To succeed in the competitive world of eCommerce, it's crucial to stay ahead of the game and be proactive.
One innovative tool that has emerged recently is the Non-Fungible Token (NFT) format. They were first associated with the art and collectible movement but quickly entered online commerce.
Forward-thinking businesses use NFTs to engage customers and pad their revenue streams beyond traditional strategies. To that end, this article highlights NFT use for business. Read on to learn more about this format and how to apply it to your brand.
What Are NFTs?
An NFT is a unique digital asset that uses blockchain to represent you owning a specific item, artwork, or digital content using blockchain technology. The term non-fungible means users can’t divide the tokens or exchange them one-to-one as they would cryptocurrencies or real-world cash.
For example, two NFTs from the same artist are two distinct artworks that can have completely different values. Unlike cryptocurrencies like Bitcoin, in which one unit is identical to the other, NFTs represent unique pieces that cater to individual tastes and preferences, making each piece more exclusive.
History and use outside of business
NFTs debuted in 2014 when artist Kevin McCoy sought to make a commentary piece by using blockchain to assert ownership of a piece of digital art. However, it wasn’t until 2017, when NFT collectibles called CryptoPunks flooded the market and sold at, at the time, outrageous prices, that people began to take notice.
Beyond the art world, NFTs have found somewhat controversial applications in music, gaming, and entertainment. Personalities of all types use the format to monetize their digital works directly. Some charitable institutions have also used the NFT format to raise money.
Benefits and Challenges of Adopting NFTs
NFTs can redefine your business strategy only if you build your systems around the format. The challenges of NFTs and how you deal with them can make or break your integration.
Authenticity and customer engagement
NFTs can empower eCommerce businesses to establish authenticity online. The internet is stuffed with fakes, so having reliable proof of ownership is extremely desirable. NFTs can help tokenize your unique products, collectibles, or digital content. These registers benefit from creating a sense of scarcity and exclusivity that can drive demand wildly.
There are also immersive NFT-based experiences to consider. Businesses are using events and promotions like virtual art galleries, limited edition releases, and interactive gaming elements to engage their audiences
Technical considerations and potential hurdles
NFTs require a level of technical expertise that may not be easily accessible. Integrating them requires navigating blockchain networks, smart contracts, and wallet integrations. Scalability issues and high “gas” (cryptocurrency transaction fees) on specific blockchains can also hinder your and your customers’ experience.
Legal and copyright issues associated with NFTs
Navigating the intricate web of intellectual property and copyright law will probably be your most critical challenge. Unauthorized use of copyrighted materials is one of the most controversial and contested issues related to NFTs.
If you choose to use NFTs, you must consider the potential conflicts. You need a comprehensive legal framework to avoid legal issues and potential social backlash.
Successful NFT Use Cases in eCommerce
Some real-world success stories showcase the practical implications of integrating NFTs. Many businesses have found success using this digital asset format. Here are a few ways they did so:
Tokenizing digital assets
One prominent use case for NFTs in eCommerce is the tokenization of digital assets. Digital artist Beeple is one of the most famous artists known to use NFTs. One of his pieces recently sold for $69 million at an auction as the first digital-only piece the auction house has hosted.
Imagine an eCommerce clothing brand that specializes in limited-edition fashion items, like MSCHF, but online. Then, the company decided to tokenize some of its exclusive fashion pieces as NFTs. Customers who get these fashion tokens receive a digital representation of the clothing item and exclusive perks.
The brand adds value to its products when it tokenizes them. Through the provided benefits, they also offer more customer utility. Owners can showcase their NFT fashion tokens in virtual wardrobes or resell them in NFT marketplaces, creating a secondary market that skyrockets demand.
Gamification and loyalty programs
NFTs have also found another niche – gamification and loyalty programs. Gamification means introducing interactive video game elements that customers can play around with. An eCommerce company can introduce NFTs related to their brand and create a digital environment to apply those tokens.
The game can give customers benefits like exclusive discounts and early access to new products. Moreover, they can then trade or sell these tokens in an online marketplace.
Brands like Nike have dabbled in NFTs to reward their most loyal customers. NFTs linked to exclusive merchandise or virtual collectibles incentivize customer engagement and repeat purchases. These NFT-based loyalty programs solidify brand connections – why shop elsewhere when you can earn digital assets here?
Getting Started with NFTs
Here’s a step-by-step guide to harnessing the potential of NFTs for your eCommerce business:
1. Research and formulate strategy
Your first step is to understand your target audience and goals. This process will tell you how NFTs can enhance your current operations.
2. Select the ideal marketplace
Choose reputable NFT marketplaces like OpenSea or Rarible. Compare their fees, user base, and the availability of their customer support. Find the ideal one based on your company’s needs and goals.
3. Minting NFTs
Create digital assets that align with your NFT strategy. Consider the rarity and utility you’re going for – will these be collectibles like art pieces, or will you gamify them to make them more tradeable?
4. Marketing and promotion
Promote your NFT offerings through social media, email campaigns, and collaborations with NFT influencers.
5. Legal and copyright
Ensure legal compliance and establish clear terms of use for NFT buyers and your commissioned artists.
6. Customer education
Educate your audience on your implemented systems and how to use their brand-new NFTs. Transparency is the secret to attaining and maintaining a loyal customer base.
New Horizons through Non-Fungible Tokens
Applying NFTs to your eCommerce strategy is a forward-thinking move. It offers a fresh way to engage customers and foster loyalty. While challenges remain, careful planning and adaptation can reap rewards beyond traditional engagement and loyalty programs.
As NFTs continue to carve out their niche in the space, savvy businesses will gain the rewards of preparing for the new horizon of online commerce.
