During the NFT craze in 2021, many big retailers and designer brands threw in their experiments with considerable success. Projects that were released included exclusive artwork by designers, NFTs that entitle holders to complimentary physical items sent by the retailer, and some that provided loyalty benefits for holding.
This came at the perfect time for these companies due to the global supply chain issues putting this opportunity into the spotlight. How can NFTs completely takeover eCommerce by bringing a new digital market and carrying out the traditional physical item retail industry?
Benefits
Off the bat, with an emerging industry and many eyes watching, it allows retailers to take advantage and build their brand identity. Some notable retailers that did this in 2021 were Nike, Gucci, Louis Vuitton, Addidas, and Puma. It also brings unique experiences to consumers. Louis Vuitton released “Louis the Game” in August 2021 for their 200th anniversary. Players would roam a virtual world in search of exclusive NFT postcards. An unexpected move from the high-end designers.
Customer experiences can be more secure and effortless using NFTs. Verification using the blockchain can reassure people that goods are authentic. Nike has patented “CryptoKicks,” which is a helper to verify whether real-life shoes are original by pairing the real-life model to an identical NFT. With the big retailers getting involved, it brings in many seamless educational opportunities for customers to understand how NFTs work and how they benefit both the business and the customer.
An obvious but overlooked feature is the global aspect, where there are no trade/shipping barriers when dealing with digital goods and blockchain-related products. Additionally, there is an opportunity for crowd ownership of digital goods, so if desirable, there can be more participants.
All over, creating a new opportunity to expand experiences and monetization. When looking at the metaverse, NFTs are the driver for supplying the ecosystem. Without them, the metaverse has much less appeal to investors as current technology is already available to create a similar concept.
Challenges
As with anything blockchain-related, there is still the problem with high volatility due to low liquidity. Demand may still be expected regardless of how innovative NFTs are becoming if consumers have little confidence. This is regarding digital goods, but when NFTs are linked to physical products, consumers can be more confident in their purchases maintaining value.
Additionally, time for education on the system and technology will take time due to older generations statistically finding it harder to adapt to new technology. Businesses will also have this challenge when allocating more resources to research and development to find the best way to take advantage and make a user-friendly experience for their NFT products.
Other than the usual challenges when looking to integrate blockchain technology into current systems, there is no significant barrier for NFTs fundamentally to help take eCommerce to the next level in bringing a better consumer experience and a new breadth of opportunity for businesses.
