Roblox Pushes for Expansion of Fashion and E-Commerce

Fashion and retail are part of Roblox's DNA, and now they're looking to drive the next stage of the gaming platform's evolution.

Roblox has given users a way to style their game characters, or avatars, since its release in 2006. Over the years, it has steadily expanded its users' digital style options with new features, projects and partnerships with some of the biggest names in fashion.

While some brands may be rethinking their virtual world altogether given the waning excitement around the metaverse, Roblox isn't showing any signs of it. For Winnie Burke, the gaming company's global group director of fashion and retail, the opposite is true.

“We're really struggling to keep up with the volume,” Burke told WWD about the partnership. “The volume is growing and the relationship is getting deeper. It's becoming a multi-year relationship.”

The fashion industry's latest Roblox-fueled creation, a digital necklace created in collaboration with Adidas, sold for 2 million Roblox (roughly $20,000).

Adidas has other products in the works, but it's hard to beat this one. The necklace became the most expensive limited virtual item ever sold on Roblox, dethroning Lamborghini. The luxury car brand raked in 1.5 million Robux (about $15,000) for three virtual mask-like hats inspired by the automaker's golden bull logo.

Limited edition items (“exclusives” in Roblox lingo) haven't existed until last year, at least from the brand. Exclusives were only offered from developers before they were released to the wider world in April 2023.

This growth is just a small part of the vibrancy of the gaming ecosystem, which had 77.7 million daily active users as of the first quarter.

That's more than the entire population of England.

Maintaining the interest of a massive audience is no easy feat for anyone, but doing it for 18 years is quite another. Roblox's formula relies on an ever-evolving technological backbone and user experience, a highly engaged community of creators, and long-standing relationships with world-class brands.

In the past year alone, Roblox has become a key destination for many companies, including Walmart, L'Oreal, Hilton Hotels via Paris Hilton, Versace, Hugo Boss, LoveShackFancy, Givenchy, and Adidas.

But despite all the buzz, the platform needs to work harder.

Roblox said more than 1.6 million digital items were sold on its platform from January to September 2023, up 15% from the previous year. But its latest first-quarter earnings report showed user spending slowing, spooking investors. Revenue for the quarter rose 22% to $801 million, falling far short of analysts' expectations of $923 million.

In other words, the pressure is on for Roblox to find new revenue streams.

The effort has already begun: In April, Roblox Marketplace did away with the application process, allowing anyone who met its eligibility criteria to sell digital items, and last month the company began running video ads on virtual billboards.

Your next stop is retail, and it's not just avatar fashion and accessories.

Apparently a pilot with Walmart, which has been testing both physical and virtual commerce on the platform, has been enlightening, and now the gaming company is looking to get into real-world retail.

In conversation with WWD, Burke spoke about Roblox's relationship with fashion, how it's growing, and the opportunities in the game's latest commerce and advertising moves.

WWD: Roblox has a long history of partnering with the fashion industry, with its latest partnership being Adidas. How did you work with them?

Winnie Burke: Adidas is a very thoughtful and progressive brand in its approach to this space, and we worked very closely with the Adidas team to help them develop strategies and understand trends on the platform and provide a consultative approach to how they're managing their virtual economy, their virtual business on Roblox, and the items that they're creating.

WWD: How many fashion brands do you work with at that level?

Warner Bros.: That's quite a lot, probably dozens. We work with over 300 brands across a range of categories.

Our fashion and retail vertical alone is pretty unique to the platform because self-expression and digital identity are so important to our community. We partner with everything from traditional retailers like Walmart to luxury fashion brands like Burberry and Gucci, to Adidas, Nike, Puma, fast fashion, and the list goes on and on.

[We] We provide a lot of consultative support and approaches as they create content and different types of activations, everything from persistent experiences and virtual items and shops, like Adidas does, to our newest service, advertising.

This is more traditional advertising for brands looking to reach a very dense Gen Z consumer demographic through video ads and other traditional advertising products.

WWD: Roblox is often lumped into the metaverse category, but because it's an isolated game and virtual world, it doesn't rely on any other ecosystem and there's no risk of the bubble bursting, right?

Wahba: I agree, but “games” can sometimes feel limiting. The most compelling thing about our platform, content-wise, is that it's a mix of games, entertainment, socialization, and activities and experiences you can do with your friends.

Of course, there are traditional games, role-playing experiences, “beat the clock” and the like, but it also includes going to concerts, meeting artists, connecting with like-minded people on private servers, attending fashion shows and dressing up your avatar.

Dressed to Impress is currently one of the most popular experiences on the platform.

WWD: Roblox is a mostly self-contained environment. But if you spent $20,000 on a virtual costume, you might want to wear it elsewhere. Are you interested in interoperability with other games and platforms?

Warner Bros.: We are a company built for the community, and when the community has the opportunity to get involved, [items] Off-platform is something that is resonating with the community…there are no plans at the moment, but it's an area we're always keeping an eye on.

I think the difference with Roblox is that the utility of those items exists on the platform. If they want to be seen wearing it, [showing it] As a status symbol, they can do so with a large audience and peers on Roblox, where the element of self-expression really comes into play.

We have around 78 million users and millions of experiences. Although the platform is limited, the experiences are decentralized so that all branches can leverage its utility.

WWD: Tell us about the trajectory of fashion at Roblox. What does it look like from your perspective?

Warner Bros.: Luxury fashion has been a pioneer in this field: it was a jaw-dropping moment when we first saw Gucci step in three years ago and create an amazing Dionysus bag that sold for more on Roblox than in real life.

[In 2021, Gucci’s digital Dionysus bag with Bee set off a frenzy of secondary sales, leading one buyer to pay roughly $4,115, beating the physical bag’s $3,400 price by over $700.]

This incident opened the door for other luxury fashion brands to experiment. Some brands were still waiting to see what would happen, which is common in the industry. The same thing happened with social in the past. But this incident turned the tide, and very similar to the trajectory of social platforms over a decade ago, brands that were ready jumped in early but still felt like they were late.

“Brands that we're meeting now, and even brands that are working for the first time now, feel like they're behind. But no one is behind. This is definitely an area that's evolving. They're meeting consumers where they are.

WWD: And speaking of advertising…

Warner Bros.: More traditional methods of advertising allow brands to [financial] It's not an investment, it's an investment of time, they can use it as a more traditional channel.

WWD: Let's talk about Roblox e-commerce and real-world products. Tell us about your journey so far, and how you got to this point as a platform.

Warner Bros.: Over the last 18 months or so, we've really been listening to the needs of our community, but also the needs of marketers and brands on our platform, helping them tell their story and help customers complete the lifecycle and complete a purchase.

We have a huge audience that spends a huge amount of time on our platform, so we want to enable brands and users to participate in e-commerce on Roblox if they want to, without having to leave the platform. We see all platforms moving in this direction, including Instagram, Pinterest, and TikTok.

Everyone is doing this, experimenting, and moving to more established business models. We have a very established audience. In such a strong brand ecosystem, this makes some sense.

WWD: Did you like the test with Walmart?

Warner Bros.: We did a pilot with them, and last month they were able to offer three products for e-commerce that were really resonating and trending within the Walmart ecosystem. [In] In the Roblox translation of items, the virtual items were a little different, but that's okay, you're taking inspiration from that.

Adidas doesn't produce those necklaces in real life, but maybe they should? Is this a platform for them to test and learn and see what resonates? Kind of like using Roblox for research and development?

I'm not saying that it is, but that's how brands think about Roblox.

Last year, Fenty let users create different versions of lip balm, which were then produced as a physical product that was chosen by Rihanna based on participation from the Roblox community. Forever 21 did the same with a black beanie. So there are plenty of examples. [phygital] It is becoming a reality.

I think we'll definitely be seeing more of it.

WWD: Adidas' virtual necklace came with actual sneakers, and Lamborghini's Golden Bull Hat earned customers a trip to the automaker's headquarters in Italy. So is Roblox moving into the “phygital” – physical-digital goods and experiences – space?

Warner Bros.: We're experimenting with different formats, but our goal is that our technology will eventually enable anyone to sell on the platform, even brands who want to sell digital goods. [Roblox] experience.

We want to make it easy for brands and creators to host a physical product within an experience with a digital companion, so this is truly inclusive, and we plan to experiment with a few different formats this year as we establish a more formal solution.