NFT trading is expected to hit $80 billion by 2025, according to predictions from investment bank Jefferies. Because each NFT is different and therefore rare, the prices are usually pretty high. Businesses are dipping into the NFT space to open up additional revenue streams and as a means to start exclusive customer clubs.
Take Flyfish Club, which is claiming to be the world's first NFT restaurant. People buy an NFT to access the New York restaurant, which will set them back 2.5 ETH. In January 2022, that's the equivalent of around $8,500. Luxury fashion brands are exploring it, too: Dolce & Gabbana's collection of nine NFTs, for instance, sold for $5.65 million. Burberry, meanwhile, has gone one step further into the metaverse, partnering with developer Mythical Games to launch branded in-game accessories as NFTs.
For these businesses, the exclusivity of the NFTs works in their favor. People are already familiar with the brand identity, and owning a rare item with the brand's digital stamp on it has a lot of social value, which, in turn, draws in high bids. BlockBar, for instance, is a platform that works with spirit brands to develop NFTs. According to co-founder Sam Falic, ‘NFTs present an incredible opportunity for brands to build a community directly with their consumers.’ He adds that ‘some view it as a PR opportunity, while others are trying to utilize the blockchain to solve problems for their consumers.’ In the context of spirits, that can mean using NFTs to prove the products' authenticity.
Getting in on the action
But what about smaller businesses, or those that don't have a well-known brand identity to lean on? Consumer Commodity is a Vancouver-based clothing shop currently listing four NFTs, designed in collaboration with fashion consultant Nick Wooster, on blockchain marketplace Rarible. London Alexander, Consumer Commodity's designer, says there was a steep learning curve to ensure the collection brought in enough return on investment: ‘We had only a few bids. We priced them at $200 per NFT. With a proper marketing campaign, it would have been much larger,’ he says. He's now exploring an auction process for the next NFT drop. His advice to small businesses looking to capitalize on NFTs? ‘Have your go-to-market strategy perfect before going live.’
Another way that small businesses are capitalizing on the NFT boom is by coupling digital assets with physical products, in order to increase the value of both. Pakistani fashion brand Rastah released an NFT collection in partnership with digital studio DMTLABS, where the digital asset would be paired with a physical outfit from the brand. On popular NFT marketplace Foundation, NFTRUGS collaborates with independent artists and designers to produce one-off, bespoke rugs, which are sent to the buyer when the corresponding NFT is purchased.
Like with Consumer Commodity, a lot of small businesses might find that it takes a little while for their NFTs to sell. It's worth looking into the costs of developing and minting NFTs. Small business owners might also want to consider which platform to list their NFT on and make a choice based on the platform's reputation, dependability and audience traffic. Although the NFT trend isn't about to slow down anytime soon, it's important for a business to think about how exactly an NFT contributes to the overall brand, marketing or community development strategy. Without that, it could end up looking like an expensive gimmick.