The NFT (non-fungible token) phenomenon has hit nearly every industry. For retailers, NFTs can be a unique offering that helps build customer loyalty and boost sales. But what are they, and how can retailers effectively use them to build brand affinity?
NFTs are digital tokens for virtual items, and its key differentiator from other virtual currencies or assets is that they're unique and non-exchangeable, giving retailers many opportunities to provide exclusive offerings through NFTs.
Targeting Younger Generations
Consumers are buying these digital assets at a rapidly increasing rate. In fact, trading volume surged in the third quarter of 2021 to $10.67 billion, a 704 percent increase from the previous quarter. The younger generations seem to be blazing the trail for NFTs. According to a recent Forbes article, “Features of NFTs directly address many of these issues at the forefront of Gen Z’s psyche head-on. Between this and the fact that those born from 1997-2012 will be the largest cohort by 2026, you can have confidence in the forecast that NFTs are here to stay.”
According to recent consumer research, one in five Americans (20 percent) aged 18-34 (Gen Z and millennials) are more inclined to have used NFTs in the past, and these generations have an appetite for one-of-a-kind items. So how can retailers leverage this draw? The key to winning over Gen Z and millennials is offering incentives for using NFTs. Nearly one in four Americans (24 percent) aged 18-34 would be more inclined to use NFTs if they were given shopping privileges such as dedicated checkout lanes at brick-and-mortar stores and special discounts for exclusive shopping events.
Luxury goods, apparel companies, and gaming entities are leading the way and have taken a growing interest in NFTs, with companies such as Gucci and digital fashion house Fabricant as major players in the space. Apparel and sporting goods companies are offering virtual collections, such as Nike’s CryptoKicks. As NFTs continue to grow in popularity, implementing these digital offerings as part of the overall brand experience can serve up new ways for customers to connect with a brand.
There’s no time like the present, and retailers can (and should) dive into NFTs to offer consumers new and exciting ways to shop.
One option is to create original goods in limited quantities. For example, developing a line of digital clothing, shoes or fashion accessories with an associated NFT provides customers with an exclusive piece of merchandise, which can be appealing in a world where everyone shops at the same retailers. Offering a limited quantity gives retailers insight into consumer demand with flexibility, allowing for a pivot to alternate options, if necessary, without a heavy output.
Another solution is a “phygital” strategy, meaning somewhere between a digital good and something tangible. In other words, selling a physical product with an associated NFT that unlocks the same product in a digital world that can be used in virtual environments, such as Fortnite and Roblox.
To give consumers a truly unique shopping experience, brands can implement both customization and personalization into their NFT experience. Brands can offer their customers personalized shopping experiences that combine the real with virtual using augmented reality (AR) technology. Utilizing 3D, AR, and “try-on/try-out” technology in your current channels is a great first step in preparing your business and your customers for the metaverse and NFTs.
To show consumers the potential with NFTs, retailers can also offer to guide customers in getting started. AR technology brings the virtual world into the real world, and NFTs provide retailers with the opportunity to personalize the virtual world with limited edition items. Music and gaming are additional markets where NFTs can bridge the gap between the virtual and real worlds. These industries are more inclined to see a positive response when introducing NFTs, which will then spill into other industries over time.
Angelo Coletta is the CEO and founder of Zakeke, a 3D product customization tool.
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In 2017, Angelo Coletta founded Zakeke to create a platform to help brands build engaging customer experiences through customization and personalization using 2D, 3D and AR. As CEO of Zakeke, Angelo leads the team’s global mission to own the visual shopping experience. By helping customers have a positive e-commerce experience, Angelo and his team work behind the scenes to make complex technology easy for any brand to adopt with the goal of increasing engagement and driving sales. For more information on Zakeke, visit https://www.zakeke.com/.