Last week I received my first physical-digital (“phygital” – terrible word) NFT product experience: the Nike AR Hoodie. To get this, I had to buy the Nike AR Hoodie NFT upfront. Later this NFT could be used similarly to a voucher to “redeem” the physical hoodie for order/shipment.
Moving from last year’s paradigm of pure digital collectibles towards utility, we have seen this phygital NFT theme more and more with examples from fashion and luxury like Nike, Adidas, Tiffany & Co. or Rimowa. The NFT allows its holder to claim one physical product core to the brand, but sometimes other additional virtual utilities are added like virtual wearables in the metaverse or AR filters.
One problem of redeemable NFTs (similar to concert tickets) is that buying them on the secondary market carries the danger of being scammed by purchasing an “already redeemed” NFT with the expectation of being able to claim the product (like a concert ticket that has already been scanned). So far best practices are still to be defined by the industry. While NFTiff solved it by changing the metadata (attribute and image) after the claim, which still has drawbacks as marketplaces do not always fetch the most recent data, Adidas and Nike burned the pre-redeemed token and issued a separate post-redemption NFT to the user afterwards.
Comparing how the brands designed their drop, we see their Web3 positioning in line with their traditional standing. With Adidas and Nike being lifestyle brands targeting the mass market, they chose a low entry price point of 0.2 ETH ($300-800 depending on launch date) and high supply – with Adidas at the upper extreme of 30k supply. On the luxury side, Tiffany and Rimowa had a much smaller supply (<1k) and a higher mint price – Tiffany certainly being the upper extreme with 30 ETH ($50k at time of mint).
While Adidas is a clear revenue leader both in the primary and secondary market of this peer group, it is also interesting to look at how many actually claimed the physical product. This tells us a bit about the buying motives for the NFT – the product or resale speculation. While Nike and Tiffany had redeem conversion rates of roughly 90% or more, roughly 20% of Adidas NFT holders didn’t claim their merch. Possibly this is due to the long communication break between the NFT mint and the updates regarding claiming the product.
Comparing holders of the projects, we see the Nike AR Hoodie with a holder ratio (58%) below peer level, while the others range around 67-81%, which is a common range. While the holders are all overall experienced in the space since last year, we see the average ETH wallet balance reflecting the customer segments: Rimowa/Tiffany holders have on average 18/25 ETH in their wallets, while Nike/Adidas holders have ~3/4 ETH (which is still significant).
