How can tokens reshape the consumer experience?
How can tokens reshape the consumer experience?
Crypto is reshaping the consumer experience. Let's take a look.
How can tokens reshape the consumer experience?
The ERC-721 standard was first introduced in 2018, and quickly took shape with the advent of crypto kitties. The standard unlocked new use cases & possibilities never seen before.
It empowered artists and creators by letting them build unique experiences with provable ownership & scarcity. But, it was only the start. In the last five years, we have seen everything from gaming assets to fashion brands leveraging tokens to unlock & deliver new experiences. In this post, I’ll be exploring how tokens are reshaping the consumer experiences, emerging trends and the new possibilities that can be unlocked.
Note- I won’t be looking at token standards as it’s ever evolving.
For the sake of simplicity, let’s divide the consumer experience into three parts-
Creation- How products are made. From R&D to production.
What story does the creation of the product tell?
Buying experience- How products are bought. From ordering online to the retail experience in stores.
What does the customer journey look like?
Owning- The ownership experience encompasses how people perceive and feel about owning a product. Toyota and a Porsche elicit different emotions due to their distinct purposes.
How does the product make you feel?
1. Centralised creation to Co-Creation
A notable shift in consumer experiences is the move from centralised creation to co-creation. Traditionally, big consumer brands followed a one-to-many model, handling everything centrally. However, this model is slowly evolving into a many-to-many approach, allowing consumers to actively participate in the brand's evolution through co-creation.
Co-creation in Web 2.0
One of the early pioneers of this model in retail was Glossier. Founded by Emily Weiss – a former styling assistant for Vogue. It was born out of the realisation that most beauty brands were out of touch with how women interacted with make-up.
In order to build excitement, glossier put up an instagram post with four different types of pink bubble wrap & encouraged users to vote for their favourite shade. Not only did the engagement skyrocket, consumers loved the idea of being able to play a part in the brand’s evolution. The key to this model lies in empowering customers with tools that can help shape the brand’s evolution over time.
We’re seeing this model slowly evolve into web 3 with ownership at it’s core. Among the brands embracing this transformative model, Nike stands out as a prominent example.Whilst RTFKT empowered creators with 3D files & commercial rights, .swoosh gave their holders custom IDs & launched creator studio where holders can directly collaborate with the team & get rewarded in doing so.
To put things into perspective, over 36K users minted a box on the Nike’s .swoosh platform, and over 97K+ boxers were minted with over $1.9 million in revenue generated in a single mint.
With co-creation, we’re seeing two trends-
Co-creating with the brands
Leveraging the core brands to create new ones.
How is this different from products in web 2.0?
It is where the value accrues. Let’s go back to the earlier example of Glossier. Even though the community had a say in the brand’s evolution, the revenue generated from each product accrued to the company with none of it going back to the consumer. Furthermore, as the company scaled, they had to spend on advertising to target new customer segments, which often lead to an increase in price for the end consumer.
With tokens, there’s a fundamental shift in how value is distributed. With provenance at it’s core, value starts accruing to the creator with the community as the core propagators of the brand.
Now, that we’ve looked at the creation process, how do you think the buying experience changes?
2. One click → Immersive Storytelling
In the last decade, e-commerce companies hyper optimised to drive sales- from discounts to BNPL offerings. The focus was to get customers to buy as quickly as possible by maximising the average order value.
We’re seeing a cosmic shift in consumer behaviour from that. Brands are now striving to be part of a bigger narrative or lore, integrating their products into captivating stories that engage consumers on a deeper level.
The emphasis has moved from quick transactions to cultivating a deeper and more meaningful connection with their customers.
Storytelling in web 3.0
We're already witnessing this trend in action, with crypto native IP collaborating with established Web 2.0 brands. Two emerging trends we’re witnessing right now are-
Lore integration
Trait based activations
Lore integration in NFT IP
Lore integration is a captivating trend where brands fuse their products into immersive narratives, forging deeper connections with consumers through authentic storytelling. It allows brands to create compelling experiences that resonate with their audience and foster a sense of belonging.
The trend has already started with Gucci partnering with Yuga labs to launch relics, and RIMOWA partnering with RTFKT to launch a suitcase coupled with Workerbots as a part of the lore. There are few challenges associated for brands using this form-
Relevance and Authenticity: For a product to fit organically within a brand's lore, it needs to be relevant and authentic to the brand's story and values.
Consistency and Coherence: Maintaining consistency and coherence within the lore is crucial for a compelling storytelling experience.
Limited Opportunities: The lore-based activations often rely on limited opportunities and exclusivity to enhance their appeal.
Self Expression in the Metaverse
Today our digital identities supersede our IRL in most cases. Like IRL digital fashion has become a key part of self expression. This is where trait based activations come in. Whilst lore integrations are opportunistic & have a limited window, trait based activations let brands deliver prolonged experiences.
If you take a close look at the secondary collections of blue chip NFTs, you’ll notice products from the real world. As the space evolves, and the demand shifts from capturing blockspace to capturing mindspace, brands will start leveraging trait specific activations to deliver unique authentic experience, whilst it helps NFT projects expand their IP to new audiences.
We’re already witnessing this with Memeland’s upcoming trait marketplace. A web 2 parallel, that we can draw is Fortnite’s inventory section that lets you change outfits, add stickers among other things. Furthermore, we’ll also see new incentives being bakes in by the brands ( wear superdry beanie jacket for 10 days to get 600 v-bucks in the game) to drive brand awareness.
3. From Owning to Collecting
The rise of social media brought forth a generation of "empty calorie" brands, heavily reliant on driving sales through brand awareness. However, this paradigm is gradually shifting as consumers are slowly moving away from the traditional model of buying products that purely revolve around utility. We’re seeing consumer preferences shift gradually towards luxury & craftsmanship.
Consumers are seeking more meaning and products that hold intrinsic value through their unique stories and exquisite artistry.
A prime example of this phenomenon is Birkin bags , where their allure lies in the craftsmanship, rarity, and rich narrative that surrounds them.
With an annual revenue of $12 billion, the company's market capitalization has surpassed that of Nike, a global giant with $47 billion in annual revenue. This marks a gradual but significant change in consumer values, where appreciation for artisanship and craftsmanship is gaining ground over mere brand awareness.
Programmable blockchains enable provenance & authentication, unlocking new forms of storytelling.
Why is this happening?
According to Professor Scott Galloway, luxury brands' ability to command higher multiples of revenue stems from increasing income inequality and their adeptness at manufacturing scarcity.
The scarcity-driven approach encompasses deliberate supply choking and induced rarity, leading to a preference for luxury and scarcity-driven brands. By limiting product availability, these brands create an aura of exclusivity and rarity, enhancing their appeal among consumers.
This scarcity-driven strategy engenders several key impacts:
Increased Perceived Value
Emotional Connection and Status Symbol
Fostering Collectibility
Investment Potential
As consumers continue to shift from owning products to collecting cherished pieces, we’ll see in a rise of curators & taste makers. These curators will play a significant role in shaping consumer preferences & trends in the not so distant future. Similar to how narratives evolve in the space.
Conclusion
As the space evolves over time, we’ll see brands, creators, and artists leveraging tokens to build new consumer experiences. From fashion to beauty, to even beverages, tokens will unlock new & exciting behaviours that previously wasn’t possible. And I’m excited for the same as well.