The ever-evolving world of ecommerce has drastically shifted in recent years, and NFTs are the latest innovation to shake things up. From upgraded loyalty programmes to new ways to fund start-ups, NFTs have the potential to revolutionise ecommerce.
Here, we’ve compiled 5 innovative NFT use cases for ecommerce to inspire your venture into the Web3 space. Read on to discover how NFTs can help you drive loyalty, retention and revenue.
This blog features insights from Roger Beaman, Co-Founder and CEO of Novel, and Gary Carruthers, Co-Founder and Managing Director of Underwaterpistol.
What is an NFT?
Unless you’ve been living under a rock, you’ve probably already heard something about NFTs, even if it’s just that some people like to spend LOTS of money on them. But, there’s a lot more to NFTs than that, and they can be a lot more useful than a random display of wealth online.
Let’s start with the basics. What is an NFT?
An NFT (non-fungible token) is a unique digital asset that is recorded on a blockchain. Unlike traditional currency (and cryptocurrency), an NFT’s value comes from what it represents – whether that be rare art, exclusive collectibles, in-game items, or something else entirely. NFTs cannot be replicated or exchanged for other tokens of equal value. They are truly unique, which is what presents exciting opportunities for industries like ecommerce.
How can NFTs impact the ecommerce industry?
NFTs have the potential to transform certain elements of the ecommerce industry by providing a new way to buy, sell and trade digital goods. They can help establish ownership and authenticity, enable new forms of brand engagement and open up opportunities for more personalised marketing that benefits both the user and the brand.
Some forward-thinking businesses have been quick to embrace these new technologies to stand out in a competitive marketplace. From Coca Cola to Norwegian Cruise Line, NFTs can impact the industry across a wide range of different verticals.
5 innovative NFT use cases for ecommerce
Let’s jump into the specific (and varied) ways NFTs can benefit online retail brands. These 5 NFT use cases for ecommerce will get you feeling inspired.
1. Token-gated commerce - using NFTs to access exclusive content or products
The idea of restricting access to certain products and experiences to those who hold some sort of status symbol is nothing new. But with the advent of NFTs, it’s entering a new era where businesses and shoppers get to explore never-seen-before use cases.
With token-gated commerce, customers can purchase (or earn) NFTs that unlock access to exclusive products, services, content and experiences. The unique and limited nature of NFTs creates scarcity, which can drive demand and increase the value of the token, and the goods or services it grants access to.
Token-gating is becoming increasingly popular with both small and large companies as a way to gate-keep content and drive loyalty amongst their customers.
For example, American water brand Liquid Death launched an NFT collection of 6,666 “murder head” illustrations that grant owners access to unique experiences, in-person events, exclusive merch and more. This has helped the brand build a community of die-hard fans - the Murder Head Death Club - that drives loyalty, retention and revenue, while also providing customers with a rewarding experience.
An added benefit is that the Murder Head Death Club opens up a dialogue between the brand and their customers, giving Liquid Death insights that help them better understand their audience and market their products. Token-gated commerce is an exciting NFT use case that could help other brands do the same.
2. Upgraded loyalty programmes - using NFTs to reward customers
Given the current economic climate and consistently high customer acquisition costs (CACs), customer retention is at the top of many ecommerce brands’ agendas. NFTs present a range of opportunities to enhance retention strategies by forming the basis of upgraded loyalty programmes.
Custom NFTs can be used as rewards for loyalty, offering an exciting alternative to traditional points. What makes this more appealing is the fact that NFTs are much more flexible than “points”, and they can represent different things.
For example, if you spend over £100 with a company, you might earn an NFT that grants you free delivery on future purchases, or early access to product launches. The NFT will exist on the blockchain so it won’t have an expiry date and it can also be transferred to others.
Starbuck embraced this technology in 2022, representing another exciting NFT use case for ecommerce. On the Starbucks Odyssey platform, customers can buy, earn and spend NFTs to unlock access to exclusive content and experiences, ranging from virtual cocktail classes to trips to Starbucks’ coffee farms. Despite involving NFTs, the loyalty programme doesn’t require a crypto wallet, making it more accessible to the average internet user.
NFT-based loyalty programmes offer brands a flexible new way to incentivise purchases, engage audiences and drive loyalty.
3. The secondary market - unlocking new revenue streams with NFTs
The NFT secondary market provides a new way for companies to monetise and capitalise on the value of their digital assets, presenting another interesting NFT case for ecommerce.
A unique aspect of NFTs is that once produced, they can also be bought, sold and traded on marketplaces like OpenSea. How this can benefit the brand that originally created the NFT might not be immediately obvious, but there are actually a range of ways this adds value, including:
- Royalties: When an NFT is resold, the original creator often receives a portion of the sale price through a royalties system. So, if a brand launches an NFT collection that goes on to increase in value, they will continue to profit from it on the resale market.
- Brand awareness: the resale of NFTs on the secondary market can increase brand awareness and recognition by tapping into a new customer base and potentially attracting new customers who would otherwise not have engaged with the brand.
- Increased demand: the success of NFTs on the secondary market can drive demand for the brand’s other and upcoming collections, leading to higher sales and greater financial success in the future.
In general, the resale of NFTs on the secondary market can be a valuable source of income, recognition and exposure for ecommerce brands, helping to establish their reputation and support their continued success.
4. Kickstarter model - using NFTs to fund new products or businesses
An NFT use case you might not have considered before is the NFT-based kickstarter model, which offers creative entrepreneurs a new means to get their projects off the ground.
How does it work? Startups can use NFTs as ‘shares’ in the company and distribute them to early adopters as incentives for financial support. This gives investors exclusive access to new products and businesses before anyone else, not just as consumers, but also as owners with a possible return on investment down the line.
Additionally, these tokens act as visual proof of ownership and can make it easier for companies to track who invested in them from the very beginning.
One example of a brand that has embraced an NFT kickstarter model is functional coffee brand Taika, who released 400 NFTs in 2022 to support the production of a new drink, in collaboration with Web3 community Friends with Benefits (FWB).
People who owned one of the NFTs were able to sample two versions of the new drink and vote on which flavour they prefer. The winning version has now been mass produced and sold to the general public via Taika’s website. NFT holders get a 15% discount for life.
5. Presell model - using NFTs to presell products
Finally, NFTs can revolutionise the way we presell products, specifically ones that take a long time to produce and may otherwise run into operational difficulties.
Think about spirits, wine and other luxury items that can sometimes take years to make. With NFTs, these products can be tokenised and customers encouraged (or incentivised) to purchase them before they’re actually produced. By this means, your customers essentially come together to fund the production in real time.
Holders of the NFTs can choose to redeem their token for a real-life product once it’s ready, or they could instead choose to sell it on or trade it, which also generates revenue for the brand through royalties.
This model is embraced by the BlockBar platform, which invites consumers to buy NFTs directly from luxury liquor brands, which they then store at a secure facility until the token is redeemed. There’s big money to be made in the luxury alcohol space, and NFTs offer a new way to safely and securely manage ownership.
Innovate your business with NFTs
NFTs represent a new way of doing business that has the potential to reinvigorate many industries - including ecommerce. If you’re feeling inspired by these NFT use cases and would like to explore how Web3 technologies could enhance your business, we’re here to help.
We help businesses tap into new technologies and take advantage of all the opportunities that come with it. Let's talk about how NFTs can help you achieve your goals.
