Our understanding of the physical and digital worlds is pretty simple. One, we can engage with through sight, touch, smell and the rest of our senses. For the other, we’re limited to just sight and essentially experience. But what happens when those two worlds collide? We get a parallel experience that doesn’t have the limitations of the 2D world we live in, but still allows us to enjoy physical participation. Is this possible? Yes, thanks to the creation of phygital experiences.
Phygital is a new term that you won’t find in Webster’s Dictionary but from the actual word itself, you can tell it has something to do with combining physical and digital. The best breakdown of the term is by TechTarget, where it’s defined as a “marketing term that describes blending digital experiences with physical ones. As the channels of customer interaction and communication proliferate, companies aim to make combining these channels frictionless and seamless, enabling a customer to make a phone call, then communicate in a social media platform, then send an email, without the company losing the thread of the communication or a sense of the customer issues associated with the customer account record.” This definition focuses on the root cause as to why the term was created, which is customer experiences. Companies who utilize aspects of both the physical and digital worlds do so to provide their consumers a way to experience their product like never before. But where does “phygital” even come from? Who created it?
According to an article by Awabot, it was “invented by the Australian agency Momentum, which claimed the copyright for the word in 2013 and uses it in its motto: ‘An Agency for the Phygital World.’” The thought process behind this concept came out of a failing clothing industry. Brick-and-mortar stores were seeing a decline in sales thanks to ecommerce, and they needed a solution to boost profit. Instead of fighting against new technology, companies started to incorporate it into their stores. One of the early examples of this is from a furniture company called The Made. They provided an in-store display of their furniture by incorporating 3D technology, but you couldn’t purchase any of the furniture in the store. Instead, they provided QR codes for you to scan and purchase the furniture at a later time.
Though many companies are slow to integrate new tech into their business plans, there are a lot of perks that come with going phygital. For example, it would cut down shipping costs since most of your inventory would be sent directly to the consumer instead of in bulk to your stores. Another benefit would be that you could increase in-store purchases by incorporating technology that incentivizes your consumer base’s engagement. If you chose to go The Made furniture route, your inventory cost would be cut in half as you would only need to purchase one of every item to display in stores. Another perk of using this technology would be an increase in brand value — by incorporating technology that isn’t being used by your competitors, you have an advantage not just from a consumer basis, but also with investors and other companies that may want to work with you. One of the biggest and most overlooked benefits is when you focus on creating a unique customer experience, you are also creating a community. Consumers want to interact with people who have shared experiences. This can allow for multiple streams of income outside of just selling clothes.
There is clear evidence that the phygital route is the way to go for brands, but how many of them are actually utilizing it? Well, thanks to the pandemic, companies were forced to create more digital experiences and even after shut-downs were over, many consumers still wanted to have those experiences in a hybrid fashion. This pushed brands to dive into phygital marketing like never before. One example is the Lush brand and the creation of their Lush Lens app. The app allows consumers to scan a product in the store, at which point they are shown how it’s created, how to use it, and what ingredients are in it. This allows for consumers to make a more informed decision when shopping and cuts back on returns. Another great example is Aldo. Back in 2021, the company conducted a livestream, in-store shopping event. Consumers were able to ask questions, interact with the host, and see items being used. The event increased their engagement rate by over 300 percent.
The clothing industry isn’t the only line of business taking advantage of the new tech. A travel company called Omnipresenz is allowing their customers to virtually travel anywhere through telepresence tourism. They also provide each user with an avatar to communicate with other people virtually. This allows you to walk around multiple locations and see which one you would like to experience the most without wasting money or time in person. Elsewhere, Nespresso coffee stores allow customers to grab their coffee sleeves and place them into the machine themselves. The connected chip in the coffee sleeve is correlated with the price and the total amount is automatically displayed. No checkout assistance needed.
But the innovation doesn’t stop there. Thanks to Web3, the phygital lane has been taken to a whole new level. A high-fashion clothing brand called Mostly Heard Rarely Seen has developed an NFT line called 8-bit. Those who purchase from the line get a scannable label that will digitally clone them and their item into the metaverse. Once in the metaverse, the consumer is given a “HIGH” token, which allows them to unlock exclusive experiences. Consumers can also mint their clothing as NFTs on platforms such as Opensea and LooksRare to establish ownership and resell to other consumers.
During New York Fashion Week, Tommy Hilfiger curated a phygital fashion show. Avatars and Roblox users wore his new collection and walked through the platform’s virtual New York City. Any items that consumers wanted to buy were immediately available after the show, and Roblox players were able to purchase the items digitally. Other major brands such as Burberry and Gucci also have limited-edition items available for purchase for your avatar in Roblox.
Clearly, we are in the beginning stages of phygital. But as this new wave continues to progress, my guess is that our daily lives will soon be somewhere between the physical and digital worlds.