Naturally, companies began to wonder how they could capitalize on such a fresh buzzword, and since then, we have begun to see their ideation come to life.
According to this article by CNBC, Walmart is entering the metaverse, Forbes thinks NFTs could become the Luxury market's “new frontier”, and physical stores are beginning to merge NFTs with their tangible product lines.
But is there more to NFTs than just selling a product or token? Entrepreneur, internet personality, and author, Gary Vaynerchuck, created Vee Friends, an NFT collection that seeks to build a community. The purchase of one of these VeeFriends NFTs gets the buyer access to VeeCon, a multi-day event around “business, marketing, ideas, creativity, entrepreneurship, innovation, competition, and of course, fun.
” As our own Mark Vornwald, Sales, points out, when you’re buying a VeeFriends token, “You’re not really buying digital art, you're buying a membership to the Gary Vaynerchuck’s inner circle.”
If retailers are already dipping their toes into the NFT pool, then how can they keep the innovation going? What’s the next step? We think it could very well be NFT-based loyalty programs.
Stephen Trott, Designer, recently came from an eCommerce background. He mentioned that he sees a lot of value around NFTs in terms of loyalty programs. Stephen says that if retailers could find a way to create a virtual currency using NFTs, it could have a variety of uses.
“Current retail discounts have to be time-sensitive for security, but if discounts are tokenized on the blockchain, then there's no reason for that time sensitivity, they can just exist in perpetuity,”
Stephen says.
“Offers can then be reused or recycled. [Retailers] can mint ‘x’ amount of 10% discount codes, for example, distribute them in things like loot boxes and those offers can be traded against purchases and then re-distributed.”
Stephen continued, expanding on the idea of an NFT-based loyalty program and what it could mean down the road.
“[In the future] customers could cash out these loyalty programs, or they could invest into it. Sneakers are a great example of an exclusive and high-demand product where the price, especially on the resale market, is dictated by the demand. A pair of $100 trainers can end up selling for $1000. So the more high-demand products the retailer has, the more valuable the loyalty program becomes.”
Our Senior Director of Product Management, Robbie Sykes, thinks it’s important to keep in mind why people are interested in collecting these retail items in the first place.
“People are treating their collections as assets, like financial assets. People are buying limited edition shoes because they expect that the value of that shoe over time is going to increase. There are obviously people who are flipping them quickly and making a quick couple hundred bucks, but there's another whole part of this where it is a long-term investment. Just like people invest in art collections.”
Robbie continues, saying
"customers who would be interested in purchasing NFTs from retailers are the same customers who hold a collector’s mentality. “I'm talking about NFTs as pieces of art, treating them as assets and building those collections. It’s a big part of this NFT mindset and I think we have to remember that when we're talking about how this technology might be applied.”
So, we have customers who are interested in NFTs as a financial asset, joining loyalty programs that could help them to add to their collection. But where might that go from there?
We think that these programs can then be expanded into larger marketplaces, where customers can continue to invest their rewards (points, cash, or coupons) into a larger ecosystem.
Stephen Trott says that...
“If the customer [was rewarded] a $0.10 coupon, they could collect those together over a period of time and make a dollar, $10, $100, and then trade them in collectively. So, I think the opportunity for promotions and discounts as well as a loyalty ecosystem could be really game-changing.”
And it seems that Stephen isn’t the only one thinking along these lines. Recently, Urban Outfitters released 500 limited edition tokens. In this article by PRNewswire, the tokens are...
“not only collectible works of art, but these NFTs also act as "utility tokens" that will unlock prizes and rewards for select NFT ticket holders; to be announced weekly over the course of the next ten weeks.”
Robbie Sykes mentions that he’s interested in what open markets will look like when both digital and physical products have their authenticity and scarcity protected. How will those markets impact purchasing behaviors like pre-ordering, and how can the customers' opportunities to purchase limited goods be their own commodity.
The retail NFT market is just getting started. It’s important to stay informed and creative when thinking about the ways that this technology could be utilized. If you’d like to talk to our experts about creating NFTs for your company, contact us, we’d love to chat.
