In just 10 months, NFT projects have flooded the fashion sphere. The details surrounding each high-profile release from brands including Gucci, Louis Vuitton, Balmain and Adidas were closely tracked. How much did they sell for? How many sold? Who could get them?
The next question: what now?
“You made the drop, it is successful. So what?” says Teddy Pahagbia, founder of Blvck Pixel, a consultancy that helps businesses and brands adopt metaverse technologies. “What are the use cases in terms of customer lifetime value?”
So far, brands’ approaches to NFTs have varied: Gucci released a one-of-one art film and partnered with a virtual celebrities company; and Balmain digitally dressed Barbie and auctioned sneakers with a celebrity gym. Louis Vuitton, a bit more cautiously, simply expanded an ongoing project to give away free collectibles; while Burberry sequestered its NFTs within an existing game ecosystem. And, despite the industry’s transparency, a host of copycats and scammers can complicate post-drop research compounded with the volatility in the value of cryptocurrency ethereum (ETH).
Assessing the relative and ongoing value of these fashion NFTs is not as easy as tracking the resale value of physical luxury goods, in which a high price reflects market value. Most of the brands tracked by Vogue Business have seen resale values at least double in value including Louis Vuitton, Gucci, Burberry and Adidas. However, experts tend to disagree on how they evaluate the same projects.
NFTs are unique because of the ongoing potential revenue for original creators, including brands, in addition to an ongoing link to consumers. That can enable rewards and loyalty perks long after the collector has boasted ownership on social media. In this way, focusing on secondary market price paints an incomplete picture. Experts consider a range of factors when evaluating the success of projects, including the stability of the secondary sale price, the strength and sentiment of the community and the perceived ongoing utility.
Making dollars, and sense, of ETH
Fashion-relevant NFT projects often follow a few structures. One approach is a very rare, auctioned collectible that can be quite expensive. Gucci’s first NFT, an art film, sold for about $25,000; a nine-piece collection of unique items from Dolce & Gabbana garnered almost $6 million. These are less likely to frequently change hands or experience big price fluctuations.
Another approach is a big collection of limited edition NFTs that build hype in the vein of streetwear drops, often benefiting from endorsements from influential Web3 “cosigners”. The industry has been increasingly moving in this direction. The initial sales price is generally more accessible — if you’re clever enough to land on the allowlist. Adidas charged 0.2 ETH (around $570 at the time of writing, a little less than at release); Louis Vuttion gave them away; Metabirkins, which is not affiliated with Hermès, sold for 0.1 ETH (around $280). After the initial mint, highly desirable NFT projects can see an immediate, astronomic surge in the secondary market price. NFTs from Gucci’s Superplastic collection quickly reached about 15 ETH (around $43,000).