Amazon will allegedly launch an NFT marketplace on April 24th. Interestingly, it will allow customers to buy NFTs tied to real-world assets that they ordered. Wow. Does this mean, next thing we know, Amazon will be airdropping stuff in our digital wallets? Not so fast, but this is an interesting signal.
The news is coming from unnamed sources within Amazon. Allegedly, the world’s largest e-commerce company will notify every Amazon Prime customer in the US of its digital collectibles initiative once it goes live. This first wave of Prime customers will have 15 NFT collections available to trade. Only later would the program roll out to ordinary customers and other parts of the world.
Amazon Early Adopter of a Trend: Big Companies into NFTs
It makes sense for Amazon to do this, as it already sells both physical and digital products – examples of the latter being movies and online books.
Amazon probably saw the need to get into this new digital ecosystem early, before other big players have already scooped up the lion’s share.
Just like Instagram started piloting NFT sales for certain creators last year (newsflash: it just halted this pilot!) it makes some sense for creators to offer their future digital creations through Amazon. It may not be ‘cool’ necessarily, but it’s where people are, and it has the infrastructure.
Amazon’s move is yet another confirmation of the trend that more and more big companies are working on a crypto strategy.
Which Blockchain will Amazon Use?
It is not known yet on which public blockchain the product will go live – if at all. It is well possible, sources in this Blockworks article say, that Amazon will use a self-created blockchain.
Of course, that would be a bit of a bummer and it would be a departure from a trend that seemed to be emerging, namely that big companies tend to use the Ethereum ecosystem for their projects. An example is Coinbase’s Base, a Layer 2 on Ethereum. Companies like Starbucks with their NFT loyalty program and Reddit have teamed up with Layer 2 Polygon – a chain that certainly has a top-notch developer AND marketing team!
Another unconfirmed aspect of Amazon’s project is that existing customers don’t need a crypto wallet. Instead, they will be able to use their Amazon accounts to add NFTs to their shopping cart and pay with a debit or credit card. Who knows, at a later stage those NFTs could be accessed ‘the proper way’, via a crypto wallet. Once that will happen, the move will potentially become more lucrative for Amazon, as I will argue below.
A Marketeer’s Dream – This is Why Amazon Likes It
Let’s keep digging a bit into the question of why Amazon would venture in the NFT space. Of course, first, it’s another thing to sell. But more importantly, it helps them target customers.
But why would Amazon need yet another source of knowledge to target customers? They already have knowledge about customers through their accounts at Amazon, right?
True, but once Amazon has insight in its customer’s crypto wallet, it will get a much deeper insight into who its customers are. With a customer’s permission, a business gets direct insight into his or her purchase history (on-chain activity) and – assuming it’s an open blockchain – into that of purchases at other companies.
Didn’t ‘cookies’ already achieve this for companies? Well, cookies track behavioral patterns on the web and not people’s purchases. Plus, cookies are on the decline. Google is set to phase out third-party cookies in Chrome by 2024.
Back to Amazon. Once it will have insight into its customer’s digital purchases, and for example token-gated event attendance badges, it obviously can target customers better. It will become much easier for them to provide perks to their users across the web, not just Amazon’s platform.
The Possibilities of ‘Twin NFTs’ or Phygital NFTs
Most NFTs thus far have been the stand-alone kind: you own a certificate of ownership of an item somewhere in a database or on-chain, not in the real world. It’s either or. Artist Damien Hirst even made a play on this by having the customers of one of his collections face a dilemma: they could either keep the physical painting or the NFT of the painting, not both.
But what Amazon plans to do is different. As mentioned in the beginning, the unconfirmed rumors are that Amazon will tie the purchases of physical products to an NFT. This concept is called twin NFTs, phygital NFTs (I know, ugh) or redeem-and-retain NFTs. In any case, it means that customers buy in one go both the physical and the digital form of the product.
This makes them more grounded and less speculative, and thus makes the plunge in the NFT world safer for Amazon.
The concept of twin NFTs makes probably the most sense for luxury consumer goods. A twin NFT of your 4-pack of toilet paper rolls makes less sense than the twin NFT of a limited-edition Luis Vuitton handbag. The latter expresses something about you, both in real life and ‘the metaverse’, and thus can be used in both worlds. Tiffany’s realized this by offering a limited edition of physical Crypto Punk pendants, only available for crypto punk holders.
Our real lives and online lives are increasingly intertwined. If I buy a pair of sneakers, why not also allow its twin NFT to grant me access to a fitness app? Or the real-world version of a fitness app, a fitness center in ‘meatspace’?
Marketers at Amazon will if this all works out have, through insight in their NFT customer’s crypto wallets, a public database of unique identifiers of both their own and other potential customers.
Let’s see how Amazon executes and if they don’t fumble this opportunity.
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
