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Why are NFTs relevant to retail in Asia
What are NFTs ?
NFTs , or non-fungible tokens , are crypto assets that represent an intangible digital item such as an image , video or in-game item , linking ownership to unique physical or digital items . They are recorded securely on a blockchain , making them difficult to alter or counterfeit . NFTs can be created by a process called ‘ minting ’, which then can be sold or given away to others . Whilst each NFT is unique , there can be multiple editions of an NFT , just like a baseball card . Recently , NFTs have gained a lot of attention and traction - in Q3 of 2021 , NFTs generated over $ 10.67 billion in trading volume , a 704 % increase from the previous quarter , and a 38,060 % increase year-over-year , as artists , celebrities and companies alike increasingly dip their toes in the trending market for digital tokens , according to analytics platform Dappradar . In the past six months , there have been a slew of brands jumping on the NFT bandwagon and releasing digital collections for purchase , including Rimowa , Givenchy Parfums , Burberry , Gucci and Havaianas , among others .
Why brands and retailers use NFTs ?
NFTs can do a couple of things for marketers . First , by certifying the authenticity and uniqueness of a product . NFTs support premium prices given its ability to trace products all the way back to the place , time and date items were manufactured . Second , it seems likely that digital complements to physical products could enhance the value marketers deliver to the customer . For example , these digital complements could include personal messages from a shoe designer . Lastly , NFTs are by definition limited and unique , which can provide fodder for collectors and promotional buzz for the brand .
What are brands doing with NFTs ?
Across industries , retailers are creating products for virtual environments , such as NFT furniture that their customers can buy to furnish their virtual property or wearable NFTs that can help make avatars stand out . This futuristic opportunity is happening right now and tapping into these environments can potentially provide brands with more revenue opportunities . There are also opportunities for brands to collaborate with other companies , thanks to the vast qualities of the virtual worlds ; it is an open stage for endless digital prospects . Retailers need to determine if there is a current market to create non-fungible items of their own .
Luxury brands are also creating limited edition NFTs for Alibaba ' s Singles ' Day sale event in 2021 . Brands that participated in creating limited edition NFTs include British label Burberry , US handbag maker Coach , and Swiss watchmaker
Longines . Take Burberry as an example , it sold special edition scarves at 2,900 Chinese yuan ($ 453 ) with an interactive deer NFT in the event .
In the domain of CPG and beauty , Clinique has become the first Estée Lauder brand to offer an NFT since Oct 2021 in a bid to drive loyalty and add marketing weight to its top products in a sign of more purposeful brand uses of non-fungible tokens . Instead of selling NFTs , the beauty brand is giving shoppers who are signed to its rewards scheme the chance to receive free products for 10 years along with one of three editions of an NFT artwork . According to Carolyn Dawkins , Senior Vice President of Clinique Global Online , Consumer Engagement & Product Marketing , through NFTs Clinique wants to demonstrate that it is continuously searching for opportunities to innovate and provide consumers with unique , engaging ways to interact with our brand . CPG brands such as Pringles and Taco Bell have also issued and sold some NFTs in the US as a way to promote their brand and products to younger audiences .
Apart from brands , we also see e-commerce platforms have been doing the same to capitalize on the trend . For instance , JD . com ’ s tech arm JD Technology announced on Oct 2021 that the company will offer free non-fungible token ( NFT ) badges to users registered for the company ’ s annual tech summit JD Discovery ( JDD ) held on Nov . 22 . In the future , JD . com expects to further explore the application of NFTs in multiple areas including copyright protection , social responsibility , art , e-contracts , e-commerce and more .
Implications for brands and retailers in Asia in relation to NFTs
We have seen brands and retailers from different domains ranging from luxury to CPG leveraging NFTs to increase sales and in attempt to create communities to better connect with consumers . With the recent foray into NFTs by Asian e-commerce platforms , we expect more brands and e-commerce platforms to follow suit in future , with shopping festivals such as the Singles Day being a massive arena for brands and retailers to shine . Brands and retailers in Asia must not miss the available opportunity laid forward by NFTs .
About the Author :
Terence Ng
Terence is Retail Analyst at Hong Kong-based retail innovation company Tofugear . Over the last eight years he has worked at multiple market research firms , including Coresight , Nielsen and Ipsos , as well as at Hong Kong retail giant AS Watson . Terence started his career as Assistant Consultant in Cimigo .
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