Quick guide on how fashion brands can jump into Web3
The fast-moving world of e-commerce has changed the retail game. People, particularly members of Gen Z, are spending more time online and exploring possible worlds in the metaverse. Here’s what fashion and luxury players need to know about this ever-evolving frontier.
One of the most popular topics in discussion at the moment is the concept of a "metaverse"—an interactive digital space where people can work, play, socialize, and shop. After much speculation, we now know that the metaverse itself is still quite young and there's no telling when or if it will happen. There is, however, a lot of interest in what the metaverse could mean for brands and the broader fashion industry. For Gen Z and other savvy young consumers, it could provide new opportunities to engage audiences in unexpected ways.
The question then is: how can fashion brands plug into the trend and get ahead of the curve in Web3? How will non-fungible tokens (NFTs), gaming, and virtual fashion change the way we shop in the future?
As more and more people spend time on their various screens, Gen Z has already been quietly adapting by spending (more then) eight hours per day on them.
Fashion items, including everything from ordinary clothing to bathing suits to jewelry, account for three of the top five categories on which Gen Z spends money.
Gaming is increasingly becoming more real-world oriented. With the emergence of the pandemic, brands like Ralph Lauren have capitalized on this opportunity and created experiences for people to partake in virtual fashion. For instance, Ralph Lauren partnered with Zepeto, a South Korean social media app, to create a virtual fashion collection where users can get exclusive items or stylish items which will change their appearance.
Simon Windsor, cofounder and joint managing director of Dimension Studio, agrees. “We’re just at the tipping point of this new era,” he says. “This is almost like a mirror of what we see happening on social media platforms such as Instagram and Snapchat. It starts to change the meaning of fashion itself.”
The opportunities for new business models open up to many interesting possibilities when considering artificial intelligence and augmented reality. Already, we’ve seen technology that allows for 360-degree views be used to present seasonal collections through online showrooms, allowing people to virtually “walk” on 3-D runways.
Non-fungible tokens, or NFTs, have been a major topic of interest in the blockchain world. NFTs are unique cryptoassets whose authenticity and ownership are verified on a decentralized network. NFTs may be bought and sold in a virtual world using cryptocurrency. One NFT that became very popular is an artwork by digital artist Mike Winkelmann, or Beeple. It was recently sold at Christie’s auction house for 69.3 million USD, which is a record-breaking price.
The fashion world is just one of many places where NFTs can be used to validate authenticity. NFTs also have the potential to serve as collectible pieces in their own right, with the Louis Vuitton game being a prime example.
With an oversaturated market, we see that the revenue potential for digital fashion assets is significant. However, monetization opportunities are contingent on the psychology of scarcity, limited editions, and new token models. All of these—plus the security of authentication and any potential to build a community—are key to digital asset success.
There are various risks that come with the NFTs and I don’t have time to go over them all, but there are some people you should be cautious about. For example, when the artist Banksy got attacked, a collector spent upwards of $330,000 for a counterfeit NFT.
Fashion brands have been quick to embrace virtual reality and augmented reality. This technology offers a lot of potential and because it’s so new, it’s hard to say exactly how it will shape up. But the opportunities it presents are exciting for luxury brands, retailers, and consumers.
Author: Filippo Decotto
To write this post, inspiration has been taken by the article previously published by McKinsey
