Despite cryptocurrency’s and NFTs’ falls from grace in recent months, brands still view the closely-related web3 as a lucrative creative opportunity. Brands including Nike and Italian footwear brand Casadei are building their own metaverse platforms and phygital collections to provide more tangible value to customers.
Nike’s latest metaverse venture is the marketplace .Swoosh, where people can buy its virtual products. It launched on Nov. 15 after a pre-registration was introduced in August. The launch follows Nike’s acquisition of the fashion and sneaker NFT brand RTFKT in Dec. 2021, reportedly for upward of $1 billion. Thus far, Nike has earned at least $185.3 million in revenue on digital metaverse products, according to Dune Analytics, with RTFKT founder Benoit Pagotto instrumental in Nike’s metaverse strategy. Nike’s 2022 revenue was $46.7 billion.
Tobi Ajala, founder and CEO of digital agency Techtee, said Nike’s .Swoosh metaverse marketplace website could signify brands’ metaverse direction moving forward. Techtee worked on the Gucci Garden activation in 2021, as well as web3 activations for Givenchy and Nike. Nike issued a patent for Cryptokicks in December 2019 and launched Nikeland on Roblox in November 2021. But it wasn’t until the RTFKT acquisition that it started heavily investing in digital wearables and avatars and creating a web3 community.
“We thought Meta was the only platform to have the resources, the ability and the understanding to push this forward — regardless of whether people like them or not. But Nike may have changed that,” said Ajala.
Last year, luxury companies including Farfetch, Balenciaga and Gucci prioritized incorporating cryptocurrencies into their payment systems. But tides have turned. “Today, there is a big wave of brands wanting to get in on metaverse spaces and create experiences,” said Ajala, pointing to the jump in brands on platforms like Roblox.
Ajala said, over time, Roblox will become a brand standard, similar to the way every business has a Facebook page or Instagram page. “But for luxury brands, board members are pushing for creating [unique] Gucci Gardens [-style experiences], which will likely continue as they see how much Nike’s stock price has gone up since the .Swoosh announcement.” Nike’s stock price rose almost 4% on Tuesday following the platform announcement.
However, owned brand metaverse spaces are only available to those with an abundance of resources. Meta itself has already spent $36 billion building out its metaverse concept. For many brands, launching phygital collections, encompassing both digital collectible elements and physical pieces, is the alternative. This allows them full ownership, while also permitting them to play in a familiar market. In a recent Twitter Space, Nelly Mensah, head of web3 and metaverse at LVMH, said web3, for many brands, is still about testing and experimentation.
Casadei is one such brand focusing on “phygital” for its web3 strategy. In September, it partnered with luxury NFT company Another-1 to create Project Nay0m1, a phygital collection of its Blade heels. Customers could purchase one of 1,000 authenticated NFTs, which came with a real-life pair of limited edition Nay0m1 Blade heels. The shoes came with an NFC tag linked to an NFT, as well as a free personalized avatar available on the Decentraland platform. The NFTs sold for $1,000 each via Another-1’s Polygon platform.
“In luxury, the product has been defined by the craft and the quality, but also exclusivity and customization,” said Arianna Casadei, head of marketing and communications at Casadei. “We approached the NFT project in a similar way, to replicate the brand’s relationship with its community.” As part of the launch, Casadei introduced an immersive brand experience featuring a giant digital model in Decentraland.
Physically backed tokens, like the NFC tags used by Casadei, are also becoming more prevalent, with fashion brands 9dcc and Azuki also using them to bridge the gap between web3 and physical products. Azuki launched its first phygital collaboration in November with Ambush, a Tokyo-based luxury brand backed by the New Guards Group. The collection of hoodies and pendants with physically backed tokens also allowed customers access to exclusive digital collectibles. The collection initially sold on the primary market for 2.7 Ethereum, equivalent to $3,255, on the Rarible platform.
The founder of Azuki, known as pseudonym Zagabond, or “Z,” said the line between digital and physical is blurring. And, where brands can’t create full virtual experiences, they’re continuing to get in on metaverse concepts and adding new dimensions to their assortment with phygital collections.
“Technologies like physically backed tokens introduce a new dimension to how brands tell their stories. We’re unlocking the use of physical goods to create digital experiences,” said Zagabond.
Yoon Ahn, founder of Ambush, said that the development of web3 has created a new stage for fashion in the digital realm. “Being rooted in fashion and having expertise in areas outside of web3 means we can bring [unique] knowledge into the web3 space,” said Ahn. “Once this bridge between physical products and web3 is established, and we are more educated on how to use this technology, we will be able to unlock new doors that are more than just assets you buy and sell. It will be like taking the red pill in The Matrix.’”