases it’s a very polarizing term. People within the industry, people that participate in the development of things related to this term are like it’s the M word to them. For people outside the industry, they may have a more literal interpretation of Neil Stevenson’s snow crash and this ubiquitous universe, interactive universe where everything is connected in a space. So it really comes down to whether you want to view it as a component, a tool, an asset, a thing, a technology that is contributor to that broader macro idea, then the metaverse is already all around us. It’s already there. If you are more of a purist and you’re saying, no, I believe in this alternate reality where everything is connected and everybody’s plugged in, well, we’re a ways away that from a technological feasibility standpoint for a variety of reasons where everybody’s plugged into the same alternative world.
But I think probably John Riccitiello, who is the CEO of Unity, he gave the best definition. I saw him at the AWE conference. And he said really it’s the best way to describe it is it’s the next version or the next iteration of the internet. Unlike the internet, the metaverse is probably going to be, he said mostly real time, mostly three-dimensional, mostly interactive, mostly persistent, meaning you’re assigning objects to specific spaces within that space, and then also mostly social. So I think that’s probably the best definition if you’re trying to really define it on a macro level. But at the end of the day, there’s tons of opportunity in the broader metaverse space for retailers and for enterprises right now to use those tools very productively for decision making, and then as entry points to imagining what a consumer interaction in the metaverse would be. How can I use it to engage in exciting new ways with my customer?
Rob Stott: Right. Well it’s cool, because we’re in between the way you’re describing it, we’re not quite at the red pill, blue pill situation yet if you’re talking about matrix and that sort of level of physically plugging into this world. But we’re also at the very early stages of it, to your point where there’s a lot of interpretation still that can be made, which also means there’s not a set way of going about this. So we’re talking very high level and general terms, a cliche kind of things. But a retailer that is interested in this space right now has the opportunity to make of it what they want to and have their space, their virtual space and just be really creative with it.
So I mean, following up on that, you set the stage where it’s that next version of the internet, new way of interacting and engaging. What are the impacts, or I guess implications for you guys of how a retailer can approach this space, or know if it makes sense for them to try to get in this early stage of the metaverse or wherever we want to call it, if it makes sense for them?
Steve McLean: Sure. Yeah. I think it’s important to understand that most savvy retailers and brands, while they might not have yet a very defined strategy, either have been for years or are currently exploring their opportunities in this space. We’re firm believers in the value of it from an enterprise level. The thing to keep in mind is that whatever you do in this space, the equity is cumulative. If I build a store for testing, for optimization, for part of my workflow or whatever it be, assortment management, whatever it might be, if I build a digital twin for enterprise purposes that strips time and cost out of my process, that asset is still relevant. All of those assets, from the product on the shelf to the science to anything is still a relevant asset moving forward from a consumer perspective. So all the experimentation is cumulative. Unlike the physical world where you want to try something, you have to tear it down, try something new, or if you want to iterate, there’s a duplicative investment in that, everything in this space has longitudinal equity.
And so we always think that from a retailer perspective, starting out figuring out a way to build these assets to deliver ROI as part of workflow, as part of your design, as part of your inner renovation, as part of your optimizing of whatever it might be relative to your business, that’s a great place to start. It starts to build knowledge of the space. It starts to accumulate assets. I mean, if you think about what we do, if we send 100 respondents through a store to shop to understand if the products are right, or in the right spot or doing all that kind of thing, the only real difference between that and actually having the store to have consumers shop at is a transaction and distribution of the product to them at that point. The tools are there. They’re grabbing products off the shelf and putting them in their basket. So there’s plenty of starting spots. The retail is experimenting all over the place in a number of different ways. And maybe we can get into some more specific examples of that.
Rob Stott: You’re reading my mind because this was my follow up. And I know that the conversation to this point, it’s very experimental. And as we’ve been saying, a retailer can approach this space in a myriad different ways, make of it what they will. I can imagine a retailer listening to this, they’re thinking, is the experience for the consumer, they strap on a headset and dive into this virtual world? Are they just walking through a store? What is that for the customer, that experience like right now approaching a brand or a retail environment in this virtual space?
Steve McLean: Sure. So most of the direct consumer applications have been in what we call basically 2D, 3D. It’s being able to interact with a dimensionalized space within your persistent systems. So you’ll see a lot of companies doing navigable environments for purchase, for shopping. Sam’s Club did this for the holidays. A lot of these types of things, because they’re early on, are more programmatic, or promotional, or seasonal in nature, it gives retailers the opportunity to test and learn, jump in and jump out without a sustained commitment to it, learn and use that to improve. Other types of experimentations that we’re seeing quite a bit for direct to consumer applications are on ecosystems like Roblox. I mean, it’s very attractive. They have a very young generation of existing and future consumers. There’s about 60 million active users daily on their platform.
I think Nike published late last year that they had 21 million visitors to their Roblox store in 2022. So the numbers are starting to get to a critical mass. And you see all of the data from consulting firms and others where I guess the proliferation of the hardware is starting to get to a point where it’s very attractive for people. It starts to get to a point where you can, maybe your investments aren’t going to have immediate ROI, but if you look at long-term, you should be doing something now if that’s part of your long-term strategy. Otherwise, there’s plenty of people that have a lot of experimentation, a lot of learnings and are developing expertise in this space.
Rob Stott: Yeah. I mean, neat to hear that. I have a young kid here at home, and Roblox is a thing, we know. It’s kind of funny to hear that and know that he’s probably the test market for these sorts of things. But it’s neat to hear how brands are taking a unique approach to the space. From a strict a retailer perspective, you mentioned Sam’s Club and the promotional approach, are there any other unique applications that you’ve seen of a retailer going about this space and making, aside from just having a consumer walk up and down aisles and view product virtually, other cool ways that they’ve gone about approaching the virtual commerce experience?
Steve McLean: Yeah. For sure. I think, and that’s part of their value proposition. So it’s not just, oh, we can make a digital replica of the physical stores and solicit the same behaviors. It’s really about not subscribing to the laws of physics or pragmatism and being able to do whatever you want in that space. I mean, really you’re not beholding to any of the traditional rules. So in a lot of ways, maybe it’s less interesting to say, oh yes, there’s a value proposition. I can sit on my couch, and walk through the store and shop, and have it get all those intuitive cues that I’m accustomed to in the physical world and use those. And it’s a big improvement over scrolling through lists of items on the web and all of those types of things. But really, isn’t the value proposition that we can do anything we want? And so retailers are starting to pick up on this.
And it’s less about, think about in that virtual space, I can layer over any kind of data I want to lay over in that space. Personalization can be hyper. I mean, if I don’t have a dog, why does my store have a pet food aisle? If I don’t have an infant, why is there a diaper aisle? So this gives you the ability to build customized things. And we’ve done concepts where we’ve taken categories and go, hey, if I only need to have one of every product on the shelf, what can I do with the rest of this space? Or how can I make it interesting? Are there things flying through the space? Is there waterfalls? What does it look like? Because there are no rules. And Target, I think this year for Halloween did a cool thing with Meta Horizon where they set up a goth Target store. They took one of their Chicago flagships downtown stores and turned it into a goth marketplace and the assortment was curated to that theme.
And so really it’s the beauty of VR and the beauty of what we’re working on is that you’re not confined by anything and you can deliver whatever your idea is because there really are no rules.
Rob Stott: No, that’s awesome. And you touched on this a bit ago, but something I can imagine being a concern for a lot of retailers considering this is that adoption part of it. And you don’t want to jump too early because you don’t think it’s worth the investment because people aren’t engaging with it. But the numbers you mentioned, talk about that a little bit, how it is a space that having been a CS attendee for … This will be number eight, I think this coming year. So it’s been a while seeing the VR space at a show like that take off. But talk about how VR is on the consumer adoption side and just maybe alleviate some of those fears that a retailer might have.
Steve McLean: Yeah. I think there’s a couple of things. One is there was a pretty big bump in consumer adoption driven by the pandemic. The only thing that really diluted some of that were supply chain issues, and chip issues and those types of things. But if you look at the reporting that are coming out from the big consultancy, this marketplace is valued anywhere from 2026 from 100 billion to multi-trillion dollars. All of the mindset sampling that’s out there is more and more of the populace is open to this. And really what it comes down to is it’s this inverse grid where some of the barriers to adoption really have been cost and the cumbersome nature of the tech infrastructure. The tech stack needed to execute the experience. But now as tools are becoming less and less or lighter and lighter weight, the computing power is continuing to advance, it’s becoming much more accessible for the consumer. I mean, look at Facebook transitioning to Meta and what they’ve done. I mean, that’s a pretty big bet to place. You look at the headlines of Microsoft and Google, and even now the much anticipated eventual announcement from Apple.
The other place to look for a lot of this stuff is personally, I look at where the companies that can afford to spend are spending, and understand that if it’s true that this is the future of the internet, then these companies that make a lot of their money in this space are making this investment for a reason. And the adoption rates continue to go up and up. The active visitors to places like Horizon World, the hardware conversion, the hardware sales continue to go up, more and more players are in this space. More and more companies that were second to the game are building a big part of their business plan around immersive or augmented type of assets or strategies.
Rob Stott: No. I mean, it’s moving beyond … I feel like a lot of, you could talk about any technology and how it starts out in the niche, maybe like gamer market and eventually it expands and becomes mainstream. And see that happening for sure with VR. And obviously the first application was gaming and immersive gaming, and now it’s taking shape in a way quickly that is well beyond just gaming and becoming that social tool, and a commerce tool as well. And I know we talked about it at the top and set the stage for the conversation with some of the ways that you guys got into this space. But I know recently ReadySet put out a report on just how VR technology is shaping retail and helping it evolve and move into the future.
But talk about that a little bit on, we’ve heavily focused on the consumer side, but the business side of it, and some of the things that you guys were doing early on that you’ve noticed this technology having an impact on things like in-store planning, and the market research and things like that. So even if a company, an independent retailer may not see necessarily the worth for them right now on the commerce side getting involved in this technology, but what are some of those business applications that they can lean into a technology like this to improve their store or their operations and things like that?
Steve McLean: Sure. Sure. I think it’s important to start out and understand that VR is not new, it’s just new to certain disciplines or certain applications. VR is decades and decades old. The automotive industry has been using it for a very long time as an early adopter. There’s military usage, training pilots, all of these types of things has been around a really long time. Enterprise is a great place to use VR as, I think an entry point to any kind of metaverse strategy, because the value proposition is instant and the ROI is instant. Let’s just take a consumable retailer, or I guess any kind of retailer for that matter. Think about the different operations. You have your product development discipline, you have your assortment category level disciplines, you have the consumer experience, the shopper experience design, the store, the ops, the checkout, all of those things, all of those pieces and parts, promotions, programs, all of those things. You can use a time machine to figure out what works and doesn’t work across all of those things.
And the funny thing is, it’s the same time machine. So you invest once and you basically, all of those disciplines can behave more effectively, more iteratively, far faster and for far less costs. Most retailers have some dark store or planning store that they use as a means to decide what they’re going to do. That’s one physical box. If I want to take an aisle, any aisle or any category and say, I want to see if this works, I want to see if that works, I have to do it. I have to take it apart. I have to do it again. I have to take it apart. I have to manage all of this inventory, how much all the labor it takes for that. What if I could just put on a headset and do all of that? And oh by the way, while I’m designing a new product via let’s just say a new private label product, I can decide before I decide which design to go with, I can understand exactly how it’s going to look on the shelf within the context of that assortment.
Training is another big application. I’m using the same store, and the same asset I’m using to plan and optimize my store for next iterations of the experience for the consumer I’m using to train my retail stock. Here’s how this should look. Here’s where these promotions should be placed. So it’s really that being able to take advantage of that build it once and purpose it across all your typical disciplines and workflows in retail in one single ecosystem. And by the way, I can have 10 stores and they’re all on my laptop.
Rob Stott: That’s pretty cool. It’s cool to hear, because I mean, I’m a technology fan, I don’t know if you can tell, but it’s fun to talk about this stuff and see how it’s coming to life, I say no pun intended because this is virtual, but coming to life in a way that is really impacting businesses and brands that are taking the time to explore it and invest in it. And it’s neat to just see it be used in ways that, as someone that had experienced it from the gaming side of things, to just see it have that business application in the way that brands and businesses are using it. And they have help as well, brands like ReadySet that are there to help along the way and show them the path to take to get into this space, and how to really utilize it and improve their business. And maybe dive into the commerce side and see how they can’t make a little cash as well while doing it. So it’s neat. It’s cool to see.
Steve McLean: Yeah, exactly. And the other part of the barrier that’s always persisted is this perception of expense or this perception of meeting a third party to execute all of this stuff. And part of the reason that we built ReadySet the way we did is we wanted to deliver a software solution, not a service solution. And so what we built is we eliminated the barriers of our clients entry pointing to be functional in VR. We have a library of all the assets, we have the stores, we have all these things. If you want to put a shipper over here, you grab it and you put it over there. If you want to merchandise it, you merchandise it. So it’s really that software solution and delivering that autonomy for our clients to be able to do what they want, whenever they want, wherever they want throughout their process, rather than saying, yeah, we had a company that did VR five years ago, it was super expensive and took forever and we had to rely on them for everything. We just want to put the power of VR in the hands of the consumer as a software solution.
Rob Stott: No, that’s awesome. Cool to see what you’re doing and I think a unique story that we’ll continue to follow. And if, hey, if you’re in the New York area and you’re listening to this ahead of the show, January 15th through 17th, I believe the dates are the NRF Big Show, you guys will be up there and showcasing this in a new area. I think the first time they’re doing, or maybe they’re really expanding it this year, that metaverse section of the show where you guys will be on display and talking about what you’re doing for the industry.
Steve McLean: Yeah. We’re excited for that. And yeah, we welcome anyone to stop by and put on a headset and go shopping.
Rob Stott: No, that’s awesome. So Steve, we appreciate the time and your willingness to dive into this, and shed some light on the metaverse, and virtual reality shopping and that retail experience in this space. So cool conversation. And best of luck at the show. And like I said, look forward to continuing to follow your story and see where you guys go in this space. So, we appreciate it.
Steve McLean: Appreciate it. Enjoyed the conversation. Look forward to the next one.