Retailers are discovering tangible value in the digital realm with non-fungible tokens (NFTs).
NFTs are unique digital assets stored on a blockchain ledger which certifies the owner. There is no way for an NFT to have more than one owner, and only the certified owner can sell it. NFTs have experienced a dramatic surge in popularity in recent months, with many individuals and entities selling certified, one-of-a-kind digital images, videos, audio recordings, and other files.
Obviously, increased consumer demand for NFTs will prompt more retailers, especially digitally-savvy ones, to start selling them. But these virtual products offer some specific benefits to retailers that undertake the technical efforts to enable NFT sales.
As with virtual products sold within video games, NFTs offer retailers the chance to sell products without physical overhead. Once the potential cost of designing and developing digital products has been expended, these companies avoid costs such as warehousing and distribution, as well as any potential reverse logistics expenditures.
Return on marketing investment
In a sign of NFT technology’s growing presence in retail, Domino’s Pizza, the largest global pizza chain based on sales, is entering the NFT marketplace. Recently, Domino’s launched a TV advertising campaign reviving the “Noid,” a cartoon villain featured in its promotions in the 1980s and ‘90s. For a limited time, the retailer is now selling one-of-a-kind NFT images based on the Noid.
The Noid-themed NFTs are being sold over the course of a 14-day auction. Domino’s is humorously asking customers not to purchase the NFTs, since the Noid will allegedly use them to fund more nefarious anti-pizza schemes. In addition to adding some color and unique interest to its marketing promotion, Domino’s is also turning it into a potential digital revenue-generator by including an NFT auction feature.
Since NFTs are publicly verifiable and can't be counterfeited, packaging them with physical goods can also serve as an effective digital authentication method. For example, Shopify enables sellers to provide gamified bundled “gift with purchase” NFT experiences with physical merchandise, such as t-shirts, vinyl albums, and sneaker drops.
And eBay, which in the past year has been offering buyers and sellers in a number of more traditional, physical collectible categories stringent authentication services, launched its NFT program by only allowing trusted sellers who meet its standards across other collectible categories like trading cards, music, entertainment, and art to sell NFTs.
eBay also plans to add new capabilities to bring blockchain-driven collectibles to its platform. In general, the retailer has been increasing its focus on serving as a digital marketplace for authenticated collectible goods. As a pre-authenticated, unique collectible, NFTs nicely fit this business model with the added bonus of not requiring eBay to develop any add-on services to prevent counterfeiting.