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Web3 x Commerce: Market Map

Navigating the Web3 Commerce Landscape

By: Lauren Tierney, Venture Investor, Decasonic

Envision a shopping world where every item you own comes with a digital equivalent, a world where your online identity is as significant, if not more, than your offline presence. This is not a futuristic fantasy.   It is the emerging reality of Web3-enabled commerce, driven Gen Z and Gen Alpha, the generations of people who are growing up digital native and increasingly VR-, crypto- and AI- native.  As these demographics increasingly value digital goods and authenticity, we stand on the brink of a seismic shift in consumer behavior and market dynamics. 

This blog explores the trends that are shaping this new era of shopping, highlighting why Web3's integration into commerce is not just inevitable but essential for meeting the evolving demands of consumers and brands alike.

What are the trends that lead us to believe Web3-enabled Commerce is the future state of shopping?

1. GenZ places a higher value on digital goods than physical ones. 

Generations Z and Alpha, the most digitally native generations to date, have shown a remarkable predilection for digital goods, often valuing them more than their physical counterparts. A significant portion, about 45%, of teenagers report being online "almost constantly," with an additional 44% stating they access the internet several times a day. A 2018 Pew Research Center survey revealed that 95% of 13- to 17-year-olds have access to a smartphone, and a similar percentage (97%) engage with at least one of seven major online platforms. This digital-first mentality is reshaping market dynamics, where digital proof of ownership often holds as much, if not more, value than the possession of a tangible item.

For these consumers, their digital identities are not just avatars in virtual spaces; they are extensions of their personas across diverse online and VR platforms, enriching their social connections, content interactions, and purchasing behaviors.

Presently, over 52 million Americans own cryptocurrency, with Millennials and Gen Z making up 60% of this demographic. A telling indicator of Gen Z and Gen Alpha's digital focus is their preference for Christmas gifts, with gaming subscriptions and Robux (the digital currency in Roblox) topping their lists. This trend highlights their inclination towards digital-only goods and an increasing reliance on digital currencies.

These generations are at the forefront of a cultural transition where the value of a product transcends its physical existence, entering the digital realm where it gains additional prestige and shareability. For instance, Gen Z consumers are four times more likely to buy a physical product if it is accompanied by a digital twin. Moreover, 60% of this demographic believes their online persona is more significant than their physical appearance. Brands with foresight are leveraging this trend by offering digital twins and digital-only products, enhancing customer engagement and bolstering their presence both online and in real life (IRL)..

Top of Mind

• A balance of realism and optimism stands to navigate the exponential changes in 2024. Read more about how significant improvements in #blockchain scalability, usability and real-world use cases are accelerating the mainstream adoption of #web3 in Paul Hsu’s post here.

• This Christmas, Gen Z and Gen Alpha have a unique wish list, and it’s not what you’d typically anticipate- they’re eyeing digital currency. Dive into the details of this generational trend in Lauren Tierney’s latest LinkedIn post here.

• Netflix Games is innovating by creating immersive story experiences based on popular shows like Squid Game and Love is Blind. Netflix also has plans to release 86 games this year, including notable titles like GTA: The Trilogy. Read more about this in Danny Pantuso’s post here.

• This festive season has seen an abundance of gatherings within the #Chicago community. Explore the latest posts from our Marketing Manager, Grace Casey, offering a glimpse into both the Crypto Leaders Holiday Luncheon and the Chicago VC Leaders Holiday Dinner.
  
  

  From our team to yours- Happy Holidays!

Thanks for reading & see you in the 2024!

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Are you or someone you know building in crypto or web3? Get in touch with the investment team here.

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