Even as the cryptocurrency market heads into a downturn, established e-commerce platforms like eBay are beginning to integrate non-fungible tokens, or NFTs, more seriously into their platforms.
On June 22, eBay acquired NFT marketplace KnownOrigin for an undisclosed amount, signaling that the e-commerce giant has bigger ambitions for the world of blockchain technology and digital collectibles. Separately, Shopify last week introduced a new feature called “token commerce,” where users can connect their crypto wallets to a Shopify online store and use their NFTs to unlock exclusive access to products, benefits, and experiences.
While NFTs remain a hot topic among brand marketers and crypto enthusiasts, markets are trying different ways to capitalize on the growing trend. For many marketplaces, making a limited-edition NFT drop has often been the first step to testing the level of enthusiasm of buyers and sellers; then some companies like eBay are making acquisitions in the space betting on the long-term sustainability of NFTs. However, e-commerce analysts remain skeptical of the scale of these efforts and have warned that they may not lead to a significant change in consumer behavior in the marketplace.are.
For eBay, which began selling NFTs in May 2021, adding these unique digital goods to its platform is a natural fit given that collectibles are part of the “brand ethos” and a key part of its business, Insider Intelligence senior analyst Andrew Lipsman said.
“NFTs make more sense in this context, given the same scarcity economy at play and the ability to authenticate goods. There’s probably a lot of overlap between the collecting community and NFT users, so it’s makes sense that eBay is experimenting and investing in the space,” Lipsman added.
EBay Managing Director Jamie Iannone described the deal as a “perfect addition” to its platform. “KnownOrigin has built an impressive, passionate and loyal group of artists and collectors, making them a perfect addition to our community of sellers and buyers. We look forward to welcoming these innovators as they join the community. eBay,” Iannone said in a statement.
Enabling NFT artists, collectors and sellers represents a significant potential growth area for eBay as it continues its technology-driven overhaul. Over the years, eBay has continuously bet on adding new technological features to attract more buyers and sellers. The company has made technical investments to improve the simplicity, efficiency and security of its local withdrawal function and has expanded payment gateways globally to include Google Pay and Apple Pay.
“My feeling is that many markets felt the need to start experimenting with Web3 technologies amid the crypto boom,” Lipsman said. “But with the recent rationalization of this market, there is a growing sense that NFTs will be more of a fad than a trend. Many of these NFT experiences will provide learnings, but may never be a key driver to long-term trading behavior in the markets.
Lipsman is referring to a broader sell-off in the cryptocurrency market recently, where investors have been selling speculative assets. The price of one of the most traded crypto tokens, Bitcoin, fell below $18,000 a few weeks ago.
NFTs are essentially unique digital items, the ownership of which is stored in a cryptocurrency blockchain, such as the Ethereum blockchain. Interest in NFTs exploded in 2021 as singers, artists, businesses and celebrities jumped on the NFT bandwagon selling everything from artwork to music records to branded merchandise as NFT. Sneaker maker Adidas reportedly made $22 million from the sale of its NFT “Into the Metaverse” collection last year. Rival Nike acquired RTKFT, a company that produces NFTs and digital footwear, in December. Following the acquisition, Nike and RTFKT launched their first NFT collection of digital sneakers in April. One of the sneakers in the collection, designed by contemporary Japanese artist Takashi Murakami, sold for $134,000 according to the New York Times.
Thanks in part to the activity of Adidas and Nike, some of the first markets to experiment with NFTs are those focused on streetwear and collectibles. In January, Detroit-based sneaker exchange StockX announced the launch of Vault, a program that tied an NFT to ownership of a product on the StockX platform. StockX said in a May report that it has since discontinued more than 1,600 editions of Vault NFT, the majority of which sold out within minutes of release.
In January, live marketplace Whatnot also started allowing users to resell their NFTs. Before eBay acquired Known Origin, they previously launched their own collection of NFTs in May in partnership with NFT platform OneOf.
Not all markets are jumping headfirst into space. In April, Amazon Chief Executive Andy Jassy told CNBC that it was “possible” that NFTs would one day be added to Amazon’s roadmap, but cautioned that the company is not. had no short-term intention to invest heavily in NFTs, nor in cryptocurrency. “We’re probably not close to adding crypto as a payment mechanism in our retail business, but I think over time you’ll see crypto getting bigger,” Jassy said.
“Amazon is focused on keeping the plates rotating,” said Marketplace Pulse founder and CEO Juozas Kaziukėnas. “Don’t expect Amazon to come out with social commerce or NFT innovation; it is focused on fulfillment, manpower, etc. “, he added.
While marketplaces are banking on NFTs to attract buyers and sellers, other e-commerce platforms are looking to make it easier for their users to experiment with NFTs. Shopify, for example, is “non-stop” experimenting with a variety of new technology features, Kaziukėnas said – NFTs being one example. In addition to enabling NFTs, the e-commerce major recently announced other new product features, including Twitter Shopping, to help merchants find new shoppers online. Kaziukėnas said this approach makes more sense for Shopify because the company’s goal is to provide tools for brands and marketers to “try on what’s hot today.”
With token commerce, the Canadian tech giant offers brands the ability to engage with their fans by unlocking unique commerce experiences, like product deliveries and early access to limited collections, via NFTs.
“Shopify does not view NFTs as speculative assets, but rather as tools for community building and engagement,” Shopify chief blockchain officer Alex Danco said in a statement. “Tokenized commerce is particularly attractive for cross-brand collaborations. It makes it easier than ever to unite the communities of two brands,” he added.
Shopify added that with its point-of-sale app, retailers will be able to enable its token-based commerce experiences everywhere — from online to mobile to brick-and-mortar.
Despite market enthusiasm, wider adoption of NFTs will likely remain a challenge due to a lack of education on the subject and waning consumer interest. According to Google Trends, the number of searches for the term indicates that interest in NFTs has fallen dramatically from its all-time high in January this year.
“This is a niche behavior that most consumers don’t know how to engage in, even if they were interested. The biggest challenge, as with many emerging technologies, there isn’t enough of a user market to support investment,” Lipsman said.