Why NFTs in Retail Are Changing How Business is Done

by | Jun 16, 2022 | Blog, NFT

Retail sales and NFTs are often seen as two mutually exclusive worlds due to retail being focused on sales of physical goods and NFTs belonging to the digital realm. This, however, couldn’t be further from the truth, as major retail brands are seeing NFTs in retail sales as an incredible new opportunity to drive up the sales of their products.

With the growth of new technologies and ideas based on blockchain and NFTs such as metaverses and DeFi, retail sellers are stepping up their game to take a part in these potential new markets, using them as platforms to sell their products while improving their users’ experiences and increasing their brand recognition.

Companies in industries like fashion and e-commerce such as Nike, Dolce & Gabanna,  are getting on the NFT boat with increasing success, investing large amounts of resources in getting ahead of their competitors through the metaverse, the DeFi markets, and other blockchain innovations.

What is an NFT?

The term NFT stands for non-fungible token. It refers to any digital asset whose property and authenticity are verified using blockchain technology

A blockchain is a special type of digital ledger which is recorded and kept across multiple devices known as nodes. Because blockchain ledgers are distributed across multiple nodes, they cannot be modified by a single third party. This technology allows for the creation of financial systems that don’t require central administrators.

Blockchains are the base of decentralized digital currencies known as cryptocurrencies, the most popular of which include Bitcoin and Ethereum. Cryptocurrencies are fungible tokens because their value doesn’t vary from one token to the other. In other words, one bitcoin will always be worth as much as another bitcoin. 

Non-fungible tokens are unique, irreplaceable assets registered in a blockchain, and unlike fungible tokens, an NFT is never worth exactly the same as another one, because it is unique.

Uses for NFTs in Retail

Retail sellers are gaining many benefits from including NFTs as a part of their business strategy. These are some of the ways in which they could become a game-changer in the near future. 

Sales Boosting

Tokenizing physical assets can be a way of making the product more attractive simply by the sheer novelty that getting an NFT along with the item can represent for potential customers, particularly for those who are interested in the blockchain space.

NFTs coined along with retail products can also make sold items more attractive by using smart contracts to give those NFTs certain functionalities.

For instance, NFTs could be used to provide things like frequent customer bonuses or opportunities for special sales, which could be then traded and transferred between customers.

Reducing Delivery Times and Costs 

Novelty is but the smallest of the benefits that come with tokenization of retail sales. Representing the ownership of an item as an NFT can reduce the need for intermediation in overhead retail sales, as well as the costs and delivery times by avoiding platforms like Amazon.

This is possible because tokenization allows transitions around an item to be registered in a distributed ledger within decentralized platforms, allowing for sales to be made on a peer-to-peer basis.

Brand Recognition

Because NFTs are a new technology getting attention from the general public, they represent a great opportunity for marketing. 

One of the most prominent recent examples of this was how they were shown at this year’s Super Bowl, representing a massive advertising success for multiple companies. Whenever a company launches an NFT or an NFT collection it is inevitable that it will garner attention. 

Even if a part of this attention comes from NFT critics, curiosity will inevitably drive people to wish to find out what the NFT is, what it does, and how the brand will employ it, leading them to wish to learn more about the brand itself.

NFT launches and drops also serve as an opportunity to create partnerships. Many well-renowned companies including Nike, Adidas, Shopify, and even Visa have all collaborated with creative companies and artists from the NFT space like Beeple, Doodles, and Superplastic.

Community Building

NFTs are all about community. Perhaps the single most important factor for an NFT’s success is being able to create a community around it. Communities are the ones who grant an NFT its value and develop a sense of identity around being able to own it.

Companies can take advantage of this fact to create a community around their brands, through NFT drops, sales, and inclusions with their products, which drive people to develop a stronger sense of identity and community around those products.

Furthermore, people in the NFT community are incredibly committed to the blockchain space and everything that it represents. The idea of decentralization carries with it the vision of a more democratic digital space. Companies giving out and including NFTs as part of their business showcase a commitment to this ideal. 

Capturing the New Metaverse Market

The idea of a broad metaverse experience that represents the future of digital social interaction still has a way to go until it’s fully realized, however, it could represent a revolution in all aspects of businesses, from advertising to direct selling.

Top global brands realize this and understand the role that NFTs will play in this new fully-fledged metaverse experience. Like social media today, the metaverse will be the place where people create an online presence and persona, and NFTs will be the element that gives them ownership of that persona.

Retail sellers can use this new concept to promote their products in various ways, for example by tying their products, whether it’s physical clothes, accessories, or other items, to NFT items that manifest themselves in the metaverse, allowing customers to fully customize their online persona as a parallel to their physical selves. 

The Future NFT in Retail Businesses

There is no doubt that blockchain technologies are leading us to a creative revolution, which will not just manifest itself in new decentralized markets with faster, safer, and more transparent transactions, but also in new incentives to create, and thus, new business models.

Retail sellers need to adapt to this new reality by understanding the potential that NFTs have to improve delivery processes, develop new marketing strategies, build online communities and create brand recognition.

In the future, NFTs will be at the core of any retail business, just as social media, coupled with intermediary retail sales platforms like Amazon and Ali Baba, need to be a central part of any retail business today.

NFTs are sure to become a game-changer in the landscape of sales, and their possibilities for creating business opportunities are just being explored at this moment. The first companies who take advantage of these possibilities are going to be the winners in the new world of Web 3.0, the metaverse, and decentralized finances.