NFTs can be used to buy and sell visual art, music, products and online collectibles. The acronym stands for “non-fungible tokens”, which represent a modern method for buying and selling digital products online. What are the chances of NFTs playing a role in the future of retail? They’ve already been adopted by major brands from Taco Bell to Gucci. Here’s a look at how NFTs and other types of digital commerce contribute to the omnichannel shopping experience.
Why Are NFTs Gaining Popularity?
The perceived value of NFTs changes over time, as well as every time an “item” changes hands. So NFTs include a feature that pays creators a percentage every time an item is sold, which helps artists who want to develop revenue streams for their digital products. These products may include songs, videos, photos, paintings, and audio.
Another reason NFTs are becoming popular is because they are part of an emerging new digital ecosystem that includes blockchain and other game-changing technologies. NFTs, for example, are stored on a blockchain. Now there are sites such as Circle and Boson Protocol aiming to embrace all forms of digital commerce. Another new digital concept is the NFT voucher, which holds funds from buyers and sellers until both parties agree on terms for triggering transactions.
How Brands are Using NFTs
Since NFTs have caught the attention of online shoppers, it’s now worthwhile for brands to invest in or use NFTs to capitalize on the growing excitement surrounding them. NFTs are designed to encourage interaction with followers, which can help develop greater brand loyalty. These digital products can create closer bonds between brands and fans. In that sense, buying an NFT is mainly a digital vote for the brand.
How NFTs Create Scarcity and Fulfill a Need
Part of the intriguing mystique behind NFTs is that they create both scarcity and exclusivity. An NFT, for example, may be a series of unique items only available to a short list of followers. Artists can offer NFTs exclusively to fan club members or podcast subscribers, which creates a special connection. Another option is for artists to sell licenses for using digital or associated items.
Digital scarcity can be created in numerous ways. Twitter CEO Jack Dorsey turned his first tweet into an NFT and auctioned it for $2.9 million. Luxury art speculation is on the rise, as it’s possible for artists to command high value based on the belief they will become profitable, famous, and influential. Another example is when a creator establishes partnerships to create exclusive art for different companies.
NFTs that attract the most demand fulfill a need that hasn’t been previously met online, such as offering a picture that captures the spirit of current news or issues. There’s a need among social media users to find digital art they can share with their communities.
How NFTs Impact the Resale Market
NFTs are not limited to representing digital experiences, as they can associate with physical assets, such as unique attire in the fashion world. In the real world, the resale market attracts luxury buyers looking for good deals. These people support all forms of art and fashion. They seek to maximize their investments by bargain hunting for used items. The same concept is being applied digitally to NFTs.
Since an NFT associates with a digital timestamp, it can be used in various ways as proof of purchase for a physical item. Not only can it be used as a ticket to a show, but it can also be used as a membership card for exclusive events. In that sense, it’s possible to buy then resell a ticket to a big event for a profit without ever leaving home. An NFT’s creator can collect money every time the digital item is resold, similar to a royalty payment.
There’s a good chance for NFTs to expand more in the resale market, which can create more excitement for people who participate. Buying and selling digital products can become a seamless online activity that generates new revenues streams for individuals and businesses. At the heart of this innovation is blockchain technology, which has already ushered in methods for creating countless new markets.
Are NFTs the Future of Retail?
NFTs have been around since 2014, but only started to gain wide attention in the early 2020s. By the third quarter of 2021, the trading of NFTs surpassed $10 billion. Clearly, there is growing market demand to buy and sell digital assets, which can be anything imaginable in the digital realm— from games to cartoons, news clippings, poems and films.
Each NFT is unique in some way, which is part of how it gains value among a following. Since the playing field is wide open for any art form to be monetized as an NFT, it’s likely that interest will grow for creative ways to build digital commerce.
The awareness about NFTs is rising. A recent Morning Consult report survey found 15 percent of males claimed to collect NFTs while only 4 percent of females said they were collectors. These female collectors often invest in high fashion NFTs. Meanwhile, crypto enthusiasts are helping spread the word about the digital marketplace. In the past, niche markets have supported the evolution of NFTs, which are expected to generate $240 billion per year by 2030.
In 2022 McKinsey & Company issued its State of Fashion report that predicted NFTs would likely enter the mainstream for retailers within the year. At the same time, retailers have major sustainability goals this decade while the physical nature of how blockchain technology uses excessive energy has become a controversial issue. That means brands will need to choose NFTs carefully to stay consistent with their sustainability goals.
Examples of AR/VR Used in Retail
Augmented reality and virtual reality have already transformed the way consumers interact with products. Nike has been a leading brand at providing AR/VR experiences in its stores, allowing customers to scan products for deeper information. Another AR/VR retail example is how IKEA’s app allows customers to use their smartphone cameras to visualize how furniture might appear in their living rooms.
Apple has helped pave the way toward modern retail with its physical stores, which use AR to showcase iMacs, iPads, iPhones and other products. Meanwhile, automakers like BMW have capitalized on VR by providing dealerships with 3D goggles for panoramic viewing. Customers can view showrooms of various car models without the physical vehicles being onsite.
A “metaverse” marketplace has become the harvesting grounds for NFTs. Certain industries, such as 17 percent of fashion brands, have already experimented with the medium. Adidas recently entered the digital art arena with a collection of 30,000 NFTs called Into the Metaverse. As a form of virtual reality, the metaverse is quickly becoming populated with 3D experiences.
Omnichannel Retail for Seamless Shopping Experiences
Due to all the different forms of digital media, there’s a need for retail businesses to consolidate this diversity within one cohesive infrastructure. It’s further necessary to create seamless digital experiences for retail customers. Timberland has been an innovative clothing brand in pioneering seamless omnichannel shopping experiences. Customers get to use tablets in Timberland stores to create shopping wish lists they can send to their email.
The key to a seamless omnichannel retail experience for customers is to offer product information through different forms of media. All the customer needs is a mobile device to participate in various omnichannel experiences.
Clear advantages exist when aiming for omnichannel retail experiences that include NFTs and other new digital technology. Consumers are gaining increasing awareness about engagement with digital products and services. Meanwhile, businesses, artists and resellers of various offerings enjoy new ways to develop revenue streams, such as through NFTs. As new ways to buy and sell emerge online, opportunities are growing to earn money from home from crafting a collection of digital solutions.