E-commerce, owing to the ever-changing technology, has transformed how we buy and sell commodities in the 21st century. It has never been so powerful yet simpler than today. Be it flexibility, better user experience, faster delivery, competitive pricing, or affordable advertising and market costs, e-commerce is the fastest-growing channel and the most preferred way of doing business. Euromonitor International estimates that the global e-commerce market will increase by $1 trillion by 2025.
However, as it stands, our way of doing e-commerce is slightly broken. This is because many retailers have become extremely stringent with their exchange policies due to the rising return fraud cases. As a result, we often face difficulty returning products. Similarly, things start to become complicated when dealing with the ownership and sale of second-hand products. And this is where non-fungible tokens (NFTs) come into the picture.
What Exactly Are NFTs?
NFTs are unique blockchain-based digital assets representing many commodities ranging from artwork to real estate. It allows owners to trade digital objects using digital currencies after showing authenticity and ownership of each product or service sold.
Ever since the beginning of this technology, businesses, individual retailers, celebrities, and artists have been selling their offerings directly to the buyer without the need for any intermediaries who control and dominate all distribution and promotion-related activities. However, NFTs also create a new window and could have some exciting applications in mainstream commerce.
How Can We Use NFTs in E-commerce?
Many businesses have adopted NFTs and embraced this technological change as an opportunity to innovate and differentiate themselves from their competition. Here’s how NFTs will prove their worth in the e-commerce market:
Streamlines Digital Sales: As NFTs use blockchain, a shared database or ledger, to confirm ownership and authenticity, it will help streamline digital sales and enable buyers to see information such as: how much a product was previously sold for, who is the owner; he can also access the entire sale history. Streamlining digital sales eliminates fraud risk and leads to a more transparent commerce system. From the name of the brand and other relevant details to shipping and courier information, NFTs will make users obtain a complete breakdown of the product’s supply chain history using tamper-proof labelings such as QR codes and NFC intelligent labels.
The model could also support a more equitable profit-sharing system, particularly for emerging brands looking to establish themselves in e-commerce.
Increases Profitability: By merging NFTs and the hybrid shopping model, merchants can expand their product catalogs to increase their profit margin. In today’s tough competition between similar products, attaching NFT with its physical form can help the product stand out. It gives an upper hand when two different products compete with similar quality. Merchants can also give consumers instant gratification by offering them immediate ownership of these products, even if they must wait for the tangible product to be delivered.
Bridges the Existing Gap: NFTs complement current offerings and help brands connect with tech-savvy consumers. Businesses may give customers the satisfaction of making a purchase whenever and wherever it’s most convenient; however, we still need a last-mile transport system to be considered. NFTs can bridge this gap in the customer’s experience when provided with physically shipped goods. This can be a passive promotional tool for brands without additional expenses.
Loyalty Programs: NFTs will help businesses to provide consumers with real-world utility. This will benefit both the consumer as well as the retailer. While for businesses, it can save time and costs in maintaining records, loyalty programs on the blockchain can bring down prices and improve the overall customer experience. Consumers can access loyalty programs from a single digital wallet and use their rewards interchangeably.
Useful for Product Pre-Launch: NFT in e-commerce can also be helpful for businesses to pre-launch their physical products without selling them. It can be provided as exclusive tokens, offering early access to upcoming products and creating the much-required buzz among the buyers. Moreover, it is even possible for businesses to mint and sells NFTs on their web stores.
Community Building: With the help of NFTs, we can form a brand community to support the brand itself. In addition to webpages and social media, NFTs can catalyze the third wave of commerce through the power of online brand communities. Brands can utilize multiple platforms to create customer engagement in NFT communities through numerous means, such as organic messages that can boost brand awareness.
Metaverse: It is a digital world that helps us make social connections virtually. Metaverse is a collaborative, computer-generated world where users can have a second life. In the Metaverse, virtual avatars can get wearable NFTs of physical products they have in real life and boost businesses’ profit margins.
Individuals and businesses have bought virtual lands on the Metaverse by paying millions. They believe that after everyone has wholly embraced this virtual world, their virtual assets will be used to promote products and services. Experts say that our lives are bound to spill over to the Metaverse and that it is our future.
The Bottom Line
As the NFT model is becoming popular, its market is expected to rise to $231 billion by 2030, as per Verified Market Research. This indicates that NFTs are an idea whose time has come. It is the future and is set to reveal its potential in times to come.