Do Web3 Brands Need Brick and Mortar Presence? A physical address for a digital the next iteration of the internet sounds idiosyncratic. But this trend of Web3 companies and brands investing in physical places is picking up, slowly and steadily

What keeps an audience hooked? A physical presence or a digital one? For a long period, India was habituated to physical shopping and experience. But things have changed now. According to the India Brand Equity Foundation, the native market of e-commerce grew from USD 67 billion in 2021 to USD 123 billion in 2024. However, by 2026, almost 75 per cent of retail shopping will remain offline. And digital-first brands have identified the need to have a brick-and-mortar existence and have gone on the physical store route as well. These include the likes of HRX, Superbottoms, Tata Cliq, and Nestasia.

But can a similar route be taken for Web3, the new iteration of the World Wide Web?

Possibly phy-gital?

A physical address for a digital the next iteration of the internet sounds idiosyncratic. But this trend of Web3 companies and brands investing in physical places is picking up, slowly and steadily. What's the common factor between Bengaluru, California, New York City, and London? These places offer a glimpse into the real-world manifestation of Web3.

What are these places built for? Education purposes and collaborative efforts. In July 2022, Vibhu Norby in collaboration with The Solana Foundation founded the world's first permanent physical retail, educational, and community space dedicated to Web3 'Solana Spaces' in New York. "It's an experiment that we think a lot of people will love," Norby said during the launch. Later in October, it launched a 4,500-square-foot space called The Solana Embassy in Miami.

The initiative aimed at user onboarding with Phantom Wallet, Solana's largest self-custody wallet app; digital tutorials in partnership with Orca, STEPN, Solana Pay, Metaplex, and Magic Eden; Solana Saga, Solana's flagship Web3 mobile phone, for customers to preview in person; interactive art installation that features a data visualization of what is happening on the Solana Blockchain in real time; Solana 101, an educational presentation on Solana's technology; NFT Gallery and limited-edition merchandise; and full retail store with exclusive merchandise and NFT collection drops.

The idea looked so promising that the CEO of Solana Spaces said "won't rest until everyone is onboarded into the space."

Courtesy: Solana Spaces

However, the real-world perception and demand said otherwise. In less than eight months, Norby took to X to share the news of sunsetting the initiative, "Over the last 2 months, it became increasingly clear to me that we were at an inflection point with our stores and our digital products." The partnership found a new way to focus on its ultimate idea of growing the Solana ecosystem- DRiP, its digital collection. "While our stores onboard between 500 and 1000 people per week, DRiP onboards that same quantity EVERY DAY," he added.

Solana Spaces saw a footfall of over 75,000 people in its lifetime.

But they weren't the only ones betting on it. Joining the club was the coworking brand present in the UK and Ireland, Huckletree, with its Huckletree Oxford Circus in London. Spread across two light-filled floors and 22,000 sqft, it is a workspace where one will find Web3 and AI innovators working alongside Metaverse builders and designers.

Courtesy: Huckletree Oxford Circus

On why it was launched, Gabriela Hersham, CEO, Huckletree said "When Web3 innovation started to surge, we couldn't ignore it. We want this to be the go-to destination for the most ambitious brands and businesses across the complete Web3 spectrum - from creators to digital assets into the Metaverse - whether on the brand, operator or investor side."

Calling Web3 an embryonic industry, Hersham feels there is still a lot of room to build structure, and network, and unlock the right access to talent and capital. The workspace housed an NFT gallery, an immersive meta-lounge for games and product demos. Notably, it also announced it would cater to Q&A sessions with crypto experts, host preview/demos of innovations, run skills workshops, and talent circles, and launch accelerator programmes to support underrepresented founders get access to early-stage investment.

A real estate bet?

Physical Web3 spaces are by pattern more prevalent in the West. Close home, brothers behind Zostel, a backpacker's hostel chain, Dharamveer Singh Chouhan and Chetan Chauhan entered the Web3 ecosystem with Zo House - India's First community-driven clubhouses for Web3 enthusiasts. Originally started as an online community on Discord, the duo riding on their real estate experience, opened up the first clubhouse in Bangalore in December 2022. It brought together 450 members who collectively own 1111 NFTs via exclusive membership. They did this to give the early believers an incentive to be a part of the ecosystem.

Courtesy: Zo House Bangalore

"For the last two years we have been perfecting the product itself," shared Dharamveer Singh Chouhan.

Zo House launched its second clubhouse in San Francisco this year and uses NFTs for membership, contrary to other utilities. "We like to use the term vibe for what's inside. It's an intangible experience that the people love us for," Dharamveer added.

The membership allows access to digital collectable airdrops and access to token-gated communities and events. "Fundamentally we combine three things- Web3, community, and real estate. When you mix all these things, we have a vision for ZO World," shares Chetan. He shared that the Whitefield outlet had received an overwhelmingly positive response, "Whoever wants to organize any event or launch any product, they knock at Zo House." Since its inception, it has organized over 50 events with a footfall of over 6,500 visitors.

With another one in Dubai, it has 50 global cities on its radar and eyes upwards of two million community members in the next three years. With the expansion, it plans to introduce its tokens.

In 2022, Nike launched its .SWOOSH platform to let users learn and collect virtual creations, which are typically interactive digital objects, such as virtual shoes or jerseys. In some cases, it allowed users to unlock access to physical products or events involving athletes or designers. With over 1,000 retail stores worldwide, the existing physical presence works in favour of the athletic footwear and apparel corporation.

The way forward

Having a physical site may seem strange initially for an organization built on Web3 principles. So, why the need? For brands, the idea is to complement their online presence and NFT projects with physical events and spaces.

To stay relevant, brands will have to change their approach to consumer needs.

Selling a product or service won't be enough; the key will be experience. On its adoption in India and the global stage, Chetan shares "A lot of people would want to do that, but the problem is that, be it general startup founders or Web3 founders, no one wants to enter into real estate. People want to build businesses on a protocol level, but even on the consumer level, people don't want to enter into real estate because it requires a lot of hassle. It's not easy to maintain people or run operations on a scale or community-driven operations and keep people satisfied. People want to sell real estate on Metaverse…But getting into real estate and making real products, itself is very defensible. People don't want to enter it, even if people know that it's a big market."

According to Matt Moorut, a Gartner marketing analyst, brick-and-mortar stores help to legitimize Web3 brands. Apart from legitimizing the brand, this strategy also works in connecting with customers, expanding the brand experience, and driving sales and revenue.