Fashion brands have hit upon a use for NFTs that goes beyond whimsical experiments or digital art. They are using them as a gateway to old fashioned physical products.
This week, Tiffany & Co. announced the launch of a custom jewelry program exclusively for owners of CryptoPunk NFTs that centers on what the company is calling NFTiff. To get a pendant, CryptoPunk holders must first purchase an NFTiff, which will cost them 30 ETH, or about $50,000 at current conversion rates. It can then be used during a designated window for a custom-designed pendant from Tiffany, as well as an NFT that resembles the physical item.
Also this week, Prada announced its latest Timecapsule NFT collection, which it has used to link NFTs to items like special edition shirts. Meanwhile, Dolce & Gabbana introduced its Realta Parallela collection of NFT hoodies, T-shirts and sneakers that entitle shoppers to a matching physical version.
Crypto-centric brands have gravitated toward NFTs that allow shoppers to claim tangible products as well. In July, Nike-owned RTFKT released an NFT hoodie that, in RTFKT parlance, owners it can be “spoofed” on a wearable device in the real world. And at the heart of the debut drop by 9dcc, the newly launched “domestic crypto luxury brand” by crypto influencer Gmoney, will be the NFTs that customers buy first to get the matching t-shirt.
Because NFTs provide an easy way to offer owners exclusive benefits, it’s not hard to imagine how brands could use the ability for capsule collections, early access to new releases, or custom styles. The scheme has several advantages, such as building loyalty among an engaged fan base, and because the brand only needs to produce as many items as NFTs purchased, there is less inventory risk.
The idea is gaining momentum among web3 proponents. Nic Carter, co-founder of crypto-focused venture capital firm Castle Island Ventures, promoted it as “the future of luxury goods” in a Medium post last week, saying he expects it to “accelerate the integration of NFTs”.
Carter’s post offered a detailed hypothesis on how brands could use NFTs to release physical goods to existing customers. If that person had previously purchased an NFT from the brand, their crypto wallet would be “whitelisted” for the next drop so that they have guaranteed access and don’t have to try their luck them in an online version. They buy the NFT, which can provide a digital version of the garment or an AR-enabled version of the product if they want to post on social media, and then have a window where they can claim the physical item, a pair of sneakers in the example Carter.
The physical-digital mix doesn’t end there. The sneakers arrive a few weeks later and contain an embedded NFC chip that the buyer can scan with their phone. It gives them another NFT that proves the shoes’ authenticity, but can also offer other benefits, like exclusive admission to in-person events. The next time that brand releases a limited edition physical item, it whitelists the holders of that NFT and the cycle continues.
This release model also comes with potential drawbacks. It’s essentially a pre-order program, so customers can wait weeks or months for their items to be manufactured and shipped. Tiffany expects to deliver its custom CryptoPunks pendants in early 2023.
It also adds steps to the buying process that, at least for now, can be clumsy and complicated. The user experience involved in purchasing NFTs remains full of bugs. Issues such as wait times reaching several hours plagued the July drop of NFT hoods from RTFKT, already a veteran of these releases, prompting the company to issue a public apology.
For these reasons, the model may be better suited for limited-edition or particularly desirable products that buyers will work to obtain. But for a standard shirt or a pair of jeans, they may not have to go through the steps of creating an NFT, going through the subsequent process of using it to order the item, and finally waiting a long period for them take that.
Perhaps unsurprisingly, fashion businesses at the forefront of experimenting with the idea so far include luxury and sneaker brands. Not every company can succeed with it.
A big question that brands will have to answer, however, is whether they need NFT to do this at all. Can they do the same just by having customers’ emails and a record of their purchases?
In short, maybe – but it may require more work to provide the same variety of skills. Carter addressed the question in his post as well, noting that instead of building custom capabilities from scratch, brands can rely on blockchains like Ethereum that provide an open infrastructure for anyone to use.
“And there’s a huge market for NFTs that already exists, with lots of new crypto-rich buyers ready to go, and tons of financial infrastructure already built, so it just makes sense to build this out there,” he wrote. .
Sounds like an argument Tiffany could use to explain NFTiffs and why it’s making jewelry for CryptoPunk owners.
