Blockchains and the Future of Fashion
By: Karen Shen, Collab+Currency
Today, digital fashion is best understood as virtual clothes and accessories for A/R, V/R, and other immersive environments. These objects might resemble the pieces in your wardrobe, or they might be boundary-pushing fashion designs that would be infeasible in the physical world — but thrive within the broader design space of the internet.
In short, wearables for the metaverse.
In my view, what receives far less attention is the nascent but growing web3 fashion tech stack and the very real implications blockchains can have as a medium for unlocking new business models in the fashion industry.
The traditional fashion industry comprises all the functions that go into making and selling fashion items: designing, manufacturing, tailoring, modeling, branding, marketing, and selling objects of fashion.
And it’s no small business.
In 2022, the global apparel market generated $1.53 trillion in revenue and is expected to grow to $1.94 trillion by 2027. The industry has helped create some of the wealthiest individuals in the world such as Bernard Arnault of LVMH and Amancio Ortego of Zara.
There have been many moments in fashion industry history where the application of new mediums, tools, and technologies expanded the industry and opened up entirely new revenue models.
Blockchains offer fashion’s next big unlock.
Over the course of this article, I’ll trace the history of fashion to the ways in which web3 will enable new commercialization opportunities for existing processes, and the novel business models that will arise as a result of this technology’s intersection with the fashion space. Let’s dive in.
Historical Moments of the Modern Fashion Industry
The invention of the Fashion Show (mid-1800s)
Prior to the concept of models and fashion shows, new clothes were presented and adorned on mannequins for buyers to admire, discern, and evaluate. They were never showcased on real humans.
In 1860, the English designer Charles Frederick Worth changed how consumers would interact with new fashion pieces. Worth was the first to hire demoiselles de magasins (translated as “young shop ladies”) to wear his couture garments. And instead of meeting his buyers in their homes, he would offer prospective buyers the experience of viewing his haute couture garments on real people inside his store.
In 1901, Lady Duff Gordon hosted what could be deemed the very first fashion show as we know it today. Gordon added staging, music, and choreography — upgrading the in-person viewing experience to an interactive live performance.
These developments not only shifted the relationship between creator and consumer from a one-to-one to a one-to-many model but also opened up a creative new surface area for the business of fashion.
Over time, a number of revenue-generating opportunities were created around these developments. Fashion infrastructure began to originate solely in service to the needs of live fashion, including event logistics, marketing, staging, and a new category of modeling called the “catwalk” model.
This marked the beginning of the fashion show.
Today, there’s a fashion week hosted in most major cities every year (see a list of shows here). A single New York Fashion Week (NYFW) show costs anywhere between $125k — $300k+. In 2020, NYFW alone generated $887 million across all its live fashion events. For comparison, the 2020 Super Bowl generated roughly half this amount.
What started as a seemingly minor change in fashion’s display format eventually led to the growth of a valuable new vertical.
The E-Commerce Era (2000s)
Just as the transition from mannequin to model unlocked the fashion show industry, the internet unlocked the online shopping experience and paved the way for a host of new revenue streams that rippled across the fashion world — targeted advertising, segmentation profiling, segmentation analytics, web UX/UI, email marketing, and more.
Brands could more granularly understand and commercialize their customers using tools like Google Analytics and MailChimp. Agencies were hired to refactor SEO and social media efforts or create frictionless online shopping experiences.
Like the transition from mannequin to human, it’s important to note that it was not the internet as a standalone technology that unlocked new value for the business of fashion. Instead, it was the optimized application of this tool decades later that would go on to create significant new revenue unlocks across the fashion stack.
Fashion Meets Crypto
Though early in its end-state application, I see many of these same similarities at the intersection of fashion and blockchain technology.
For most of history, humans could not store value in digital objects.
Today, leveraging trust-minimized ledgers as a recording format, blockchain-based objects like digital fashion for A/R, V/R, and other immersive environments can enjoy a novel set of features and concepts that weren’t previously available.
This includes the following feature-set upgrades:
Think of these features as a new blank canvas with exciting new properties that fashion firms and brands can design new products on top of.
Over the past two years, many of the crypto digital fashion projects we see today have been experimenting with this new medium. They’ve been building the infrastructure and tools required to allow digital fashion objects to exist and be utilized in meaningful ways.
What we have today is the beginning of a new fashion tech stack — one I believe will be optimized over the coming years, unlocking billions of dollars in net new revenue over the coming decades.
The Web3 Fashion Tech Stack
The tech stack consists of a range of projects building solutions to different problems on each layer–from base layers to immersive environments, to marketplaces, to crypto-native fashion products and brands.
Just as the emergence of fashion shows and e-commerce transformed fashion, the web3 fashion stack will unlock new applications for consumers to experience fashion.
Let’s review some of the most exciting opportunities.
The Opportunity
In the present day, most fashion is enjoyed purely in the physical world.
However, recent reports indicate that this is quickly changing. Three in every four Gen-Z respondents have spent money on digital fashion, and two in every five believe expressing themselves with clothing and accessories digitally has become more important than expressing themselves in the physical world.
A seismic shift in consumer fashion is underway.
Today, this digital world of fashion primarily exists within the siloed walls of a video game, A/R filters on Snapchat and Instagram, or on other custodial platforms. The gaming skins industry is estimated to be a $50 billion dollar industry. Roblox alone had over 157 million users acquire free or paid fashion items. One in four of these paying customers spent between $20 to over $100 on a single item.
Given that these fashion objects are written to private databases owned by the brands and companies that create these goods, consumers don’t actually own the digital goods they purchase — and they certainly can’t activate them across other platforms.
The full value proposition of digital fashion is currently stunted as a result of the existing infrastructure that supports it.
Blockchains, and the public database structure they enjoy, change this.
Leveraging the new web3 tech stack, consumers can now experience a purely digital fashion journey — from start to finish:
Own Digital Objects. Buy, sell, and own digital fashion items from brands and marketplaces like Tribute Brand, 9dcc, Draup, Artisant, DressX, and UNXD. On Tribute Brand, for example, your fashion identity can extend beyond digital fashion wearables to include a sovereign-owned generative logo, an immersive environment wearable including A/R, and an NFC-powered physical garment.
Modify Avatar Identities. Rig and wear your digital wearables on interoperable avatars powered by Ready Player Me, a standard that is supported by over 4000+ (and growing) immersive environments and social applications.
Immersive Environments. Interact in real-time online spaces across various immersive social environments like Monaverse and Otherside, or check in to physical locations in the real world using NFC-powered technology standards created and powered by leading technology firm IYK.
As the technology optimizes and users onboard into these new fashion experiences over the coming decades, new trends and outcomes are likely to be achieved:
Increased Demand For 3D Fashion Talent. According to Roblox, 58% of Gen Z respondents consider digital fashion designers to be just as impressive or more impressive than physical fashion designers.
Rise in Digital-Only Brands. Digital-only brands will incur fewer operating expenses since few will require physical factories, tailors, and manufacturers. The economic barrier of entry will be lower, encouraging more new entrants to join.
New Consumer Insights. Since the full lifecycle of a digital fashion object will exist on-chain and dark data from physical fashion objects can be brought on-chain via embedded NFC chips, new customer insights can be drawn. Analytics can be tracked from item purchase to where and how frequently they wear it in the physical and digital world, and if they ever resell it. Brands can analyze the garment’s IRL interactions to improve a customer’s post-purchase experience. Insights can also be drawn from the communities that form around each garment. What happens when you can see all the physical IRL connections your item makes?
New Customer Interactions. Brands can gamify the IRL experience by adding utility to physical fashion objects through programmable NFC chips. For example, people may be incentivized to wear digitally-enabled fashion items to unlock new benefits. A reputation system could form based on the combination of your on-chain and off-chain activities within that particular ecosystem.
Or, if a group of people at an event (i.e. concert, sporting event, or fashion show) were to wear their digitally-enabled physical garments, the brand may activate a private messaging chat or immersive A/R game experience via the NFC chip technology.
New Marketing Channels. Instead of paying big $$ for sponsorships with celebrities, anyone can become a paid influencer for converting real-life interactions into sales leads.
This immersive, interactive, end-to-end digital fashion lifecycle can be best demonstrated by the ambition of 9dcc, a crypto-native luxury fashion and lifestyle brand.
9dcc, as one of the early leading digital fashion brands, aims to create a fully networked product experience by leveraging this new web3 fashion tech stack:
(1) 9dcc T-Shirts are first minted as physically-backed NFTs. Then, users can claim the NFT for a T-Shirt. The entire process–from minting to redeeming–is handled by 4K, a decentralized solution for physically-backed NFTs.
(2) Each T-Shirt has IYK’s NFC chips stitched into the hem. The chip can be scanned by mobile devices to receive an NFT. The NFT verifies ownership and authenticity. It also enables a record of provenance and allows the embedding of utility from other web3 applications like POAP.
(3) 9dcc fashion physicals can be worn to interact intelligently with the owner’s community. The owner can get their friends, family, or strangers to tap on the T-Shirt’s hem to receive a custom POAP NFT. The POAP is a representation of the interaction between the recipient and the owner. It also becomes one connection of many within the owner’s personal on-chain network.
(4) In addition to these unique physical experiences, 9dcc also aims to utilize each digital wearable across all immersive environments. Powered by the Ready Player Me standard, 9dcc digital fashion objects will be compatible with thousands of immersive digital experiences including Monaverse, Internet Game, and many others.
The mannequin-to-model transition kickstarted the fashion show industry.
The internet kickstarted the e-commerce industry.
Blockchains will kickstart the digital fashion industry.
The new web3 fashion tech stack will present business opportunities to the current fashion space in ways immeasurable today.
The surface area is vast, and I’m excited about what’s to come.
If you’re building, writing, or investing in the digital fashion x web3 space reach out to me on Twitter — my DM’s are open!
So thankful to everyone who helped shaped my thoughts on this piece including Derek, Steve, Amanda, Arad, Zack, Greg, and Ronan from my Collab+Currency team & other voices I admire in the space including Gala Marija Vrbanic, Dani Loftus, Gmoney, Gaby Goldberg, Priyanka Desai, Zoe Seccull, and Jack Magnusson.
*Disclosure / Disclaimer*
The above material and content is is for educational purposes only and should not be considered to be a recommendation to invest in an individual digital asset or security. Investing in digital assets, NFTs or cryptocurrency (collectively “digital assets”) is highly speculative and volatile, and digital assets are only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns.
