Current brand categories and entry patterns into NFTs and Web3

Recently (about a week ago), eBay acquires KnownOrigin, an NFT marketplace, making its major investment into Web3 and NFTs. eBay itself is a marketplace that facilitates the transaction of physical goods, the acquisition just makes quite a lot of sense.

But if we stepped back a little, albeit we hear all the perspectives of NFTs are scams, Ponzi's, bad for the environment, etc, it is undeniable that large companies are seriously taking a shot.

eBay acquires KnownOrigin, Nike acquires RTFKT, Adidas partners with BAYC, Lacoste launches NFT collection, GaryVee launches Veefriends, and Audi partners with various projects, just to name a few.

And from observing this emerging industry and technology, it has been incredibly interesting seeing how different groups are approaching it - where early patterns are forming.

But before that, I want to quickly tell my story. It now has been about a year since I've been immersed in NFTs, which was my first deliberate step into Web3. Back in 2017, I did have a look at crypto, but I dismissed it as speculative and never got in. Although I did notice the potential of the underlying technology. I focused on learning the tech in the meantime or played with other metaverse adjacent ideas.

Then came NFTs during the bull period. And I found it incredibly fascinating. There was this energy, euphoria, and excitement in the space. It felt like there were all the smartest people from all over the world on Twitter and Discord. Experimenting, building, innovating, and creating. Very similar vibes to the entrepreneurial software tech startup boom a decade back. I can't deny that the promise of money was not alluring, but the raw melting pot of talent, creativity and passion was inspiring.

So I had to get in (out of FOMO). I didn't want to be on the sidelines, observing. I wanted to have skin in the game. It's the only way to really learn about something.

And now… I'll call myself a cautious bull. I believe in the technology, the role it has in the formation of the metaverse, and that the emerging concepts will be the first iteration of ideas that will change the world in ways we can't imagine just yet. But I also think the majority of projects out there have not found market fit yet and will largely go “poof” and disappear.

So, back to eBay and the various companies that entered NFTs. Although there are a few dominant categories for NFTs at this moment (art, collectables, digital land, PFPs, access passes, and others - for another article), those who have entered seem to be doing it for a few primary reasons.

• A new way to do community engagement, much more directly (like Adidas, Lacoste, Pepsi)

• Extend their product offerings into digital products (like eBay, Nike, Gucci)

• To get ahead of the competition

What's also very interesting is that the ones who have entered in a big way are all sports, fashion, and consumer brand companies. I'm also seeing a lot of brands lightly dabbling or sitting on the fence like Budweiser, Hublot, and LV. They're probably all chasing eyeballs.

One commonality is that many of these companies are luxury brands. Where their value is derived from their Veblen goods status - usually created by exclusivity, high cost to entry and symbol of status. The current 'meta' of NFTs plays directly into that.

The question will remain whether NFTs will continue to be a Veblen good, especially as the market downturns. Inevitably as the value and price go down, these goods will become less desirable, and less of a symbol.

As the space continues its own self-exploration journey, many brands have entered the space in a similar way. Here are a few common patterns and uses of NFTs these brands are experimenting with now:

• NFT gated communities and Discord channels to create exclusive groups

• Limited edition merchandise/clothing for holders

• Offer digital PFP collections

• Exclusive access to events

• Digital wearables for Metaverse applications

• Collectables and proof of attendance

I predict that more and more fashion brands will look to enter this space. It’ll start with the high-fashion brands where exclusivity and status are important, and then it’ll go into street lifestyle brands.

Fashion was the first cab off the rank, but we will now start seeing our internet platforms coming in. Meta has just announced their NFTs, with many others showing integration into Web3.

Even if it’s not NFTs, the desire to curate your digital identity will not go away, and only grow stronger as the younger generation grows as a larger portion of society.

These ideas are not foreign to those who grew up in the digital world (myself included). We don’t need convincing that this is valuable, it always has been.

Do you have a favourite NFT brand?

Mine’s currently RTFKT. Not really because they are acquired by Nike and you can forge physical shoes from digital shoes. But because they have diversified into various verticals including shoes, virtual homes, avatars, and perfume. Someone called them a cosmetics company of the metaverse. Cosmetics. Just think about that for a little 🤯

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