Metaverse and its potential for retail and consumer brands (Part-2)
Many brands are exploring interest in Metaverse and trying to get an understanding of the space. I believe investing and dipping toes is one of the most important decisions you will make as a brand to get ahead in 2022 before it becomes a rage in the next 1–2 years. I share my views what Metaverse and NFTs can do for consumer brands, including use cases that can be tried right away.
You can refer to Part-1 here.
So here are the first 3 metaverse use cases:
- NFTs as part of branding strategy: Many major brands have started experimenting with NFTs for creating media attention and publicity. The response is overwhelming. Here are a few examples:
- Coca-cola auctioned as a single “loot box” via the OpenSea marketplace, the four multi-sensory, friendship-inspired NFTs put a virtual-world spin on iconic Coca-Cola merchandise. They raised 535k for charity.
- Adidas and Prada collaborated to create an NFT collection that was sold out almost immediately generating 22m+
- Nike is moving even further by acquiring NFT collection studio RTFKT. This indicates their long-term view and bets in this market.
The velocity of investments here will be a function of crypto / NFT adoption which today is moving at a brisk pace. Around 28.6 million wallets traded NFTs in 2021, up from some 545,000 in 2020. If this is any indication, we should see huge interest coming in 2022 and more brands jumping to design and market NFTs to create their identity in the metaverse.
2. Proof of ownership: In today’s world, the role of any digital content produced by brands is used for marketing and customer experience purposes that support the core product or service. But NFTs give a tool and metaverse a platform where digital content can be used in business operations such as proving ownership of physical items. Digital ownership can be monetized on its own.
- A digital asset can be purchased separately from a physical asset on an NFT marketplace such as opensea. Not only can it be purchased but traded peer to peer as secondary sales. Brands can continue to monetize secondary sales as royalty if they choose to do so. Initial experiments by Adidas, Dolce & Gabbana are successful when they designed branded NFTs for digital use only. The utility of these digital assets in the metaverse is currently limited to collector’s items and a couple of crypto gaming platforms where NFTs can be used as part of digital avatars. However Potential is infinite as Metaverse gets developed further.
- Ownership of physical items or services can be tied with digital assets. An NFT can serve as IOU or a receipt of purchase. For example, high-value luxury items such as jewelry or handbag from Louis Vuitton that have a secondary sale value can provide NFTs as an ownership receipt. It will serve as a utility to prevent fakes and better value generation for real owners. Another ownership example can be tickets to concerts or events where NFTs can serve as passes as well as a fan art collection.
3. NextGen Commerce: Adidas NFTs grant access to physical items to its holders as well. In a way, the customer has purchased both digital and physical items in a single transaction. What if this is the beginning of next-generation web3 eCommerce. Amazon of web3 will give you an option to buy NFTs as a way to buy physical items. Not every NFT will find its use in Metaverse such as apparel but even in those cases, it can work as a receipt and more so an anonymous purchase if you don’t need to share data with the brands. A good marketplace will make it easy for traditional web2 brands to come on board into web3 by offering third-party orders in fiat currencies. It can be a low-risk option to come into metaverse trading without dealing with technology or financial volatility. The first such attempt I find is in this space is Stockx.
Below are 3 more use cases that I will cover in my next and final write-up for this series.
4. Crypto payments
5. Build Metaverse store
6. Personalization and analytics
