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You can read more about the NFTs in our explainer here.
Virtual assets, very real opportunities for brands and retailers
While gaming and digital art represent some of the earliest applications for NFTs, as well as some of the largest asset classes in the ecosystem, there are some very real opportunities for brands and retailers to capitalize on this trend.
Luxury goods are a perfect match for NFTs: Luxury goods and NFTs share several attributes, including scarcity and a price that is mostly driven by the intangible value of these goods. As we highlighted in a past brief, luxury brands such as Gucci and Louis Vuitton have already been experimenting with selling virtual goods for some time and are rumored to be close to releasing NFTs. For brands, success will heavily depend on their key audience’s familiarity with virtual goods as well as their ability to create a unique online shopping experience.
CPG brands can leverage NFTs to boost online customer engagement: While not all brands can make a business out of selling virtual versions of their products, they can use NFTs to create unique online experiences and boost customer engagement. As mentioned in our NFT explainer, the likes of Pringles and Taco Bell have already some NFTs as a way to promote their brand and products to younger audiences.
Decentralized commerce (dCommerce) — a practical use case of NFTs for brands and retailers: NFTs can be used by merchants to tokenize physical products and services on the blockchain to help reduce online transaction costs and arbitration risks by bypassing intermediaries such as Amazon or Alibaba. For example, a fashion brand could tokenize the ownership of a physical swimsuit and sell this token — the ownership of the swimsuit — to any consumer or reseller. The payment would be escrowed to protect both parties and reduce counterparty risk. The buyer can then choose to redeem their token and get their swimsuit delivered or resell it if authorized.
Startups such as Boson Protocol and Splyt Core are already working on building an NFT-based decentralized commerce infrastructure, touting additional benefits such as enabling physical goods authentication and eliminating the risk of double selling.
As a consumer, I didn't quite understand the benefits of decentralized commerce until I recently purchased some clothes online from a small fashion brand located in northern Brazil (randomly found on Instagram). Needless to say, with a payment process happening over email and a clear lack of protection against potential fraud, I took a counterparty risk that could be avoided with NFTs!
Be curious, stay ahead!
Thomas Sineau
P.S. I haven’t received my order yet, but I'd be happy to share the name of the brand. Simply reply to this email. |
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