Chainstarters sees a big future for NFTs and how they can be leveraged by brands. One of the biggest areas of opportunity for “NFT 2.0” is in the retail space – especially for brands that sell high-end luxury items.
Imagine going into a store, buying a new handbag and minting an NFT that is tied to the physical item you just purchased – right then and there. That NFT serves as proof of authenticity for the item and is something you can show to your friends. If the brand has a presence in the metaverse, it may also grant access and unlock special offers within.
Luxury goods are unique from others in that they can often retain a great deal of value or, in some instances, increase in value over time. With NFTs, brands will be able to create and maintain their own certified, pre-owned marketplaces. When the owner wants to sell the physical item, it can be put up for sale and backed by the NFT. The NFT contains all of the verifiable, unchangeable information that a prospective buyer would want (metadata):
When the physical item and NFT are sold, the related data is updated on the blockchain to reflect a new purchase date and change of ownership. The smart contracts are coded to automatically give a percentage of revenue to the original manufacturer – every time the good is re-sold.
This creates a new stream of revenue for brands – money that would otherwise go to a third-party reseller that relies on a system of trust and human authentication. NFTs remove any subjectivity in the verification process, as all of the information is kept on-chain and is visible for anyone to view.
NFTs in the luxury space lend themselves very well to the hallmark values of web3: aligning incentives, creating more transparency & accountability, and bringing together a community of like-minded consumers.
A name-brand, certified pre-owned marketplace is also more optimal than those of third-party resellers, and puts a lot of power back into the hands of the consumer.
Many product categories could greatly benefit from leveraging this tech: watches, jewelry, high-end fountain pens, handbags, wallets, sneakers. Resale markets are currently dominated by third parties that sell hundreds of brands; but it’s less about the brand and more about selling. Not to mention, these categories are also plagued by counterfeiters trying to pass off fake goods as the real deal to make an easy buck. Brands could also have a hand in combating counterfeiters, immediately and forever banning any bad actors from the marketplace.
Because sustainability is now widely discussed in fashion and many other industries, selling and purchasing second-hand items is more socially acceptable than ever. It’s no wonder that the luxury resale market was worth over $38 billion in 2021, and is only expected to grow. However, luxury brands have missed the opportunity to monetize the second-hand market of the very goods they produce! A certified pre-owned marketplace could provide them with the data needed to reach certain sustainability targets while growing the business.
NFTs tied to luxury goods are a compelling opportunity. If brand-managed marketplaces that use NFTs become the gold standard for resale transactions, both sides win: consumers will have more assurance and trust in the products being sold, and the brand will have more control over its valuable goods and insights into those purchasing them. The early movers in this space will have a rare chance to make their mark, increase consumer loyalty, and add to their bottom line. Chainstarters has the solutions needed to take luxury resale to the next level.