The connection between NFTs and the fashion industry
NFTs are more than a trend. According to a report by Verified Market Research (VMR), the NFT market is currently valued at over $11.3 billion and is projected to grow to $231 billion by 2030.
Although NFTs have spurred higher levels of customer engagement, loyalty, and community in lots of industries such as music, food & beverage, and sport, the fashion sector is one where NFTs have the most promise. In this Rikkei Finance article, we’ll discuss the connection between NFTs and the fashion industry.
How do NFTs impact the fashion industry?
NFTs have been making waves in the fashion industry since 2020. When the Covid-19 outbreak caused a number of tragedies, using NFTs was seen as a reliable approach to connecting with target customers and developing a devoted fan base of buyers. That’s why according to data from Vogue Business, one in five customers of luxury clothing view NFTs as exciting for the sector.
Brands are also paying attention since a total of 17% of the brands included in the Vogue Business Index have already collaborated in some way with NFTs. For example, Burberry released their NFT collection in Mythical Games’ blockchain game Blankos Block Party, and Dolce & Gabbana established a record price for a nine-piece digital NFT collection at around $6 million.
This is only the tip of the iceberg. The NFT gold rush prompted a number of fashion companies to look into the possibility of digital collectibles and get ready for the next phase of fashion ecommerce. Digital collectibles give fashion brands a new level of exclusivity and perhaps a different source of income. Additionally, NFTs can be the nucleus of a robust community, which will be essential for long-term success in the upcoming ten years.
Let’s look at the potential benefits of NFTs these brands have discovered.
The benefits of NFTs
Create a community
One of the main factors creating a successful fashion brand is a strong community. According to 2022 Future of Commerce research, 40% of brands want to increase customer interaction with them in the year and beyond.
An NFT project with a strong community can help not only supporters interact with one another but also customers connect with the brand. The ability to own digital assets from a particular fashion brand incentivizes customers to refer others, just like genuine brand ambassadors.
Create specialized, exclusive experiences
Exclusiveness stimulates desire. Consumers’ need for customized experiences from their preferred brands is rising. According to Epsilon, when brands offer personalized experiences, 80% of customers are more likely to make a purchase. Thus, the creation of an NFT collection with members-only advantages helps improve customer relationships.
Customers can utilize NFTs to adopt your brand as their own, and they can proudly show this association on social media. Due to ownership, customers are encouraged to keep coming back, which raises the customer’s lifetime value. The streetwear retailer The Hundreds is a great example because it gives customers access to the Adam Bomb Squad NFT line.
Create customized loyalty programs
In the future of commerce, brands may benefit from competitive advantages thanks to customized loyalty programs leveraging NFTs. Fashion brands can offer their clients tokens for a variety of benefits, including discounts, early access to new merchandise, or entrance to secret communities and events.
For instance, when Collezione Genesi NFT collection by Dolce & Gabbana was unveiled, NFT holders might receive two years of access to Dolce & Gabbana Alta Moda, Alta Sartoria, and Alta Gioielleria couture events in Italy, in addition to a physical copy of Dress from a Dream that is specifically tailored to the asset owner with an original signed sketch. It means that the NFT has successfully encouraged the customer to interact with the brand for two years.
Trade in digital assets
When used effectively, NFTs can give fashion brands access to a fresh revenue stream apart from the one from their physical products. In this sense, NFTs are seen as a type of digital stepping stone into the metaverse and the future of customer interactions.
By establishing Nikeland in association with the online gaming platform Roblox, Nike made its debut on the NFT market. Customers can pick from a range of pre-made games at Nikeland or make their own. Their games can also include real-world motions like lengthy hops and sprints into the game by using accelerometers in mobile devices. For a more realistic experience, users can take a look at the Nikeland showroom and outfit their avatars with a selection of shoes, clothes, and accessories.
Increase awareness for a new product launch
One way marketers might utilize NFTs to increase value and assess consumer interest is to conduct a pre-sale restricted drop of actual products connected to particular NFTs.
For instance, sneaker company Flowers for Society offered its initial product drop through pre-order, tying each item to an NFT. All sneaker buyers earned entry to the Flowers for Society metaverse community and gained special access to upcoming sneaker releases, limited editions, and collaborations of the brand.
Also, Adidas collaborated with NFT pioneers GMoney, PUNKS Comic, and Bored Ape Yacht Club to release its inaugural NFT collection, Into the Metaverse. According to Cryptobriefing, the drop of 30,000 NFTs, priced at 0.2 ETH each ($800), sold out almost instantly, bringing in approximately $23 million (6,000 ETH) in revenue.
To conclude, NFTs have been the talk of the fashion town for quite some time due to their considerable impacts. Everything might still be in the infant stage but NFTs are believed to create major shifts in the fashion industry.
Disclaimer: The information herein is for educational purposes only and should not be considered financial, investment, or trading advice. Please conduct your own research and due diligence before making investment decisions. You understand that you are using the Information provided at your own risk.