How Luxury Has Led Web3
Words by: Joseph Genest
“Web3 opens doors to interactive commerce, redefining ownership of luxury items. We can communicate with the product holders, and customize their experience.” - VERBAL
As the AMBUSH cofounder notes, ‘interactive commerce’ could be trending in 2024.
When the NFT craze slowed, luxury brands quietly led the way in what the true potential web3 could host. As leaders in experiential marketing, luxury brands have been using these digital tools to reward high-value customers, setting the stage for what’s to come in the mainstream.
The best part? Most consumers won’t even know this is happening. As the technology behind web3 has gotten to be more seamless, the buying experience hasn’t changed, however, what’s being gifted and rewarded is shifting quite a bit.
When the NFT craze slowed, luxury brands quietly led the way in what the true potential web3 could host. As leaders in experiential marketing, luxury brands have been using these digital tools to reward high-value customers, setting the stage for what’s to come in the mainstream.
The best part? Most consumers won’t even know this is happening. As the technology behind web3 has gotten to be more seamless, the buying experience hasn’t changed, however, what’s being gifted and rewarded is shifting quite a bit.
Why Has Web3 Gravitated Towards Luxury?
“Luxury has quickly become more and more of a driver in web3 adoption,” says Ian Rodgers, Chief Experience Officer at Ledger, a hardware wallet company for cryptocurrencies and NFTs. Before Ledger, Rodgers helped lead Apple Music and then was LVMH’s Chief Digital Officer.
“NFTs are scarce and desirable. They're a perfect match.”
Selling over 3 million wallets, Ledger has been a leader in wallet adoption, partnering with luxury brands like Fendi to elevate their brand.
“We aim to make NFT owners feel like first-class citizens. It makes sense for us to partner with legitimate, desirable brands - our brand has a lot in common with them.” says Rodgers.
A goal of Ledger is to make their wallets a fashion accessory, which is why artists like Drake have adorned diamond-encrusted versions of their Ledger Nano. For all we know, there could be over $10 million in the wallet around his neck, which is part of the allure.
While Ledger has been a frontrunner in winning over the crypto-native, it’s been Rodger’s former employer, LVMH, which has been the biggest leader in onboarding new luxury consumers.
“NFTs are scarce and desirable. They're a perfect match.”
Selling over 3 million wallets, Ledger has been a leader in wallet adoption, partnering with luxury brands like Fendi to elevate their brand.
“We aim to make NFT owners feel like first-class citizens. It makes sense for us to partner with legitimate, desirable brands - our brand has a lot in common with them.” says Rodgers.
A goal of Ledger is to make their wallets a fashion accessory, which is why artists like Drake have adorned diamond-encrusted versions of their Ledger Nano. For all we know, there could be over $10 million in the wallet around his neck, which is part of the allure.
While Ledger has been a frontrunner in winning over the crypto-native, it’s been Rodger’s former employer, LVMH, which has been the biggest leader in onboarding new luxury consumers.
LVMH’s Early Impact
“Our main objective through these initiatives is to support and strengthen brand desirability. Beyond collectors, consumers who are looking to build an additional level of connection with the brands will find our offerings interesting, attractive, and engaging – they are unique ways to be immersed in a Maison’s universe,” says Nelly Mensah, Head of Web3 and Metaverse at LVMH.
In 2022, LVMH’s Tiffany & Co. had arguably the biggest splash in web3 with its NFTiffs, which enabled 250 CryptoPunk holders to purchase custom jewel-encrusted pendants with matching digital renditions. This was one of the first noteworthy examples of how utility could serve high-value collectors, as CryptoPunks are a customer base that costs over $123,000 to join. Selling for $50,000 each, it only took Tiffany & Co. 20 minutes to sell out, raking in over $12.5 million.
As an 'aha' moment for the industry, LVMH has taken this model and expanded it into its other Maisons.
In 2022, LVMH’s Tiffany & Co. had arguably the biggest splash in web3 with its NFTiffs, which enabled 250 CryptoPunk holders to purchase custom jewel-encrusted pendants with matching digital renditions. This was one of the first noteworthy examples of how utility could serve high-value collectors, as CryptoPunks are a customer base that costs over $123,000 to join. Selling for $50,000 each, it only took Tiffany & Co. 20 minutes to sell out, raking in over $12.5 million.
As an 'aha' moment for the industry, LVMH has taken this model and expanded it into its other Maisons.
In 2023, LVMH's Louis Vuitton followed up with the VIA Treasure Trunk, offering its iconic travel trunk for $41,600, which came with a digital twin.
“The VIA Treasure Trunk is a good example of connectivity because it’s the digitization of the more-than-160-year-old Louis Vuitton Travel Trunk to give customers a new, interactive experience with a quintessential brand item,” notes Mensah. “Trunk owners can purchase keys linked to digital collectibles which are always attached to their physical counterparts, as well as create connections within the VIA community. It’s a phygital immersion into the world of Louis Vuitton.”
Mensah also notes that other LVMH brands have followed a similar phygital approach to Louis Vuittion’s VIA Treasure Trunk, including Dior’s B33 sneaker, which has an NFC chip for users to tap and authenticate on the Aura blockchain.
“There’s no set rule” for approaching phygital offerings from a physical or digital standpoint first,” says Yoon Ahn, cofounder of AMBUSH® and Nike Global Women's Curator, “but what we always keep in mind is to leverage the technology to make interesting products, adding a new category to the collection.”
Regardless of approach, marrying physical and digital has become commonplace, opening the door for consumers to understand the relationship between the two.
“The VIA Treasure Trunk is a good example of connectivity because it’s the digitization of the more-than-160-year-old Louis Vuitton Travel Trunk to give customers a new, interactive experience with a quintessential brand item,” notes Mensah. “Trunk owners can purchase keys linked to digital collectibles which are always attached to their physical counterparts, as well as create connections within the VIA community. It’s a phygital immersion into the world of Louis Vuitton.”
Mensah also notes that other LVMH brands have followed a similar phygital approach to Louis Vuittion’s VIA Treasure Trunk, including Dior’s B33 sneaker, which has an NFC chip for users to tap and authenticate on the Aura blockchain.
“There’s no set rule” for approaching phygital offerings from a physical or digital standpoint first,” says Yoon Ahn, cofounder of AMBUSH® and Nike Global Women's Curator, “but what we always keep in mind is to leverage the technology to make interesting products, adding a new category to the collection.”
Regardless of approach, marrying physical and digital has become commonplace, opening the door for consumers to understand the relationship between the two.
Putting The Product First
The model of putting a physical product first that has a digital token attached has been an attractive strategy for enticing newcomers. The focus is less on explaining digital assets or trading and more on customer identity; for example, The VIA Treasure Trunk includes a ‘soulbound token' (one that cannot be traded) with the trunk. This helps Louis Vuitton identify customers based on their purchase history, packaging them into segments that they can then reward with curated gifts and other offers.
The core function of this is to eliminate a lot of the guesswork that digital marketing faces, instead honing in on creating experiences for repeat customers and super fans. As VERBAL notes, this trend has been finally breaching the traditional fashion market as well.
"Once fans discovered the possibility of web3 and how it can be used creatively to connect different verticals and industries leading to new collaborations, the concept became more widely adopted"
The interoperability between brands is as simple as copying and pasting a collection address. This makes collaboration much easier, where a brand can feel more confident that a group of 10,000 dedicated collectors is more likely to buy a product than a wider audience across social.
Still, for the average consumer, web3 needs to be made an afterthought. As Rodgers notes, “a lot of terms that are commonplace now are just not very good. The term ‘NFT’ is an engineering acronym, savvy brands entering the space have already moved on.”
Granted, the technical improvements have meant companies have had to explain less, opening the door for web3 products to fit better within our digital wheelhouse.
The core function of this is to eliminate a lot of the guesswork that digital marketing faces, instead honing in on creating experiences for repeat customers and super fans. As VERBAL notes, this trend has been finally breaching the traditional fashion market as well.
"Once fans discovered the possibility of web3 and how it can be used creatively to connect different verticals and industries leading to new collaborations, the concept became more widely adopted"
The interoperability between brands is as simple as copying and pasting a collection address. This makes collaboration much easier, where a brand can feel more confident that a group of 10,000 dedicated collectors is more likely to buy a product than a wider audience across social.
Still, for the average consumer, web3 needs to be made an afterthought. As Rodgers notes, “a lot of terms that are commonplace now are just not very good. The term ‘NFT’ is an engineering acronym, savvy brands entering the space have already moved on.”
Granted, the technical improvements have meant companies have had to explain less, opening the door for web3 products to fit better within our digital wheelhouse.
Social Is MovingTo Memberships
A common misconception about web3 is that it's here to 'replace' social media. Instead, the two will work hand-in-hand to help convert more customers, especially with social currently trending downwards.
After a decade of data, consumers still trust traditional media (TV, radio, etc) over social media. Additionally, Gen-Z is the first generation to see its social media usage decline year-over-year, with US TikTok users now following that trend in 2023 too. Combined with social ad spending decreasing from 2022 into 2023, it’s becoming increasingly harder to reach new customers on social media.
As more brands adopt web3, it'll be increasingly common to see social media as a gateway to joining these digital communities, primarily as we replace terms like collector with member. To the average consumer, a membership to a brand with exclusive content, perks, and other rewards makes significantly more sense than being an NFT collector (even if the membership is distributed as an NFT).
Luxury brands have already set the bar for treating high-value customers like members of an exclusive club. Now's the time for more brands to follow.
After a decade of data, consumers still trust traditional media (TV, radio, etc) over social media. Additionally, Gen-Z is the first generation to see its social media usage decline year-over-year, with US TikTok users now following that trend in 2023 too. Combined with social ad spending decreasing from 2022 into 2023, it’s becoming increasingly harder to reach new customers on social media.
As more brands adopt web3, it'll be increasingly common to see social media as a gateway to joining these digital communities, primarily as we replace terms like collector with member. To the average consumer, a membership to a brand with exclusive content, perks, and other rewards makes significantly more sense than being an NFT collector (even if the membership is distributed as an NFT).
Luxury brands have already set the bar for treating high-value customers like members of an exclusive club. Now's the time for more brands to follow.
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