Technological innovations aim to add value to existing ideas and ways of doing things. It helps to create better ways of doing things and to evolve industries. One of the major changes happening right now is the incorporation of NFTs into e-commerce.
What are NFTs?
NFT is a popular decentralized web acronym that stands for Non-Fungible Token. It represents a one-of-a-kind digital coin that cannot be interchanged with another of its kind due to its unmatched features or characteristics.
An NFT can be a portrait, artwork, music, files, GIFs, videos, memes, etc. For digital objects to qualify as NFTs, they must be minted on a blockchain network where their details are recorded on an immutable audience. ledger often referred to as Distributed Ledger Technology (DLT).
What is e-commerce?
Traditionally, businesses conducted physical transactions by proxy or directly with consumers. These transactions involved the buying and selling of goods and the exchange of services. It was the conventional way of doing business before the advent of the Internet, which gave rise to online retail outlets, otherwise known as e-commerce.
E-commerce represents all forms of business performed or transacted on online platforms. It involves producers, distributors, retailers and consumers who buy and sell products online. This buying and selling concept can be B2B, B2C, C2B or C2C.
How NFTs will transform e-commerce
The adoption frenzy of NFT in both centralized and decentralized spaces makes it one of the most popular blockchain tools today. Many industries and sectors have been looking for ways to find a use case for this new technology in their industries. One of them being the e-commerce industry, where NFTs can pave the way for additional economic values.
NFTs are instrumental in e-commerce in the following ways:
1. NFTs as a digital representation of your merchandise
Since NFTs are a digital representation of various objects, you can associate NFTs with your goods or merchandise as an e-commerce business.
These NFTs will have two objectives:
- Since e-commerce is an online point of sale where products are ordered and shipped, shipping products to consumers will likely take days, weeks, or months, depending on locality. Having an NFT of your products to give to consumers immediately assures them that their physical goods are on their way.
- Rather than waiting for the physical product to be delivered, they can start using the NFT replica, which is exclusive to each purchased product. They can use it to brag about ownership of your brand and products, which can easily be verified on a blockchain network. Nike, Adidas, Gucci and other brands are already using it.
- An NFT version of your products can also serve as an advertising tool in the Metaverse, where the physical and virtual worlds meet.
2. Bring your e-commerce business into the metaverse
The Metaverse represents a virtual world where people can experiment with their imagination. Beyond that, it is a virtual economic space where avatars of various shapes are used. These avatars are NFTs. So, having an NFT replica of your product can take your e-commerce business to the metaverse, where you can own a store and market your products.
Notable brands like Adidas, Gucci, Nike, Louis Vuitton, Burberry, Tommy Hilfiger, Samsung, etc., already have retail spaces in the Metaverse.
3. As a means of authenticating transactions
Products with replica NFTs can be easily traced and authenticated via the public ledger where the NFTs were recorded. Since each product will be assigned to an NFT, the number of productions and editions can be easily monitored and publicly authenticated.
This model will close the door to counterfeit products mimicking your products and verifying transaction records, making it easier to trace and verify ownership of products and editions.
4. Instant gratification for consumers
Having NFT replicas for your product means consumers pay for one product and get two. They will pay for the physical product and get an additional NFT version. This instant gratification will entice consumers to buy into your products and your brand, rain or shine.
5. As a collectible loyalty item
NFTs can be given away to VIP consumers as exclusive collectibles. Depending on your brand’s capabilities, this can be replaced by coupons or souvenirs, distributed quarterly or annually to loyal consumers or consumers with high traffic or large purchases.
6. As an inventory tracker
NFTs can effectively help your e-commerce business manage your inventory, no matter how large. When you mint NFTs on a blockchain network, you choose the number of NFTs to mint, which will be the number of particular products you have in stock.
Once done, the record is immutable on the blockchain network where you mint, so you can easily spot discrepancies between your physical inventory and the number of NFTs minted.
7. As a pre-order tool
NFT collections can be hit on pre-order for a particular product. This can be used to reduce or process overorders.
If, as a brand, you intend to make a product but you don’t know if consumers will like it, you can create NFTs in a particular unit so that each NFT represents each product. Thus, each holder of such NFTs will be entitled to an equivalent product. With this, you can control your production and reduce expenses related to excess production.
To reduce overorders, once you have produced your products, you can mint equivalent NFTs. Once your NFTs have been sold or distributed, this will mark a “out of stock” for that product.
8. Market your products and brands to more consumers
As NFTs become popular due to wider adoption, associating them with your physical goods will market your products and brand to new consumers who want to have a unique piece of your brand.
Consumers posting them on social media will also market your brand indirectly; this, in turn, increases demand and sales for your products. On top of all that, you can list your NFTs on marketplaces specifically for NFTs. It comes down to bringing marketing into the decentralized space while running additional commercials and advertisements on your eCommerce POS.
NFTs cannot replace physical goods; they can only add value to existing ideas and create more economic strength. The application of NFTs to e-commerce goes beyond the highlighted use cases; you need to find the right ones for your e-commerce business and use them.
It should be noted that being an early riser ranks you higher among your contemporaries. Major brands are using and integrating NFTs into their business, which is paying off.
Examples of world famous brands using NFTs:
- Coca Cola
- JP Morgan
- Dolce & Gabanna
- Louis Vuitton
- Tommy Hilfiger
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* All investment/financial opinions expressed by NFT Plazas are derived from the personal research and experience of our site moderators and are intended for use as educational material only. Individuals are required to thoroughly research any product before making any type of investment.
Technical writer, passionate about everything related to blockchain and the decentralized world.