The global Retail Innovation Conference & Expo has just unveiled the primary agenda for their 2022 event. Some of the more anticipated topics include social commerce and the Metaverse, of course, but there was one that stuck out for me – NFT powered communities. What’s the connection between retail and NFTs?
Firstly, let’s get everyone on the same page with regards to what an NFT is. A non-fungible token (NFT) is a piece of data stored on the blockchain that can be sold and traded. NFTs are usually connected to pieces of digital art; but photos, videos and audio are also in the mix. In a nutshell, an NFT is proof of ownership for a piece of digital collateral. The currencies that facilitate the purchase of NFTs are your usual mix of cryptocurrencies like Ethereum and Bitcoin. While NFTs might be focused on art right now, in the future when we begin buying digital real estate, NFTs will play a role there.
If that doesn’t sound complex enough, the biggest furore over NFTs is not whether we really need them, but rather their impact on the environment. NFTs (and crypto in general), use vast amounts of electricity to complete transactions. One transaction on the Ethereum platform has the same energy consumption as running a fridge for an entire month. Some of the numbers are shockingly high, and I have to wonder if Eskom’s grid is going to support an NFT economy.
What does this have to do with retail? Quite a lot it seems. Gap Inc. has just launched a series of NFTs in collaboration with artist Brandon Sines. It’s Gap merchandise – you own it, you can look at it, but it just isn’t real (the cynic in me). Jumping on the Gap site, you’ll find that almost all of them are sold out (at time of writing). Brands participating in the NFT ecosystem include Coca-Cola, McDonald’s and Gucci. It seems that creating demand for branded, limited edition digital merchandise goes a long way when it comes to your brand marketing efforts.
But why are people buying NFTs?
To sell them; use them as avatars (profile pics); and to form communities around them. That’s it. It’s just a really fun kind of stock market. There are of course the futurists and early adopters, those that want to get in on the ground floor. NFTs could become a very important part of the Metaverse – a digital mark of ownership of virtual property and possessions. There’s probably a lot you could say about the sociological and psychological impacts a digital society will have, but I am not going to get into that now.
As much as there is a temptation to jump on the NFT bandwagon and espouse them as the first step to a glorious digital future, I’m going to hang back a bit. Should you be creating an NFT for your brand as part of a marketing exercise? If you’ve got the right audience, then yes, go for it. It’s fairly easy to create one; and right now it’s so new that not only will you have some additional brand collateral/product, but you’ll also have a PRable story.
I’m still sceptical about the whole crypto thingy, but hey, I didn’t collect Pokémon cards either and look how popular that became.
*This article originally appeared on Retailing Africa
Need Assistance with Digital Strategy?
Rogerwilco’s team of strategists, business analysts and data scientists is here to help.