NFTs or you can say the Non-fungible tokens are changing the functioning of the digital world at a very high pace. According to Statista, the sales volume of NFTs is increasing progressively in different segments worldwide. Its high capabilities and benefits have made every company curious and e-commerce being the most blooming is stated to have a big impact in near future.
Want to know how? First, you must understand what NFTs are.
What are NFTs?
NFTs are Non-fungible Tokens. The term “non-fungible” refers to an item that cannot be exchanged for another of equivalent worth. For example, a $20 bill can be traded for two $10 bills, or one bar of gold can be exchanged for another bar of the same size, which are some instances of fungible items. Whereas NFT is one-of-a-kind, that is a non-replaceable digital item. However they can be copies, like the painting of Monet can be copied, but the original remains the same.
Any digital item, from images and graphics to films and music, can become an NFT with the sole ownership rights. When you purchase an NFT, you are purchasing a token rather than the actual asset. Your purchase includes the rights to the item or information within it, as well as a publicly verifiable certificate of ownership on the blockchain.
Why should E-commerce integrate NFTs?
Corporations, trade groups, sports teams, and venture investors are all showing an excessive amount of interest in NFTs. As e-commerce is a highly promising sector merchants are also ready to come up with more strategies for integrating NFTs in e-commerce. Designing multi-sensory items, upselling value-added packages, and delivering the instant pleasure of a virtual equivalent of a real purchase via NFT can ensure a company’s long-term viability.
“When a business utilizes resources wisely, it becomes better able to widen the margins between revenues and expenses.”
― Hendrith Vanlon Smith Jr
Advantages of NFTs in E-commerce
Several e-commerce businesses are willing to build NFT integration solutions keeping in mind the advantages it provides. Let’s see a few –
- As it functions in a centralised environment, it removes the participation of third parties and large commission distribution.
- It provides excellent revenue generation possibilities for various business models
- You get a permanent record of ownership and transactions in the public domain
- As the system is programmable, creators could earn new forms of royalties
- The digital economy can be reshaped and expanded to different segments of the market
- The brands can trace the provenance of fine products
- Instant ownership of gaming, sport and art can be attained
- A more transparent economic ecosystem can be created
- An easy possession and transfer of augmented reality can be seen
Examples of NFTs
Many digital areas have reaped the benefits of the exceptional adaptability of NFTs. Let’s explore a few newsworthy NFTs to completely comprehend this new form of the digital product.
- Beeple’s “First 5000 Days,” marked the most remarkable NFT sale of $69.3 million at Christie’s
- CryptoKitties, a breedable collection of lovely digital kitties, generated approximately $7 million in just 24 hours in September 2021
However, not all NFTs produce millions. E-commerce NFTs with less spectacular examples are also noteworthy.
- Fred Segal’s Los Angeles-based shop, Artcade offers a dynamic retail experience with an NFT gallery for physical and digital products for sale
- Royal, founded by 3LAU, a music producer and Justin Blau, a DJ, is an NFT platform for artists to collaborate with their fans so that they can co-create and co-own music. Fans can sell music rights and receive royalties using NFTs
- RTFKT, recently acquired by Nike, sells cryptocurrency in the form of NFT-based shoes. They were able to sell 600 pairs/NFTs in less than six minutes, netting $3.1 million
- Shopify allows its merchants to mine and sells NFTs directly on the platform. The function was first used by the Chicago Bulls in July 2021
- Neuno, an Australian startup, has created a platform that allows consumers to purchase NFTs using credit cards
Potential of NFTs in E-commerce
NFTs have the potential to boost online commerce, which is predicted to dramatically develop in the coming years.
Pre-launching – NFT Tokens can be used to pre-launch physical things generating publicity and excitement before the launch of a new product, allowing you to build a loyal following of early adopters.
Branding – Integrating NFTs with real-world items can help brands appeal to both early adopters and traditional clients. For example, Nike’s NFT-based sneakers provide buyers additional opportunities to interact with digital purchases.
Trailing – The NFT technology can speed digital sales and provide lifetime product data tracking, previously unavailable in e-commerce.
Value Adding – Hybridised product variety of NFTs and physical objects in E-commerce businesses, can bridge the experiential gap due to the time taken in delivery.
Authentic Verification – Due to blockchain-based verification methods, clothing that uses NFTs for both personal signature and deed of ownership will have a higher perceived value.
Loyalty Program – Supplying NFT-based collectables to the customers can add value to the loyalty programme as it can allow consumers to use their hard-earned points in several ways.
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