Non-fungible tokens (NFTs) are set to reshape the future of the global fashion industry by driving product innovation, production processes, and community building, while enabling new channels for revenue and marketing, as well as new authentication methods. A new report by Huobi Research Institute has highlighted the potential benefits fashion brands could realize by tapping the technology behind NFTs, which tend to be regarded as digital art without a sound business model.
Titled “An Overview of Fashion NFT- How will NFTs Change the Fashion Industry?”, the report noted that fashion NFTs can be divided into the four main categories of Hybrid Products, Digital Collectibles, PFP Derivatives and Metaverse Fashion.
NFTs have allowed fashion brands to innovate their revenue model by selling physical products in the digital form of NFTs before going into production. They have also made it easier for consumers to freely trade products on the secondary market. Using smart contracts embedded in NFTs, brands and designers can earn a perpetual stream of royalties from secondary re-sales, which can range from 5% to 10% of the resale price.
NFTs can also effectively tackle the perennial challenge of counterfeit goods in the secondary resale market, by offering an authentication method for traceability and consumer protection. Additionally, they transcend the limits of traditional fashion merchandise descriptions by featuring labels that include information relating to interoperability, copyrights, product attributes, smart contracts and ownership.
Fashion brands have started using NFTs as a marketing tool to build a loyal customer base. They help consumers easily connect with each other through holder-only Discord groups or communities. Token-gated e-commerce platforms created by Shopify have taken exclusivity to a new level, bringing exclusive online storefronts, discounts and experiences to the holder community.
Huobi Research Institute researcher Hanson Chan, the author of the report, said: “The global fashion industry is still in a nascent stage of leveraging NFTs in their core business, with just 17% of fashion brands in the Vogue Business Index having either explored or included NFTs in their products. The potential of NFTs could be limitless in helping fashion brands grow their offerings, revenue, marketing channels and customer base.
“We are likely to see even more categories of fashion products that integrate NFT technology. Regardless of the category, fashion brands should always consider the 6 core values that drive the success of fashion NFTs: Tradability, authenticity, exclusivity, community, identity, and interactivity.”
To download the full report, click here.
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About Huobi Research Institute
Huobi Blockchain Application Research Institute (referred to as “Huobi Research Institute”) was established in April 2016. It is committed to researching and exploring new developments in the global blockchain industry. Its goal is to accelerate the research and development of blockchain technology, promote its applications, and improve the global blockchain industry ecosystem. Huobi Research Institute covers industry trends, emerging technologies, innovative applications, new business models, and more. Huobi Research Institute partners with governments, enterprises, universities and other institutions to build a research platform that covers the entire blockchain industry. Its professionals provide a solid theoretical basis and analyze new trends to promote the development of the industry.
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