In my girlfriend’s world, people pay $500 for t-shirts and $2,500 for trench coats. That’s because she works at the corporate office of Burberry, the British luxury fashion brand. But for the last few months, the 166-year-old fashion house has been blasting company-wide emails about a new kind of fashion line: web3 wearables.
Last August, Burberry launched wearable NFTs for a crypto video game called Blankos Block Party. Sharky B NFTs, sold together with a jetpack, armbands, and pool shoes, generated about $375,000 in sales. Now, brands such as Gucci, Louis Vuitton, Nike and Adidas, want to dress this burgeoning market, too.
With virtual goods generating sales of about $110B in 2021 and Fortnite developer, Epic Games, making $50M from one set of skins alone, fashion companies want in. Each brand wants to dress the metaverse’s virtual inhabitants – which, even while the crypto market craters, they maintain will be the next generation of customers in the decades to come.
It’s only a matter of time until the tech goes mainstream, predicts Dani Loftus, a digital fashion writer and member of RedDAO, a DAO that invests in fashion NFTs. “In the next five years you will wear Digital Fashion. On your in-game avatar, on zoom, or on your social media,” she wrote in a Mirror post.
So, what does this new fashion world look like? After speaking with professors, founders, and Instagram influencers, I learned that brands are vying for dominance in two main opportunities.
The first is Primarily Online NFTs (P-URL) – think NFT characters like Bored Apes or Cool Cats rocking Gucci clothing in 2D NFT artwork, or digital skins for characters in blockchain video games – like Decentraland hosting Metaverse Fashion Week in March, which featured brands like Dolce & Gabbana, Tommy Hilfiger, and Etro. Completely virtual, it hosted after-parties, immersive experiences, and of course, shopping.
There’s big money in this space – OpenSea, the NFT marketplace, soared to a valuation of $13.3B after a $300M funding round in January. With collections like Dolce & Gabbana’s making the equivalent of $5.7M in sales, there’s demand for metaverse fashion whether you understand it or not.
That explains why, in December 2021, Nike acquired RTFKT, a start-up that drops 3D sneakers as NFTs and has since partnered with CryptoPunks. Cryptokicks, the first major RTFKT and Nike sneaker collaboration, sits at a floor price of 1.88 ETH.
“As fashion NFTs gain wider acceptance, it will be the norm to launch pure NFT fashion collections independent of physical product launches in the future,” Professor Vincent Quan from the Fashion Institute of Technology told The Defiant.
This March, Gucci released 10KTF Gucci Grail, an NFT collection that plasters Gucci clothes on big-name NFT collections such as Bored Ape Yacht Club, World of Women, and Cryptoadz. The collection has a floor price of 0.8 ETH and has 3.5K ETH in total volume traded.
Real World Experiences
The second opportunity is called Primarily In Real Life (P-IRL): where web3 interacts with the real world of fashion and merchandise.
Some major brands are accepting crypto at their brick-and-mortar stores. In April, LVMH-owned streetwear brand Off-White began accepting crypto payments across its flagship stores in Paris, Milan, and London. Gucci followed suit and will start accepting crypto in some of its stores at the end of May.
Then there are token-gated websites selling physical merchandise to select customers. The Cryptoon Goonz NFT collection launched a token-gated store in December through Shopify — meaning that the real clothing was only available to holders of the Cryptoon Goonz NFTs.
“We’re seeing a new class of brands emerging that are using NFTs to unlock totally new commerce experiences and build strong communities,” tweeted Shopify’s Director of Product Robleh Jama. At South by Southwest this year, Shopify partnered with the Doodles NFT collection to host an IRL token-gated merchandise store.
Other companies are using NFTs to verify that, say, the Louis Vuitton purse you bought for cheap on the street is legit. ORIGYN, a Swiss company that authenticates luxury items with NFTs, has launched NFTs to authenticate luxury goods, such as watches. “Swiss watches keep time, but the watch-making industry is always late,” ORIGYN board advisor Alexander Friedman mused from his office in Switzerland.
While the watchmaking industry may be a moment behind, ORIGYN’s technology feels like it’s from the future. For ORIGYN’s partnership with watch marketplace Watchbox, it’s sending customers boxes with cameras that take high-definition photos of the watch. Because each watch – even in the same line – is unique due to imperfections, the data for each photo will be unique. “It’s like a fingerprint,” says Friedman.
While many watchmakers have relied on their history and reputation to make sales, Friedman says they are now looking forward to the future. Watchmakers must capture the younger audience — that has been lost to smartwatches — and NFTs are one way to do just that.
Takeaways from the Metaverse Runway
The metaverse offers opportunities for brands to build streams of revenue through new products. But will consumers keep purchasing digital-only clothing during a recession considering the 2008-09 recession shaved 8-9% off the value of the luxury goods market?
My bet is on the P-IRL routes, which offer consumers real clothing while incorporating crypto – considering that you can’t wear digital clothes outside, it’s easy to imagine a metaverse fashion market vanishing when purse strings are tightened.
Still, high-end fashion is an ancient industry, and probably isn’t going anywhere anytime soon. No one ever needed a $2,000 Louis Vuitton purse or a $500 t-shirt to begin with, and digital outfits aren’t vital to your survival, either. But fashion — especially luxury — has always been for non-survival purposes like self-expression and status.
Laugh all you want, but as for me, I’ll be using some crypto next time I drop by the Gucci store — maybe I’ll even buy my girlfriend a dress with my NFT profits!