February 7, 2023 | Seattle, WA
It is being reported that Amazon, the largest online retailer in the world, with over 300 million active users, 197 million daily visits, and over 150 million Prime users (Amazon's Loyalty Program), is getting into the NFT business. Amazon has long been investing in Web3 initiatives by supporting Crypto and Blockchain companies with cloud infrastructure on AWS and simplifying development with serverless clouds and lambda functionality. Many of the largest Blockchains have partnerships with AWS, have worked with AWS, or are using AWS in some capacity.
A brief history of Amazon
Amazon was founded in 1994, going from an online Bookstore disrupting brick-and-mortar bookstores to the everything store where you can buy just about anything and have it shipped to your door the same day. In the early 2000s, Amazon realized it could offer its server infrastructure that was not being used as a service to technology companies and AWS was born, which is one of the leading digital cloud providers that many companies in the software world rely on.
Amazon is one of the pioneers of eCommerce, a leader and model for Brands and Retailers since they launched their eCommerce in the early days of the internet, arguably the most innovative company in retail technology, and is responsible for evolutions in consumer behavior and the ease of use shoppers have been accustomed to such as one-click-payments via Amazon Pay, same day delivery via Amazon Prime, launching media and content via Prime Television, and selling available cloud storage via AWS which became Amazon's largest business unit.
The role of the Marketplace in NFTs
Amazon is the largest online marketplace in the world and interestingly enough the first wave of NFT adoption involved NFT Marketplaces such as OpenSea, Nifty Gateway, and Super Rare. The NFT Marketplaces focused primarily on digital art and PFP Avatars.
When Brands began to get involved with NFTs, many looked to NFT Marketplaces to launch their first collections, drops, or one-of-ones. To put into perspective major Brands likely have more customers than users on NFT Marketplaces as OpenSea for example is under 2 million users.
Brands prefer to sell their products through their own channels and properties as this allows them to fully own the customer, get first-party data, receive larger margins, and reduce the likeliness of churn for competitive products. As Brands had limited options to offer their NFTs, selling on an NFT Marketplace seemed like the best bet. Since then solutions have become available to allow Brands to sell NFTs directly on their existing commerce platforms such as with Niftmint, which is a Web3 Commerce Wallet and Infrastructure company.
Amazon's NFT Opportunity
NFTs open up opportunities to drive marketing, branding, and loyalty decisions for Brands while providing revenue, business, and customer retention when focused on enhancing existing business offerings.
Amazon could think of entering the NFT industry by having a similar offering to existing NFT Marketplaces or focusing on a highly crypto user, though this would be a big mistake. Since its founding Amazon has made the shopping and consumer experience more and more convenient, so creating a workflow asking its users to download Metamask Wallets and pay for NFTs in cryptocurrency seems highly unlikely. The more likely scenario is for Amazon to abstract cryptocurrency and crypto-wallets while making the purchase functions take place inside of Amazon Pay or your Amazon account.
Five ways Amazon could get started with NFTs
1.) Digital Collectables:
When Reddit ventured into NFTs, it did so by creating wallets for its users and allowing them to mint NFTs of variations of the Reddit avatar. While Amazon, doesn't necessarily have a mascot, it could release a collectible for Prime Members that could simply be a digital avatar, image, or PFP as an entry point into offering Web3 or NFT experiences. The unlocking of business logic such as access, loyalty, rewards, discounts, etc. can all stem from this initial NFT release given to all Prime Members.
2.) Digital Twins:
A concept often used with manufacturing and hardware products, Digital Twins also unleashes several opportunities for all physical products that could have a digital equivalent via an NFT. When the concept of Digital Twins is discussed with NFTs the difficulties around crypto wallets and management often get brought up, but assuming Amazon solves for this issue then Amazon users could have an NFT for products they purchase on Amazon. This may not need to be across all items though could be applied to high ticket items such as jewelry, electronics, appliances, computers, cars, etc. which all lend themselves to offering a Digital Twin that could either be included in the sale of the physical good as added value or could be offered as a one-more-sale.
3.) Gaming NFT
Amazon has planted several flags in the gaming industry with Twitch, Amazon Games, and Prime Gaming. Offering Digital Collectables in the Amazon gaming ecosystems similar to as described above in the Prime Membership lends itself well to this verticle with each gaming user being able to create or select their own avatar they use throughout the platform be an NFT. Web3 base games with characters, skins, and tools/weapons used in games have been touted as in-game NFT opportunities for game developers and their communities. As Amazon has in-house games and a gaming ecosystem, these in-game assets could have opportunities to be interoperable across games.
4.) Partner & Brand Collaboration
As Amazon has its own private label brands, as well as many companies who highly rely on primarily selling on the marketplace, Amazon has the opportunity to provide exclusivity, private access, limited quantities, or other incentives for specialty branded products. This can also work with larger more established Brands with which Amazon wishes to partner with to bring sales onto their site. For example, say Amazon wanted to have an exclusive product from a high-end fashion house like Louis Vuitton, and by offering an NFT with purchase could incentivize customers to transact. Brand collaborations also introduce new products, product categories, experiences, revenue, and loyalty with NFTs becoming the representation of the partnership.
5.) Events
Through AWS and its infrastructure services, Amazon has a number of courses, certificates, and events for developers, marketers, and partners who use the Amazon platform. Certification of AWS proficiency is highly important for individuals and for companies looking to partner with Amazon. NFTs could be offered as a certificate of completion or as a commemoration of attendance or participation in an event. While POAPs have become popular at events as a participation NFT, they do not offer an in-network branded experience that can live on Amazon properties but instead offers the POAP in a public application where users of POAPs can collect across any event they attend. Brands and organizations who host events need to own the relationship and experience with their attendee and be able to offer Event NFTs from within their conference, course, or certificate environment.
Lessons for Brands
Let's not forget that when incumbent and legacy Brands in the late 1990s and early 2000s saw Amazon making strides in eCommerce, many Brands decided to stay in their old ways thinking the Internet and eCommerce were a fad. For Amazon to make a team, time, resources, and money investment into building out their NFT strategy is enough of a warning for Brands to start building their own.
Brands can take lessons from the "Five ways Amazon could get started with NFTs" and apply them to their own businesses. NFTs as a product category are still in their infancy and there is no defacto leader or space where average consumers are visiting to acquire Brand NFTs which provides major Brands with the ability to own the narrative and the experience with their customers before an incumbent Brand sets the precedent.
Most Fortune 1000 Brands have dedicated individuals in their organization who are tasked with developing their internal Web3 and NFT strategies.
Just like the Brands who adopted eCommerce and then Social Media continued to have success, the Brands who adopt Web3 and NFTs yet make consumable to their customers will find success as commerce enters its 3.0 era.
Conclusion
With Amazon being the industry and innovation leader in eCommerce arguably since its founding in 1994, it doesn't seem crazy to think the most innovative retail technology company would get involved with the best retail innovation to take place since the smartphone. At Niftmint, we believe "Brands will take NFTs to their first 1 Billion users" and with Amazon getting involved it seems that could happen even sooner.
About Niftmint
Niftmint makes it simple for Brands to Mint, Sell, and Custody NFTs directly on their site while abstracting crypto and crypto-wallets from the Brand and their Customers via our embedded Nifmint Wallet. Niftmint has productized all smart contracts, wallet creations, token deployments, and transfers while providing a user experience native to traditional Commerce.
About the Author
Jonathan G. Blanco is the Founder and CEO of Niftmint and has been building companies at the intersection of Web3 and Commerce since 2017, working with leading brands to establish, build, and execute Web3 Commerce in their organizations. As a Product and Branding leader, Jonathan has been working with and building Brands since 2009 and has been building retail technology and commerce integrations since 2014. Jonathan has long been an advocate for Web3 always doing so from a product and customer lens to make sure the experience is true to the business need.