Understanding NFTs as a Power Tool For Big Brands
Many big brands are entering the NFT (non-fungible token) world. Recently, Balmain created its own NFT ecosystem, which they call a Non Fungible Thread. The thread is an amalgamation of real and virtual experiences built on a Ripple ledger that exclusively caters to Balmain’s clients. Balmain customers can join its Non-Fungible Thread. The benefits of the thread are still under discussion. The benefits may include early access to digital and physical products, exclusive access to some products, and invitations to events like the Balmain Fashion Week. Thus, Balmain aims to provide a unique immersive experience to its customers. This is a part of its strategy to offer an omnichannel experience.
Other big brands have been making headlines too. For instance, Gucci bought an unknown amount of virtual land in The Sandbox, a decentralized blockchain universe. Similarly, Dolce & Gabbana turned heads when it sold a digital piece called Doge Crown for $1.25 million last year. This year Prada is jumping on the NFT bandwagon too and launching 100 Ethereum NFTs. Prada shoppers will get a free drop NFT by purchasing their merchandise. These developments indicate that Web 3.0 has become an essential component for luxury, high-end brands. This is because exclusivity and scarcity are the common thread that defines both luxury fashion and NFTs.
The spirit with which the luxury fashion industry is embracing Web 3.0 is almost shocking for many people. This is because the industry has not been exactly welcoming to online shopping. However, it seems that the luxury fashion industry has changed its approach to digital innovation and is heading straight towards Web 3.0. It is making progressive efforts to build its own space in the new era of Web 3.0 in a highly digitized world.
Why Are Luxury Brands Seeking Web 3.0?
Web 3.0 is a hotspot of opportunities for high-end fashion brands. For instance, the fashion publication of Condé Nast decided to put Web 3.0 as its theme. Similarly, big names like Vogue and NQ are shifting to Web 3.0. There are quite a lot of things that align between these two industries - Web 3.0 and high-end fashion. Web 3.0 offers luxury fashion a way to convert its consumers into an audience. Luxury brands are utilizing the powerful tool of NFT to strengthen their brand name. Both NFTs and fashion labels have an aura of exclusivity. For instance, Balmain’s NFTs offer fashion show invites, an opportunity to meet Olivier Rousteing, Balmain’s creative director, and one-to-one sessions with Kirk Myers, the Dogpound founder. Another interesting reason why luxury brands are embracing NFTs is to create fantasy fashion garments that cannot exist in the real world. For instance, the first NFT by Balmain was a couture design that was impossible to replicate in real life because the entire dress was burning in flames.
Couture designs are hard to make and usually require a lot of time, effort, and resources. However, very few people prefer wearing couture designs. Digital garments are easier to make and cost much less than physical garments. Designers can get a chance to express themselves more creatively while each garment can have a personalized touch too added by the creative director. Digital clothes will also be available to more people. However, exclusivity will be maintained because luxury brands cannot afford to be ubiquitous. Therefore, the digital version of garments is deliberately kept scarce and exclusive to give customers a similar luxury experience. When it comes to high-end fashion, everyone wants something unique and something luxurious. Customers should get a similar experience when they buy the NFT. Some brands combine their NFT drops with the release of their new line - something that they call - phygital.
Challenges Related to Phygital Model
One of the most significant obstacles of the phygital model is the disconnection between the time taken for the digital item to arrive in the wallet and the delivery of the physical item. For instance, the NFT will reach the buyers’ wallet immediately, but it will take 12-16 weeks to ship the physical equivalent. This is a huge discrepancy.
Even traditionally, there has been a problem with shipment time in the luxury fashion industry. Clothes were reflected in collections months before they were available in the stores. The industry has been taking steps to address this issue, especially in a world where instant shoppability experience is becoming increasingly commonplace. Designers now create smaller batches of collections throughout the year instead of relying entirely on the previous year’s collection.
Some experts think that an entirely Web 3.0 model of the luxury fashion industry is difficult to fathom. Many challenges need to be addressed. Some people are talking about a Web 2.5 - something in between. This is because luxury fashion contradicts decentralization. The reason why these brands are popular is because of the centralized persona of the designer. And everyone who works for that brand is totally invested in that kind of authority and persona.
Many web-native brands like Cult & Rain are exploring the idea of permitting their communities to design their products, but such a radical reinvention is not easy to come to high-end fashion brands. They do not have much appetite for such a radical shift. Some people believe that stellar customer service, one of the major selling points for such brands, will not be possible without some kind of centralization of authority. In a genuinely decentralized world, there are no customer help desks, support, and services.
Given the magnitude of these challenges, fashion giants are taking small steps to enter the space and try to create their presence on Web 3.0. This may not mean dedicating an entire team to developing Web 3.0 products. But they are trying to improve their customer experiences by integrating metaverse elements into their global branding strategy. Big names are taking the space seriously and striving to innovate to offer their customers the best experience.
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