In 2019, the US recorded that the total share of online transactions had overtaken traditional retail sales. Now, in a post-Covid ‘always-on’ world, these figures seem like the norm. But things were already heading that way. In the run-up to 2019, we could argue many brands were already moving towards e-commerce being their primary consumer channel.
Brands that operate in both physical and digital environments have constantly struggled with how these two spaces co-exist. Ideas around delivering real-world store experiences in a digital environment have been the pot of gold at the end of the rainbow for many a digital strategist.
From how they deliver a consumer experience that’s fitting with a real-world store to understanding and integrating new technology and trends that seem to pop up almost daily.
It seems to have taken until 2022 for brands to understand that trying to force a digital replica of an in-real-life (IRL) store experience or a series of awkward try-on-at-home digital wardrobe solutions may not be the best way to integrate the physical and digital experience of the brand.
So, where are we today? What changes are we seeing in the physical versus e-commerce experiences that brands are currently offering to consumers?
When Nike acquired the virtual fashion NFT studio RTFKT towards the end of 2021, the world was at the height of an NFT collectable ‘flipping’ bubble. Flipping is the act of buying a hyped item with the intention of selling quickly at an inflated price. As we have moved through the year, however, we can now understand Nike’s intentions for this acquisition: to navigate ahead of any current trend or hype and into a world where brands begin to blur the lines between physical purchases and digital assets.
After a series of Nike x RTFKT NFT sneaker drops, Nike has begun to experiment with physical and digital world collections. The Nike x RTFKT AR hoodie is the latest example of this and allows the physical owner of the hoodie to connect with a digital version of the hoodie via an NFC chip placed inside the garment. The NFT and the digital version not only allow the owner to wear the hoodie on their avatar in the metaverse, but they also enhance the hoodie with animated wings.
Nike has understood one key factor in this product launch. One that many brands over the years of the mainstream e-commerce uptake have failed to understand: Consumers now have both a physical identity and a digital identity.
The notion of a consumer having both a physical and a digital identity feels like nothing revolutionary, but it’s somehow been overlooked in the quest for the real world and digital brand unity. The realisation that consumers can act, dress and communicate a certain way in the physical world and a different way in the digital world may be a linking of some of the dots.
Arguably the metaverse is driving much of the conversation around digital identity versus physical, but that’s a topic for another time.
What we need to address currently is: Have brands now finally found a way to sell and be relevant in three ways: the traditional way; the brick and mortar stores, the current way; using e-commerce; and in the near future via an online identity or through the metaverse?
The opportunities around products that are developed with the above points, open up new avenues for a connected consumer experience and how products are purchased and used.
In these scenarios, a product might be purchased in a physical store via a story-first personalised face-to-face service, which may be based on data gathered from a previous e-commerce experience. Following the physical transaction, the user receives a digital version of that product, the NFT, that can be personalised depending on the user’s digital identity.
In a slightly less futuristic scenario, we will see a lot more products purchased with NFTs attached, giving users access to key information about the product. This includes the fabric’s source, its carbon footprint or, in a world of increasing resale, it tags the product’s authenticity and ensures it is genuine.
The last months of 2022 will see many more conversations around the future of e-commerce and how brands will navigate this ever-changing space.
We may not be calling the merge between physical and digital ‘phygital’ in 2023; however, we can be certain that the growing understanding around digital identities will shape all transactions online and how brands sell to consumers going forward.