NFTs and Luxury
Exploring the World of Digital Luxury
We indulge in luxury for a variety of reasons that might go beyond our rational decision-making functions. Since the luxury assets excel in quality and have a longer lifespan, it mostly provides users with personal gratification towards a better way of life, allowing the industry to thrive even under crises.
Customers hold a privileged position at the heart of any industry and they are the reason why companies are constantly trying to deliver the best products and services. In a society where the adoption of new technology and digital has become the new normal, the luxury industry is also embracing digital and blockchain technology. The act of digitising real-world assets provides efficient and convenient interfaces for owners who wish to purchase from their favourite luxury brands at any time and from any place.
How did we end up normalizing digitalization and consumption without having to hold the physical product? Here we will explain how the digital world keeps revolutionising the luxury industry.
E-Commerce for the Luxury Industry
Technological developments have paved the way in the luxury market to a world of wider opportunities. From digital payment platforms, customer relationship management, to global marketing, technology has been a great contributor in helping to quadruple the market value with a 27% annual growth rate in the past five years.
Consumers have many choices to purchase luxury products from different online platforms, and plenty of luxury brands have revelled in the success of their brand through technological means. As an example, online luxury fashion retailer Net-A-Porter disrupted the fashion industry, having attracted 6 million unique users globally with over 1.6 million downloads of its application per year on smartphones.
The e-commerce trend was unstoppable and opened the door to new ways of consumption. According to the iconic French luxury goods brand Hermès, online shopping gathered more revenue in comparison to its Parisian flagship store in Rue du Faubourg Saint-Honoré in 2020, and 85% of their online buyers are new clients who may not have purchased in physical shops. From a brand’s perspective, following the trend allows them to expand their vision globally, providing to a wider public the chance to explore the world of luxury.
From a consumer’s perspective, e-commerce transactions drastically jumped with higher demand due to the recent pandemic and the number of online purchases has been completely off the charts. Luxury brands were initially slow to accept E-commerce and understand all its potential but they soon realized the benefits for both parties.
The Adoption of New Technologies
With an increasing number of actors participating in the online world of luxury, luxury brands are urged to dig for the next innovations that will revolutionize the industry and keep up with the public’s high expectations. In the past few years, brands explored the use of new technology such as augmented reality (AR), as they introduced new campaigns that feature the new technology.
We remember when the Italian luxury fashion house Gucci, joined forces with Snapchat application to launch its new “Shoppable AR” technology, providing consumers with an AR shoe “try-on” filter that simulates the experience of trying on a pair of shoes and the possibility to purchase directly from the application via a “Shop Now” button. The British luxury fashion house Burberry is also a pioneer in the early adoption of new technology. They proved it with their previous social campaign “Burberry Kisses”, which aimed to humanise technology through emotive digital experiences and the use of AI-enabled analytics to improve the customer experience.
The luxury sector is in constant reshape with the adoption of cutting-edge technology and the luxury brands and retailers will be able to provide next-generation products and services.
Taking it One Step Further with Blockchain
Blockchain technology can permanently record transactions in a digital, tamper-proof database. Information is spread across a network of computers and is highly accessible to anyone but cannot be altered or deleted.
Luxury brands have been dabbling in non-fungible tokens (NFTs) for a while, with a particular interest to integrate NFTs as a shopping alternative for their customers that will remain aligned with the brand’s identity. Gucci has developed 3D clothing as NFTs, providing customers with the opportunity to see themselves in a garment, without having to own the physical product.
Luxury brand Louis Vuitton also released a virtual fashion line with the popular multiplayer video game League of Legends to promote their brand. With NFTs, gamers have the possibility to own exclusive luxury items in the digital space.
The use of blockchain technology in the luxury industry is not limited to NFTs, as blockchain-based platforms in general can provide users with a decentralized ecosystem that allows a transparent and safe platform. Although still at its early stage, the influence of blockchain in the luxury sector will be revolutionary to the next large paradigm of Web 3.0, and soon enough, the luxury industry will unleash possibilities we never imagined.