Do Existing Businesses Really Know How to Use NFTs?

Photo by Patrick Perkins on Unsplash

Are businesses using NFTs as advertising gimmicks or life improvements?

Recently, Alfa Romeo announced that their latest SUV will come with an NFT that tracks the car’s service history and will improve its re-sale value. I would dare to say that many people would be sceptical about this but I think it sounds like a decent idea because trying to keep your log book in good condition is painful.

I’ve done a bit of research on NFT use in business cases and haven’t found anything too compelling but Emmanuel Awosika from Hackernoon has given some interesting insight on how NFTs can be used in business. For this article, I’m going to assess how feasible the ideas are.

NFTs tied to physical products

Apparently, Nike has released a product where if you buy the shoe you also get its NFT. I’m not too sure on the usefulness of this other than using the pair of digital Nikes as your avatar.

Alfa Romeo’s idea of making the log book obsolete and using an NFT is superior. This definitely makes our lives easier by allowing us to take the easy route out and forget further administration tasks. I could easily see blockchain being attached to receipts, warranties and the like. If NFTs can alleviate administrative tasks for us, then this is definitely a good business case.

Selling NFTs to virtual audiences

This is what NFTs are known for nowadays. Selling virtual goods to a virtual audience. But, I guess this all has to do with the audience. If the audience isn’t virtual, then why sell NFTs to them. This is like trying to sell orange juice to a kid who only drinks apple juice.

Apparently, Coca-Cola is selling Coca-Cola branded gear to the metaverse. This makes for great advertising but I’m not too sure how it will improve Coca-Cola sales. Coke’s a physical product that only has one time use — well if you use it for its intended purposes. However, it’s also a recognisable brand but being recognisable doesn’t necessarily improve sales. For example, I can recognise the Coca-Cola logo a mile away but I prefer to drink Mountain Dew because I prefer the taste, personally.

I guess using NFTs like this keeps the brand relevant to their audience. To me, this marketing depends if people really want to use the metaverse much at all in first place, or at least if they want to use the brand as their gaming avatar or display photo.

Brand loyalty with limited edition products

This one is a smart way to use NFT — keeping users loyal to a brand. However, I would need to emphasis that it maintains loyalty and does not necessarily drives growth. Another thing I would need to point out is that to keep up with limited edition NFTs, these brands would need to hire many artists to keep making compelling NFTs. So, I would dare to say if the return on investment is worth it? If the brand is losing relevance with its audience, sure it works, but if it’s trying to break into a new market, I don’t know if it will work.

Reducing counterfeits

This idea is similar to offering NFTs with a physic product. It is useful to know if the product is original from the source, but I would dare to say that everyday people may not necessarily care about the source depending on the product. For example, an NFT with a luxury wine is great idea, only if you and your circle drink and discuss about luxury wines. If you’re like me and don’t mind a $10 bottle of shiraz once in a while, I don’t think an NFT really matters. However, for companies like Louis Vuitton, this is a good idea, but for most other consumer goods companies, I’m not too sure.

Raising funds for social causes

Apparently, companies like Taco Bell and Coca-Cola are rewarding donors with NFTs if they donate to a social cause. This sounds more like you’re buying an NFT rather than donating. However, what is good about this idea is that it appeals to our social proofing. Nothing shows that you support a cause better than if you have a badge of honour of some sort that you can show off to others. This would compel others that to be like you, they too need to have an NFT to show that they also support the same social cause as you do.

Improve supply chain management

I remember reading a few years ago that this would be one of the highlights of blockchain technology, and even though it has been implemented, I don’t really know if I care too much where my products are sourced. This is like reducing counterfeits with NFTs. If the product is fairly cheap, I don’t care too much. If the product is expensive, then I do want to know the source country and how it has travelled into my hands. Likewise, if I’m into sustainability practices, then yes I do want to know how the products go into my hands; however, if I don’t care, then an NFT doesn’t matter.

Conclusions

At least with the current ideas at hand, there are no super useful ways businesses can use NFTs. Majority of NFT use more has to do with advertising rather than improving the customer experience. But in saying that, for some people, receiving exclusive NFTs is great customer experience for them.

The most compelling thing to me I got from my research is that NFTs can reduce the amount of administration needed for some boring maintenance further down the track. But, we’re generally short term people, so I’m not too sure how effective of a selling point this is.

In the meantime, NFTs still make for great speculative investments. You can invest in artists or even invest in metaverse real estate.


Do Existing Businesses Really Know How to Use NFTs? was originally published in DataDrivenInvestor on Medium, where people are continuing the conversation by highlighting and responding to this story.