How NFTs and tokengating revolutionise commerce

Tokengated commerce is personalised, collaborative and permissionless. That’s what makes it scalable and a perfect fit for consumer brands. Thought leaders like Alex Danco make it their mission to make Shopify and companies that use the e-commerce giant “wallet aware”.

A couple days ago Rye announced its $14 million funding round lead by a16z. The startup is building an e-commerce API (application programming interface) which enables stores and customers to transact freely with minimal fees and use a unified checkout experience as well as a built-in rewards system on crypto rails.

In this short and spicy article we will dive into the potential of tokengated commerce, successful examples of brands leveraging it and thought experiments.

People with Wallets

I can’t help but borrow this brilliant phrase from Alex Danco. “People with wallets” are a new type of user emerging on the internet. This user owns NFTs (like community PFPs, game items or Web3 Domain names) and of course, cryptocurrencies.

This new user persona cares to own these digital tokens and makes a conscious decision to do so.

Whatever is in a person’s wallet, says a lot about them. These tokens are information that brands can tap into.

“People with wallets care to own stuff. They make a conscious decision to buy one token vs. another.”

A behavioural change

A couple months ago adidas Originals joined forces with BAYC, bought ape #8774 and created clothing in collaboration with BAYC, Punks Comic and Gmoney. Everyone who was part of these communities or held an Into the Metaverse NFT had exclusive access to this offering. This was one of the first tokengated shopping experiences pioneered by Adidas in collaboration with native Web3 communities.

Exclusive access makes users feel special. They belong to a tribe, proudly support its mission and get rewarded for doing so in the long run.

Users who own an NFT of a respective community or brand, turn from customers into members.

Members of a community are invested with time, money, reputation and emotion. This investment is reflected in the form of an NFT to the outside.

This paradigm shift enables brands to engage more deeply and build a more refined relationship with the right users. A loyal customer deserves more benefits. If brands are enabled to identify these through token ownership, rewards like exclusive access, discounts and gifts can be easily integrated.

The magic of tokengated shopping 🦄

Tokengated shopping is a perfect tool for rewarding your strongest advocates as it makes them feel special and comes with an inherent surprise effect:

There is a door. There is something special behind this door — but you can’t look behind it, unless you have the magical key (aka NFT) to unlock it.

This whole cycle makes a user feel special. If the contents behind that door are catered towards the token holders, we go full circle and have a rewarding tokengated shopping experience.

Brands 🤝 Web3 Communities

Brands like Adidas, Nike, Gucci, Tiffany´s and Puma have made the first steps to collaborate with native NFT communities. Nike launched digital sneakers, hoodies and clothing with RTFKT, a next generation luxury digital brand. While Nike has acquired RTFKT and benefits from its CloneX community and thought leadership in the space, other brands pioneer through collaboration.

NFTIFF, a project spearheaded by Alexandre Arnault, Tiffany & Co.’s VP of product, sold 250 NFT at 30ETH which guaranteed buyers the redeem of a physical rose-gold-enamel pendant of the Cryptopunk.

The collection sold out in 22 minutes and generated ~12,5$ million in revenue.

As Cryptopunks are extremely expensive — or at times not even buyable as none are listed on the market — it is the perfect target group to tap into for a high end luxury brand. Not every cryptopunk owner loves to show off but enough personalities and celebrities have joined the NFT mania and love to do exactly that. Product 🤝 Market fit.

This gets as back to a key observation:
Whatever is in a person’s wallet says a lot about them.

Tokengated Collaborations 🚪

The Web3 native streetwear brand bobbyhundreds teamed up with deadfellaz for an exclusive collection collaboration — only accessible to holders of each community.

Some would want to argue that this is also possible without NFTs.
Possible: Yes, Easy: No.

Delivering vouchers to emails and a CRM of each company is a pain. Merging these customer bases is even more difficult.

With NFTs we don’t even need to know the person but simply ask them to sign in with their wallet and we are good to go. In this case, the Web3 solution is technically superior and easier to implement.

Tokengated collaborations will see massive adoption as it’s fairly easy to implement and allows brands to introduce new members in a seamless fashion.

With tokengated shopping, brands don’t have to push their stuff onto users but pull them in through the power of collaboration and knowing what’s in their wallet.

Shopify’s GM Shop

As you read in the entree, Shopify is putting Web3 high up on its agenda. With their GM (gated merch) shop, brands can gate special products to holders of their community and customers. The general store is accessible to anyone, special products only to token holders. Doodles and other communities show us how its done.

Token gated shopping is not only an online thing, but Shopify also brings it to retail — showcased first at SXSW in collaboration with Doodles. With an RFID-embedded NFT passport, holders were able to unlock limited edition merch, non-holders couldn’t.

Seeing the leading e-commerce platform double down on NFTs and pioneering tokengated shopping brings the required technical infrastructure and trust signaling.

Key Takeaways

Tokengating enables your brand or community to tap into new user groups and target these based on what is in their wallets.

The whole shopping process comes with a magical experience:

The user holds the secret key to unlock something others can’t — this makes token holders feel special.

Do you want to jam on the potential of Web3, NFTs and tokengated commerce for your brand?

Shoot me an e-mail to malte@mtx.studio, say hi on twitter or book a coffee break chat with me!

Thanks clepp, Vicky, elliott and Andrew for your sharing your thoughts and feedback.