The fashion industry has really benefited from creating fashion NFTs. By making “phygital” items, they’ve cleverly used NFT technology to their advantage. Big brands like Louis Vuitton and Gucci have connected their NFTs to physical products, using what’s known as redeemable NFTs. So, what other industries have hopped on this trend, and how has it worked for them? Let’s take a closer look!
What Are Redeemable NFTs?
Redeemable NFTs offer extra benefits to their owners. To unlock either digital or physical items, the NFT usually has to be “burned” (meaning it’s destroyed). These types of NFTs are still pretty rare because they can be complex to create.
What Is Phygital?
The term “phygital” combines the physical with the digital. Many museums, like the Belvedere and the British Museum, have started using NFT technology to create digital replicas of classic artwork. They sell these as limited-edition NFTs. In the fashion world, NFTs can represent clothing in the metaverse or be linked to physical items to prove their authenticity. When you buy a piece of clothing, an NFT is created and transferred to you, which you can then resell along with the physical item.
Pioneer Brands That Used Redeemable NFTs
Several major brands from various industries have tried this strategy, including perfumes, cars, and even whisky. Here are a few examples:
- RTFKT: This brand made headlines in 2020 when it sold its first pair of cyber sneakers for 30 ether, which was about $90,000 at the time. The company set a record for the highest price ever paid for a digital fashion item. In April of that year, they sold 600 pairs of sneakers in just seven minutes, raking in $3.2 million. The following year, Nike acquired RTFKT.
- William Grant and Son x BlockBar: This partnership created NFTs for 15 bottles of 46-year-old whisky, selling each for $18,000. The whisky stayed with the company until the NFT holder claimed it. At that point, the NFT was “burned,” ensuring the authenticity of the physical bottle. The whisky was stored in a temperature-controlled facility in Singapore.
- Alfa Romeo: They introduced the Tonale SUV as the first vehicle to come with a digital NFT certificate. This NFT tracks the vehicle’s data, providing a permanent record of its service history to help maintain its value for future resale.
- Danilo Lauria: Visual artist Danilo Lauria launched a fragrance called L’eau de Distance in partnership with perfume expert Gunu Kapoor. They offered 10 NFTs for sale, each priced at 300 Tezos (around $1,659 at the time), which promised a bottle of real perfume. Unfortunately, this launch didn’t go well due to issues with the Hic et Nunc platform. Two years later, he created the “Ethereum Scent,” featuring an exclusive physical perfume bottle tied to an NFT.
NFT and All Its Possibilities
These examples show that NFTs can provide significant advantages across various industries, and is not just limited to buying digital collectible art.
One big benefit is that creating desirable products in the metaverse can help companies cut down on physical production and inventory costs—especially if the physical item remains unclaimed. On the flip side, the failure of the Hic et Nunc platform serves as a reminder of the challenges companies face when relying on third-party providers for NFT projects. This highlights the need for careful evaluation of those partners to avoid risks.
Overall, these case studies offer a roadmap for effectively using NFT technology. They may not directly solve issues related to sustainable supply chain management, but they certainly show that NFTs have real commercial potential. They also provide valuable insights into new practices that could impact various industries down the line.
