How is NFT revolutionizing the Retail industry?

Non-fungible tokens, or NFTs, are the newest buzz in the art market. Despite the fact that they've been there since 2014, the popularity of NFTs skyrocketed in 2021, with trading reaching $10.7 billion in the 3rd quarter of that year. Their success can be attributed to the fact that they are both elite and becoming increasingly inexpensive.

 

Non-fungible tokens, or NFTs, are exploding right now. They're pushing up prices and attracting the attention of CEOs, with mentions of "NFT" or "non-fungible token" on conference calls skyrocketing in recent months. 

 

They might provide a significant potential for businesses and merchants to capitalize on the expansion of virtual worlds and engage with potential customers. The advent of NFTs prompts the question, "What importance do physical retail firms play in all of this?" Let’s check it out.

 

Also Read | Top NFT Wallets

 

 

What is an NFT?

 

An NFT is a non-fungible token. When things seem fungible, they may be replaced or swapped for a similar object. For example, a pair of jeans manufactured in large quantities would be deemed fungible since each pair of jeans is replaceable with one another because they are virtually similar. 

 

Meanwhile, non-fungible refers to the item's inability to be replaced or replicated. A well-known work of art, for example, is non-fungible since there is only one original. An NFT is another technology platform that lives on a blockchain and serves as a certification of ownership. 

 

When someone buys an NFT, they usually do it using cryptocurrency. Because the digital asset is non-fungible, it is non-replaceable and one-of-a-kind, which adds legitimacy to the idea that you must be the only one who owns it. Furthermore, because the blockchain is publicly accessible, it contributes to its credibility.

 

Also Read | Top 10 NFT Platforms

 

Types of NFTs

---

Types of NFTs

---

In essence, everything digital may be an NFT. This offers a lot of freedom for creativity and a wide range of assets. Twitter CEO Jack Dorsey is a prominent example of an NFT, selling his first tweet as an NFT for slightly over $2.9 million. The person who acquired the NFT now owns that one-of-a-kind digital object (the tweet).

 

Because it is one-of-a-kind, anything regarded as a "digital collectable" is an NFT. Among the more frequent types of NFTs are:

 

• Trading cards for artwork

• Sporting moments to remember

• Names of domains

• Gameplay items

• GIFs/memes

 

However the large percentage of NFTs will just not wreck your bank (depending on what you are buying), there have been cases when millions of dollars have been spent on digital assets. For example, in March 2021, a digital artist named Beeple sold a compilation of his art as an NFT for $69.3 million.

 

 

NFT for Retailers

 

NFTs generated approximately $10.67 billion in trading volume in the third quarter of this year, a 704% rise from the previous quarter and a 38,060% growth each year. From these figures alone, it is clear that the popularity of NFTs is increasing.

 

From the perspective of an outsider merchant, NFTs may appear to be a particularly individualised manner of purchasing, in contrast to shopping at a physical firm. For example, when an independent seller sells an NFT, it is a separate digital asset (it is non-fungible), yet when a huge retailer sells an item in a shop or online, it is not often particularly different since it lacks any original value (it is fungible).

 

Tangible items are becoming increasingly popular among both the general public and companies. As more firms manufacture and sell NFTs, more excitement and brand interest are generated, while the purchasing and selling of NFTs becomes more popular.

 

There is a wholly digital environment out there, where virtual real estate is thriving and purchasing fashionable clothing as an avatar is becoming super trendy.

 

As technology progresses and we edge closer to entering richer virtual worlds, companies who aren't participating in some manner may miss out on such a fantastic chance to contact clients in new and creative ways.

 

Retailers Have a New Market in NFTs

 

The NFT business has evolved from a specialised sector for technology and crypto aficionados to something a little more accessible to the general public. At the same time, the approximate market size and the total value of NFTs climbed during the course of 2021.

 

Collector-sized transactions of $10,000 to $100,000 accounted for 19% of all NFT transactions by October 2021, up from 6% in March 2021. This indicates that NFT assets are fast increasing in value and that collectors and customers are not turned off by exorbitant price tags.

 

Furthermore, the market for NFTs for merchants is already established. Millennials are the most likely demographic to buy NFTs, with 42 per cent of millennials responding to one poll claiming they do. They are followed by Generation Xers, with 37% claiming to be collectors.

 

Also Read | Everything About CryptoPunk NFT

 

 

Practical Use Case of NFTs for Brands and Retailers

 

NFTs are about more than simply intangible products. As technology evolves, merchants may be able to tokenize real items and services in order to decrease online overhead costs and arbitration risks by avoiding middlemen like Amazon or Alibaba.

 

A fashion business, for example, might tokenize ownership of a real swimsuit and sell this token – ownership of the swimsuit — to any customer or reseller.

 

To safeguard both participants and limit counterparty risk, the money would be escrowed. The buyer might then exchange the token for the bikini or resell it. Startups like Boson Protocol and Splyt Core are already working on NFT-based decentralised commerce infrastructure, citing additional features like physical good verification.

 

Retailers Taking Advantages of NFTs

 

The Fabricant, a clothing house, was the first to embrace NFTs for merchants in 2019 when it sold a digital garment for £7,500. Since then, many shops have turned to NFTs to increase brand recognition or explore new revenue streams. According to the Vogue Business Index, 17% of fashion businesses have already collaborated with non-traditional retailers.

 

Adidas made its first introduction to the world of visual art past year. Their initial collections, Into the Metaverse, included 30,000 NFTs, each of which provides the buyer with unique access to actual products that will be accessible in the future. 

 

The NFTs cleared out in hours, and Adidas made almost $22 million in sales. The shop has subsequently said that they want to release additional NFTs in the future, and given the popularity of their initial collection, future profit is nearly inevitable.

 

Also Read | MekaVerse Etherium NFT

 

Time to Get Evolved

 

Despite the enthusiasm around NFTs, it is vital to highlight that for an NFT to be effective, it must have a perceived social value. Remembering Jack Dorsey's initial tweet, owning the tweet comes with a certain sense of "hype." Of course, not everyone will believe it's worth $2.9 million to own a tweet, but there's certainly a market for it.

 

Retailers must decide if there is a present market because of their own non-fungible merchandise. There are other barriers to NFTs, such as the claim that it requires a lot of power to store blockchain data, which makes many people apprehensive to enter a market that still has a lot of work to do.

 

In any case, NFTs are something to keep an eye on as their popularity grows, especially among companies. The curiosity amongst digital customers exists; it is simply a matter of who will take the plunge into this comparatively recent virtual realm of consumer shopping.

 

Also Read | NFT Games

 

 

Are NFTs the Retail Industry's Future?

 

According to McKinsey's State of Fashion 2022 research, NFTs are anticipated to become commonplace for merchants this year. With the market's quick expansion and the marketing and profit prospects offered by the selling of virtual currencies, it is apparent that they will become a mainstay in the future of retail. 

 

In fact, the luxury NFT market is predicted to reach $56 billion by 2030, and while luxury NFTs will continue to account for a tiny fraction of the entire industry, this retail innovation will experience increased competition as a result of the metaverse.