Making NFTs work for retail means finding utility

NFT-backed coffee subscription Bored Breakfast Club says CPG brands are ripe for Web3.
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Bored Breakfast Club

· 5 min read

The non-fungible token frenzy of 2021 may be behind us, but apparently nobody’s told the retail world. From Nike and Adidas, to Starbucks and Lacoste, brands are betting big on NFTs.

Many of today’s projects are going further than pricey digital images, as brands experiment with connecting products or experiences to their tokens in the hopes of reaching beyond crypto enthusiasts and art collectors to bring their most engaged consumers into the fold.

Achille Traore, CEO of loyalty platform White Label Loyalty, said NFTs are an excellent way to bridge the gap between a brand’s products and its online engagement with consumers. “That’s probably the best use case…so you can actually take a physical product and have an experience online as well,” he told Retail Brew.

And Traore believes retail’s love affair with NFTs is here to stay. “From a business perspective, it’s almost like a new revenue stream and a new way to get closer to customers,” he said.

Getting real with Web3

One such foray into the physical side of NFTs is the Bored Breakfast Club, a subscription project delivering Los Angeles-roasted coffee to token holders. A collaboration between digital design firm Kley and Yes Plz Coffee, Bored Breakfast Club is a collection of 5,000 NFTs on the Ethereum blockchain.

  • Each NFT is a “breakfast scene” featuring the arms and hands of an ape eating a morning meal in various locations (the founders owned several of the popular Bored Ape NFTs and sought to leverage them for the subscription).
  • The digital breakfast images are available on NFT marketplace OpenSea, and each time an NFT is sold, Bored Breakfast Club receives royalties from the transaction. That income is used to fill a “community coffee wallet”—as Kley founder Brad Klemmer calls it—a pool of funds that pays for packaging, roasting, and shipping coffee to token holders. Each time the wallet fills up, a new batch of coffee is shipped out.

Klemmer said the project is essentially a proof of concept for loyalty and subscription models.

“In the Web2 world, building community and having brand advocacy is the holy grail,” Klemmer told Retail Brew. He said that despite the buzz around NFTs, most projects exploring Web3 technology lack utility for the everyday consumer.

“What we noticed is none of them are really doing anything that feels immediate,” he explained. “There’s got to be a way to tie in what’s happening in this space…with direct to consumer and consumer packaged goods.”

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A changing landscape: The way the retail world is approaching NFTs has evolved in the last year, said Bain & Company partner Gene Rapoport.

“[The conversation] has moved beyond the three people in marketing, and it is moving to the CMO and it is typically moving to the entire C-suite,” Rapoport told Retail Brew.

  • Despite the interest from big-name brands, the retail/Web3 space is still nascent, Rapoport said. “I would label it as just very thoughtful experimentation that’s going to inform future roadmaps for these larger brands as they think about how to adopt this with a larger base of consumers.”

Building a model: Bored Breakfast Club, for its part, has over 2,600 token holders, who received three coffee shipments between January and November 2022.

“We’ve done surveys in the traditional sense for a lot of our clients, and it’s like pulling teeth to get people to answer,” Klemmer said. When Bored Breakfast Club sent out a survey to token holders, they saw an immediate and high response rate, he said.

“We had hundreds of people responding with really robust answers to the questions that we were asking because they’re passionate and excited and felt like they were a part of something, which led us to better dial in our offering,” Klemmer explained.

  • That’s a model that other brands could look to in order to obtain a better understanding of their consumer wants and needs, he added.
  • “What we’d love to do is to be able to create almost like a turnkey solution for a lot of brands that are looking to play in this space and have absolutely no clue how to get started.”

Beyond breakfast: According to Rapoport, all brands launching NFT collections, whether subscriptions or otherwise, should be thinking about them as test cases, and considering how to make them more widely relevant.

“If you’re a brand launching something in the space now, ideally…you’re not thinking about 2022, 2023 as…the final release of something,” Rapoport said. “What you’re launching now should be a really thoughtful pilot to learn and test.”

Despite the challenges, Traore expects to see more movement in the retail world for these projects in the coming year.

“We’re in the very early stages, really. I think there’s so much more to come from that. And the brands…realize that there’s potential here and they don’t want to miss out.”—MA

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.