THE METAVERSE: NEW OPPORTUNITIES FOR FASHION
An essay on the new opportunities for fashion that the Metaverse provides.
The metaverse was introduced to the public with Facebook’s announcement in 2021 that it would be re-named Meta as it planned to take a pioneering and central role in the formation of the new digital frontier. The metaverse rapidly began to form with companies like Roblox quickly having players partake in it through gaming, and NFT collectors and creators quickly utilized the space to sell NFT’s to new customers. The fashion industry, especially the behemoth fashion giants in retail, ensured that this opportunity did not pass them by. In 2021, Dolce and Gabbana decided to create their own NFT collection, and it consisted of a collection of nine NFT’s that sold in Ethereum (a cryptocurrency) for the equivalent of $5.7 million dollars. The NFT’s sold came with physical couture that was wearable in real life for the customer, and included in each sale were tickets to future Alta Moda events by Dolce and Gabbana (Thomas). In June of 2022, Gucci began an NFT collection that is focused on exploring and displaying the brand’s history over the past 100 years of its existence. They launched in 2021 an experimental platform, known as Vault, where fans can purchase Gucci NFT’s. In May of 2021 it became the first brand to ever begin investing and partaking in NFT”s, through its “Aria collection”. This NFT collection was subsequently sold for $25,000 (Batycka). In 2021, Adidas joined the metaverse by making its own NFT’s. It created 30,000 NFT’s from a collection titled Into the metaverse, and in total the NFT’s sold for an astounding $22 million and are still being traded by private owners with other NFT enthusiasts in the present moment (Peters).
Crypto has in the second quarter of 2022 begun to experience the beginnings of a bear market. Celsius, a crypto lending company, declared bankruptcy as well as the crypto brokerage Voyager. The stablecoin LUNA of Terraform Labs collapsed, with many investors losing their entire life savings and investment portfolios with it. This indicates that fashion companies should be cautious when entering the crypto and NFT sphere, but many fashion companies remain undeterred. Gucci announced in May of 2022 that it will allow customers to pay for purchases utilizing crypto at some of its stores. In addition, Instagram has revealed that it will allow users to share their NFTs on Instagram soon. Due to these mixed signals, instead of abandoning crypto altogether many companies are instead focusing on investing with “blue chip” products that seem more reliable and safer than more unknown, risky investments. Many experts such as Brian Trunzo, the metaverse lead at Polygon Studios, argue that fashion companies should focus on NFT’s that have utility, such as the ability to be used in the metaverse or the capacity to give customers loyalty rewards with trendy fashion brands (Bain).
NFT’s intrinsically have value because they are unique and cannot be replicated. NFT’s are now evolving to create more utility functions for those who possess them. This creates an additional layer of value that goes beyond just the uniqueness and scarcity values that NFT’s hold. Different utility and value characteristics of NFT’s include a bundle of services, goodies, experiences, and unique access. As described by NFT blogger Clyde F. Smith, NFT’s can now be purchased in bundles, which is where a buyer is able to buy multiple NFT’s at once that come in a pack. This is compared to an analogy of a container filled with goodies, where by purchasing a bundle a buyer or investor may get a variety of NFT’s or examples of larger editions of an NFT. These NFT’s can then also provide experiences and access to real-life or virtual events, products, and memberships to exclusive social clubs. For example, the Bella Hadid NFT drop included with the purchase of an NFT access to the unique experience of joining an exclusive club made of up exactly 1,111 NFT’s that allows them entrance to the Bella Hadid metaverse mansions as well as access to real life meet-ups with the model herself, global treasure hunts, and an invite to the exclusive CY-B3R Gala, a virtual and physical gala celebrating fashion and art in web3 (Dean).
NFT’s also offer an extremely unique and appealing ability to fashion companies that remained largely unknown until recently. They offer the ability to become the ultimate tracer for CRM-1 systems for fashion companies. Since NFT ‘s act as a receipt, NFT’s are able to keep a record of who sold and bought a specific NFT and the last transaction that occurred with it, which allows them to function like a CRM. NFT ownership through purchase of a fashion NFT allows the purchaser to create a long-lasting membership with fellow owners of similar NFT’s or NFT’s that are created to be part of a group (such as with CY-BELLA NFT’s). This better allows companies to conduct CRM as they are able to keep track of each individual owner of their brand’s NFT. Furthermore, NFT”s can serve as global identifiers, specifically identifying where in the globe purchasers of a fashion brand’s NFT are located, and this can give much pertinent information about present and future clients to a fashion company. Finally, NFT’s assist with community building, as they allow individuals to create communities and even kinship with one another based on being owners of NFT’s that belong to a NFT community. These capabiliies make NFT’s the potentially ultimate tracer for customer relationship management (Edelstein).
NFT’s offer an additional opportunity to the fashion industry of gamifying the customer journey, making fashion products more addicting, entertaining, and popular. NFT releases are often centered around drops, similar to the opening of a new store or sample sale, but even more appealing because the NFT will be dropped or released at a specific moment worldwide online. This creates a sense of excitement, scarcity, and competition for consumers to be able to get an NFT in a drop before they are sold out. This also creates “hype” for a company and its products-excitement, glamour, and an elevated consumer desire to acquire that product. NFT’s can also be attached to products, such as clothing, artwork, music, in-game videos, or items. This creates the desire for consumers to acquire an NFT so that they can acquire both the NFT and the product that is attached to it (“What Is An NFT? Non-Fungible Tokens Explained”). An example of this is how the band Kings of Leon generated more than $2 million NFT sales of their latest album (Moore). Fashion companies can mimic this success by attaching NFT sales to specific clothing launches and make even more financial profit than they would from selling the clothing product alone. This gamification of the customer journey through NFT’s in the fashion industry allows for increased marketing opportunities as well as increased overall profits.
Digital fashion is unique because it is not limited by the physical limitations that fashion products have to be created through. Clothing designers and couture houses can only transform clothing to a certain point depending on the limitations of the fabric and tools available, but digital fashion does not have those limitations. In web3 there are no physical limitations from textiles, tools, or even the laws of physics. A designer can create a dress that is constantly on fire, a dress that changes colors every few seconds, or create a floating men’s suit, etc. The only limitations, so to speak, are those of the mind. Clothing designers are able to design and create in such a wide-encompassing and limitless way that it allows a greater degree for creativity. There is no need to replicate real-life products or imitate products that already exist, when NFT clothing can be created that look like something out of a CGI movie or an artist’s most decadent fantasies. This will result in improved customer relationships, as customers will likewise find themselves excited, emotional, and even inspired by this new type of clothing. Especially for customers who are lovers of fashion and tech, seeing how the couture masters of the fashion industry expand their imaginations to create unique and never-before-seen digital fashion will create more interest in products and innovation in the real world of fashion as well.
NFT’s permit the opportunity for fashion companies to toy around and take advantage of the supply versus scarcity of their product. They can determine what level of scarcity creates the most interest and most sales of NFT products as well as what level of supply results in unsold products. They can also keep track of these numbers much more easily and much more safely with blockchain technology. These will likely be very different from typical supply and scarcity levels with physical clothing, and fashion companies can experiment to see what levels are best to create the largest profit margin. In addition, brands can explore the possibility of mass market NFT’s versus niche NFT’s. As the market is still young, brands have the opportunity to experiment with making either mass market NFT’s that appeal to the interests of a large population or create more niche NFT’s that appeal to a small number of the population to see what is more successful for their brand. In addition, the NFT world is relatively new, so it isn’t like clothing industries where there are set price points for certain types of materials, certain designers, etc. Rather, companies have the freedom to set whatever price point they want and experiment with price points for their NFT’s. Finally, fashion companies have the ability to choose whether to put their items in a proprietary marketplace (such as Facebook Metaverse’s NFT store) or through a global marketplace like OpenSea. Each has its own drawbacks and benefits, and fashion companies can explore these new options for NFT products to see what would be most advantageous for them to utilize (Bain).
Finally, there are multiple KPI’s that are applicable to NFT’s for fashion companies. Firstly, in terms of supply, reach, and engagement, companies have much more ability to increase supply since everything is done via technology and computers versus physical items that need to be transported worldwide. In addition, reach can be managed through Twitter and other means of social media easily, as NFT enthusiasts are extremely active on social media, and engagement can be measured through social media posts. In terms of cross-platform utility, NFT’s work well in more than one type of locale. For example, NFT’s can be created for different marketplaces, such as OpenSea or Meta’s official metaverse store, or companies can collaborate with other metaverse companies that have already done collaborations with fashion houses (such as Roblox). In terms of real-life utility, NFT’s have use beyond just being unique digital assets, as they can grant their owner status, perks, membership to exclusive groups, access to specific metaverse locations, etc. And finally, NFT’s have a strong example of first market versus second market value, as NFT’s are first bought from either the company or artist creator themselves, and then it can be sold and purchased an indefinite number of times through marketplaces like Opensea.
NFT’s made an explosive entrance into the fashion industry in 2021, and even though the crypto and NFT space is currently in a bear market, there are many indicators that suggest to industry experts that NFT’s are not going anywhere and now is a good time to invest in them for relatively lower prices. Web3 investors are encouraging fashion companies to focus on NFT’s that have utility and build community to ensure they are making a good investment and choosing the best possible NFT partner for their business ventures. NFT’s offer many new benefits and possess unique capabilities that benefit fashion companies, such as the ability to become ultimate CRM-1 tracers, gamifying the customer journey for increased financial profit and engagement, eliminating the barriers that supply and demand create due to its digital form, and NFT’s can be made in never before seen designs as they do not have to be made under the limits of physical reality, such as gravity or fabric limitations. This is why fashion companies are wise to invest in NFT’s if they haven’t already or join in making their own for their products or as a stand-alone project. As long as companies have experts and consultants to guide them in creating the best possible project and take into account all of the necessary factors for success in the current web3 space, companies can be assured of increased profitability and new customers by entering the fashion NFT space.
Works Cited
Bain, Marc. “What Fashion Needs to Know About the NFT Market Rollercoaster.” The Business of Fashion, 12 May 2022, https://www.businessoffashion.com/articles/technology/what-fashion-needs-to-know-about-the-nft-market-rollercoaster/. Accessed 15 August 2022.
Bain, Marc. “What Fashion Needs to Know About the NFT Market Rollercoaster.” The Business of Fashion, 12 May 2022, https://www.businessoffashion.com/articles/technology/what-fashion-needs-to-know-about-the-nft-market-rollercoaster/. Accessed 15 August 2022.
Batycka, Dorian. “Gucci Enters Its Next Century of Art and Fashion With an NFT Collection That Includes a GG-Monogrammed Bionic Body.” Artnet News, 24 June 2022, https://news.artnet.com/market/gucci-latest-nft-metaverse-2136351. Accessed 15 August 2022.
Dean, Ian. “Bella Hadid’s first NFT is a shocker (because it’s actually good).” Creative Bloq, 29 July 2022, https://www.creativebloq.com/news/bella-hadid-nft. Accessed 15 August 2022.
Edelstein, Justin. “NFT for Membership Organizations – A Blockchain Think Piece.” Arkus, Inc., 11 August 2021, https://www.arkusinc.com/archive/2021/nft-for-membership-organizations-a-blockchain-think-piece. Accessed 15 August 2022.
Moore, Sam. “Kings Of Leon have generated $2 million from NFT sales of their new album.” NME, 12 March 2021, https://www.nme.com/news/music/kings-of-leon-have-generated-2million-from-nft-sales-of-their-new-album-2899349. Accessed 15 August 2022.
Peters, Jay. “Adidas sold more than $22 million in NFTs, but it hit a few snags along the way.” The Verge, 17 December 2021, https://www.theverge.com/2021/12/17/22843104/adidas-nfts-metaverse-sold-bored-ape. Accessed 15 August 2022.
Thomas, Dana. “Dolce & Gabbana Just Set a $6 Million Record for Fashion NFTs.” The New York Times, 4 October 2021, https://www.nytimes.com/2021/10/04/style/dolce-gabbana-nft.html. Accessed 15 August 2022.“What Is An NFT? Non-Fungible Tokens Explained.” Forbes, 8 April 2022, https://www.forbes.com/advisor/investing/cryptocurrency/nft-non-fungible-token/. Accessed 15 August 2022.
#metaverse #tech #crypto #techjournalism #NFT #AI #techwriter