Retailers are entering the non-fungible token (NFT) market to expand their digital presence and attract and retain customers.
Despite the collapse of the global token market, Korean NFTs are selling like digital hot cakes. The secret doesn’t seem to lie in the NTFs themselves, but in the benefits that come with them.
Having an ursine theme also seems to help.
Department store Shinsegae introduced Puuvilla NFTs, selling 10,000 digital image NFTs based on the bear-like character Puuvilla. They were sold out as soon as they were released on June 11. The department store is the first to offer an NFT with its own character among all department stores in Korea, according to the retailer.
NFTs refer to blockchain-based proof of ownership of digital assets.
Puuvilla NFTs were sold on Open Sea, the world’s largest NFT marketplace.
“We also provided artistic NFTs in March, where customers could draw NFTs through our mobile apps,” said a spokesperson for Shinsegae Department Store, who mentioned other NFT-related projects in the future.
Buyers of the Puuvilla NFT are offered a number of benefits, including a lounge pass, valet parking passes, and discounted promotions based on NFT ranking.
Gmarket offered its Smile Miya Club NFT in June, where a total of 3,000 NFT profile pictures (PFP) of K-pop artist Sunmi were sold.
“The phenomenon of consumers buying NFTs sold by retailers resembles the recent Pokemon bread hunt,” said Lee Eun-hee, a professor of consumer science at Inha University.
“People will enjoy the following benefits after buying an NFT, just like how people used to buy Pokemon bread to collect Pokemon stickers. This will encourage consumers to buy the product again.”
Lotte Homeshopping opened an NFT marketplace called NFT SHOP in May and sold a 60-second 3-D NFT video Belly Gom, based on Lotte’s bear character Belly Gom.
Marketing strategies involving NFTs have become common globally.
Nike, the global sportswear brand, successfully sold an NFT sneaker for $134,000 in May after acquiring RTFKT, an NFT fashion startup in December 2021. Although consumers can only try on the sneakers virtually, they are eager to buy them as they anticipate the value of the NFT sneakers will increase.
Adidas generated 27 billion won ($21 million) after selling 30,000 NFTs last year.
“Put simply, retailers are growing their digital content business,” said Hong Ki-hoon, a business professor at Hongik University.
“Although NFT marketing does not directly bring profit to domestic companies at the moment, it will definitely be a strategy for companies to gain more profit indirectly in the future.”
The NFT market has been growing rapidly and was valued at $14 billion in 2021, according to Jefferies. The global investment bank expects the value to grow to $80 billion by 2025.
With the expansion of NFT marketing, retailers expect to attract more young customers, as NFTs are mainly purchased by people of the so-called MZ generation.
“As the MZ generation are the ones that react quickly to changes, they will lead the expansion of the NFT market,” said Kim Seung-joo, professor of cybersecurity at Korea University.
People who have bought cryptocurrencies before or were very interested in the digital market are often attracted to the NFT market.
“I’ve bought Bitcoins before, so buying NFTs was quite natural for me because I spend a lot of time reading information from coin communities,” said Kim Jae-hwan, a 25-year-old developer.
“I first started with generic art NFTs, then I started to study utility NFTs.”
Exclusive memberships and the chance to buy new products before everyone else are some of the perks retailers offer NFT shoppers. The future value of NFT is an important factor, but the resulting benefits are considered more important to most retailers.
“The type of utilities companies provide to consumers when purchasing NFTs will be key for these companies to effectively market their products through NFTs,” Kim said.
Despite the sudden boom in the NFT market and the enthusiasm of companies starting their NFT business, the volume of transactions in the NFT market fell by 94% between January and June this year, according to The Block, a market research company. digital assets.
The decline in the NFT market is mainly due to the disappearance of the crypto market.
Optimism remains, especially regarding the marketing potential of the tokens.
“Many large Korean companies are investing in NFTs and have recently announced plans to invest in the NFT market,” Kim said.
“Unlike cryptocurrencies like bitcoin, NFTs have visual digital content. With businesses pushing to expand their digital presence, it is highly likely that more businesses will find more effective ways to use NFTs to the future.”
BY CHO JUNG-WOO [[email protected]]