Non-fungible tokens have become popular, but for luxury fashion, they pose a host of questions, from what would they look like and would buyers get any utility from them to whether maintaining a cryptocurrency wallet will be too complicated for luxury consumers.
Luxury fashion brands have been relatively quiet while data shows non-fungible tokens (NFT) are raking in record sales. But that’s about to change. Based on their studies of blockchain and its numerous creative and business possibilities, they’re ready to jump in and get involved.
Gucci recently told Vogue Business that it’s “only a matter of time” before they release a No-Fail Trend. In addition, multiple industry sources said many luxury fashion houses are on the verge of releasing No-Fail Trends.
Founder of Lukso, a platform that connects fashion brands with blockchain technology says:.
“The question is just who will pull the trigger first,” says Marjorie Hernandez,
“Luxury brands were behind on the e-commerce trend, so there’s now more of a willingness to experiment with new technologies like blockchain.”
Almost everyone in the fashion industry has asked, says Hernandez, about what they can do with NFTs. Everything from art to music to fashion can be put into a unique NFT that is recorded on a digital ledger, or blockchain. Some proponents of NFTs say that the scarcity and ability to accumulate value of NFTs make them an ideal next step in digital fashion. They believe that NFTs’s scarcity and ability to gain value will bring digital fashion closer to real fashion.
Net-a-Porter of NFTs
NFT use cases include fashion, but they are in their infancy, according to Cathy Hackl, CEO of the Futures Intelligence Group. “Right now, fashion is being sold via virtual goods, rather than typically as a utility,” she says.
Currently, brands can sell non-functional technologies (NFTs) that are graphics of clothing pieces, but buyers can’t do much with them besides admire the GIF. This means the current fashion NFT experience is disappointing to luxury fashion buyers.
Players inhabit avatars in Decentraland, where coins are exchanged for fashion NFTs. A recent scroll through the Decentraland wearables market reveals a strange mixture of sneakers, hoodies and Santa Claus gag costumes branded with names like Kraken and Binance.
Fashion brand shoppers might not be interested in this game because the outfits are cartoonish and pixelated, and it takes too much trouble to set up a browser-based Ethereum wallet.
Nevertheless, company’s are competing to make an NFT fashion experience that is premium, clean and beautiful. Imagine Net-a-Porter, not Amazon.
Sydney-based Neuno is one such startup, currently working with five luxury fashion houses on launching NFTs, CEO Natalie Johnson tells Vogue Business exclusively.
“We want to be the universal 3D wardrobe that plugs into everything, For example, imagine if somebody bought the iconic J Lo Versace dress on our site. We are working with a social media platform that specialises in filters so the owner will be able to post a photo of themselves ‘wearing’ the dress, and we’re also working with one of Asia’s biggest games, so they’ll also be able to dress their gaming avatar in the dress. The buyer only needs to buy the NFT once and they’ll be able to use it in multiple different ways.”Natalie Johnson
According to Johnson, Neuno is a more secure marketplace than current NFT marketplaces, in that it only works with brands. That way, it ensures an authentic experience for buyers. Customers are able to buy NFTs with credit cards, so they do not need cryptocurrency.
The digital collectible element of fashion NFTs
In contrast to large luxury brands, many smaller brands and retailers have already invested in NFTs and are selling them on marketplaces like OpenSea, Nifty Gateway, and KnownOrigin.
An example of a fashion NFT is a digital replica of a physical garment. Clothia, an online retailer in the accessible luxury sector, is currently auctioning NFT dresses. The winners of the auction will receive both the NFT and the physical garment.
NFTs could come to be viewed as a new revenue stream for brands that are thinking beyond digitising existing goods. “Diffusion or bridge lines can help luxury brands make their brands more accessible to their customers.” An example could be Gucci’s $12 digital sneakers.
According to Amber Jae Slooten, the most fun part of NFTs is going beyond the physical. “I would not encourage brands to just copy their physical products,” she explains.
A 3D fashion competition was run by The Fabricant in partnership with Adidas and Karlie Kloss’s charity, Kode With Klossy. Top 20 submissions were displayed in a gallery in Decentraland where visitors can walk around and vote on the designs.
1.4 ETH, or about $2,400 at current exchange rates, was collected for the winning design. The revenues from the auction supported the featured artists, while voluntary donations helped support programming for Kode With Klossy’s alumni community of over 5,000 scholars.
Using NFTs as a platform to discover new potential products is another option. For instance, Re-inc, founded by Megan Rapinoe and four female soccer stars, sold streetwear. Jenny Wang, fifth co-founder of Re-inc, says the company is planning to purchase carbon offsets with some of the profits of its NFTs. She explains that critics have criticized NFTs as bad for the environment. As a result of Ethereum’s transition to a “proof of stake” consensus protocol, which will dramatically reduce carbon emissions, the environmental concerns should dissipate in the coming months.
When it comes to virtual fashion, Cathy Hackl says we are only at the beginning when it comes to its possibilities.
“As we move into a more immersive web, every fashion brand will need to have a virtual strategy,” she says. “Selling virtual dresses and assets will be a significant revenue stream for brands. For my children, the way their avatar looks in games is equally as important as how they look when they go to school. My daughter said to me the other day about her avatar, ‘Yeah mom, I paid a lot for that face.’”Cathy Hackl