First up, what’s an NFT?

The acronym ‘NFT’ has been bouncing around the internet for a while now but, understandably, people are struggling to get to grips with what NFTs actually are. NFT stands for “Non-Fungible Token”, which is a digital product that you can buy through a blockchain…bear with us.

An NFT is (to put it simply) a digital asset, such as a link to a file and a record of the owner. An NFT can be minted (certified) by adding it to the Ethereum blockchain which acts as a ledger - a sort of digital certificate that can’t be forged or lost - so that ownership can be proven securely. Customers can buy an NFT from a creator (or owner) on online marketplaces which act as "trading floors" and complete the purchase and awarded ownership of it, on a blockchain.

Let's use a real-life example like the Mona Lisa painting to break it down even further. The Mona Lisa is an extremely valuable painting, sure you can get Mona Lisa posters in gift shops or buy a print on Etsy for £11, but you don’t actually own the original, which is where the value is held. It’s a similar situation with an NFT. The difference is in the digital world you could have a literal copy of the file - pixel for pixel even though you aren't the owner. But, like with Mona Lisa, copies won't hold the value of the original NFT only the owner of the certified version has the valuable version.

You can manage the NFTs you own through a crypto wallet on the blockchain. These are digital accounts for transactions using cryptocurrency (still the most popular way to buy NFTs - but more on that later). You have to own a crypto wallet to buy an NFT so that your ownership or the ownership history of an NFT you have minted or sold can be traceable. Still with us? Good.

NFTs are part of web 3.0, removing middlemen and giving power back to the creators, small players and “the people”. As we spend more time online, owning something digital is becoming increasingly valuable. But this is just the beginning, and with e-commerce platforms like Shopify dipping their toes into the world of NFTs and blockchain, we could see trading taking place directly through e-commerce sites.

There’s a whole lot more information on NFTs out there, but don’t let the ‘how’ get in the way of your excitement around this. Remember, most of us still have no idea how emails work, but we use them with ease every day, and NFTs can be the same.

What does this mean for e-commerce?

The growing popularity and normalization of NFTs present a unique opportunity for e-commerce brands, agencies and technology solutions alike. We all know that as social media becomes more saturated, paid media is becoming more expensive.

And, thanks to the growing demand from consumers who want to really connect with the brands they purchase from, loyalty and rewards programs are on the rise. That’s where NFTs come in, they’re like a loyalty program on acid. They enable e-com brands to offer discounts and award exclusive access to drops and events, etc. to NFT holders. The NFTs themselves could be sold or gifted to early supporters and loyal customers.

Another benefit of NFTs for e-com brands is that they can encourage a community and build investment in your brand (by making NFTs available to your customers you can create a community of collectors).

And the benefits don’t stop at the business. Early supporters of brands that experience huge growth can sell their NFT (with all of its perks) for a big profit. By rewarding customers financially, your community is more likely to participate and encourage your brand’s growth.

Community-based streetwear brand, The Hundreds, hopped on this new loyalty concept starting with ‘Adam Bomb Squad’(ABS) NFTs. Customers can buy ABS NFT which is an image artwork that also acts as a badge giving them free exclusive t-shirts from The Hundreds, early access to their latest drops, access to exclusive events both online and in-store, and fast-lane privileges for warehouse sales. This creates a ‘club’-like mentality, where customers are buying into the brand and being rewarded for doing so.

And they haven’t stopped there. The Hundreds have upped their game by partnering with more big names in NFTs such as deadfellaz, BRAiN VOMiT and smilesss to offer exclusive merch that customers can pay for using crypto via Shopify and coinbase commerce.

We Make Websites Sales Consultant, James Foti, sees The Hundreds’ loyalty scheme as just the beginning and expects global brands to follow suit in the coming months:

I think we’ll see the likes of Adidas and Nike doing more of this. Big fashion brands collaborating with NFT brands for exclusive merch is the future. By giving people with the NFT exclusive access to certain clothing items brands can create ‘FOMO’ and as a result, increase engagement in their loyalty scheme and brand overall.

James Foti
Sales Consultant, We Make Websites

E-commerce loyalty solution Yotpo seems to be picking up on this opportunity by recently launching their own NFTs ‘Fabulous Flamingo Club’. These NFTs are available on the Ethereum blockchain and will unlock loyalty benefits and perks in the future - watch this space.

How is Shopify supporting merchants who want to sell NFTs?

While most people are only just starting to get to grips with NFTs, they’ve been around for a while. It seems like Shopify had their fingers on the pulse with this one as the first e-commerce platform to allow merchants to sell NFTs through the platform. In 2021, the NBA Chicago Bulls were able to start selling their NFTs - digital artwork of champion rings - directly through their Shopify Plus store using credit or debit cards.

Note - NFTs are typically associated with cryptocurrency but customers have been able to purchase using credit or debit cards in the past. However, it certainly wasn’t as easy for customers as the Chicago Bulls have made it look through Shopify.

What’s more, NFTs were recently featured in Shopify’s ‘Future of Commerce’ report. With Shopify’s CEO, Tobi Lutke purchasing the ENS name tob.eith (like an NFT for a website domain name) and Shopify’s President, Harley Finklestein trading and promoting NFTs like Adam Bomb Squad, it seems the NFT trade is hot on the agenda for Shopify in 2022.

Currently, Shopify Plus merchants can sign up to their NFT beta program where they can mint and list NFTs on popular blockchains using Shopify partner apps. Then, they can sell them any way they want, whether it’s Shopify Payments, credit/debit cards, crypto payments or Shop Pay.  

What’s next for Shopify x NFTs?

Shopify is an exciting platform to be on if you want to tap into the world of NFTs, but there are still uncertainties surrounding their future. For example, there’s a lack of clarity regarding which blockchains are available to merchants on the NFT beta program. Some Shopify articles state only Ethereum and Flow are available, but in the future, merchants can choose which blockchain they want to sell on. Others confirm that merchants can mint NFTs on all the popular blockchains including Ethereum, Polygon, Near and Flow by using its partner applications.

We also have no timeline from Shopify as to when this program will officially launch, and the beta phase is still only available to US-based merchants.  

Despite this, the fact Shopify is the first e-commerce platform offering an NFT solution means they’re paving the way for e-commerce’s involvement in NFTs and they’re making it easier and more profitable for merchants and customers while doing so. We think the next step for Shopify would be some form of integration with crypto such as a Shopify app that can be built directly onto a store, as a lot of these are built via the Ethereum ecosystem.

Final words

E-commerce has seen huge growth over the past few years (sped up by the pandemic) and the progression of e-commerce solutions will only continue that trajectory. Similarly, NFTs that once started out for small businesses and digital artists have shot to fame and integrated into household brands' loyalty programs and e-commerce sites. Their increasing popularity and the rapid integration into the mainstream mean it's safe to suggest they won't be just another trend. This means, if you haven't already, it's time to get clued up on how you can use NFTs to your advantage. And joining the NFT beta on Shopify might just be the best place to start.

If you have any questions on NFTs or if you’d like to have a conversation on wider Shopify products and how to keep your store up to date with industry trends get in touch.