Home Nike store Nike buys NFTs, eyeing real money on virtual sneakers

Nike buys NFTs, eyeing real money on virtual sneakers

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Thomas Arias is the proud owner of over 100 pairs of new and vintage Nike Inc.

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sneakers. Now he is thinking of building a new collection of the brand’s shoes, but in the virtual world.

“I see an asset that maybe in the future could be worth a lot more than what I paid for,” said Arias, who is 37 and helps his father run a small import business in Miami.

Nike, which releases its second quarter results on Monday, predicts sneaker enthusiasts like Arias and others will want to invest in virtual kicks as it seeks to further expand the digital side of its business by exploiting emerging technologies such as non-fungible tokens, or NFTs. Tokens are essentially digital deeds that verify the authenticity of the objects they represent as unique.

Earlier this month, Nike acquired Rtfkt (pronounced artifact), a startup launched in 2020 that creates NFTs of sneakers and other collectibles, for an undisclosed amount. Nike has also recently filed trademark applications indicating that it wants to sell NFTs of its sneakers, clothing and other products stamped with its swoosh logo. Soon after, the company launched a virtual gaming spot on Roblox. Body

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Free online gaming platform where users can dress their avatars in Nike clothing.

Clone X # 3537 is part of a collection created by Rtfkt and Takashi Murakami, and owned by collector Justin Bazdarich. Nike recently acquired Rtfkt.


Photo:

Justin bazdarich

These steps reflect Nike’s ambitions at a time when a range of fashion and other consumer goods companies are rushing to gain a foothold in virtual worlds where people are expected to learn, work, shop and play. Dolce & Gabbana, Jimmy Choo and Adidas AG

have launched NFTs. Balenciaga worked with maker of “Fortnite” Epic Games Inc., and Gucci worked with Roblox to create immersive digital worlds.

Nike did not respond to requests for comment on its plans for Rtfkt. The startup referred questions to Nike.

Nike has long dominated the scarcity model in the physical world by selling limited quantities of exclusive items and touting their uniqueness, said Erinn Murphy, senior analyst at Piper Sandler & Co. “There is so much white space. to conquer for Nike in the digital arena as well, she said.

Do terms like “non-fungible token”, “coinage”, “gasoline charge” and more sound like a foreign language to you? To better understand and explain it, Joanna Stern of the WSJ turned her son’s art into an NFT on the Ethereum blockchain. Photographic illustration: Jacob Reynolds

The clothing and sneaker seller has spent years building their digital business by launching apps like SNKRS, which gives users access to exclusive items and events. Analysts say digital investments have been a boon to sales. Overall, Nike’s net sales through its online channels have exceeded physical stores for over a year.

Rtfkt, which was valued at $ 33.3 million after a funding round in May, is designing its own sneakers and virtual avatars, which collectively sold for millions of dollars within minutes. The company has made physical products through so-called “forging events,” where owners of the studio’s NFTs can request their virtual sneakers become real.

Nike could also release real-world exclusives with NFTs, and tokens could be traded through digital marketplaces such as OpenSea.

Technology analysts claim that NFTs could present financial risks to buyers, as their value is largely based on speculation and, therefore, they tend to be volatile. While the creators of NFT may tout the unique nature of tokens, sometimes they create thousands for the same item.

It could take years, if ever, for NFTs to become the main drivers of Nike sales. But the company’s peers are having some success in the space. Adidas launched its NFT “Into the Metaverse” collection on Friday and grossed around $ 23 million.

Analysts polled by FactSet project Nike to have generated $ 11.25 billion in revenue in the three months ended November 30, which would be roughly stable from the same period last year. Nike’s stock price has risen 12% in the past year, compared to a 25% gain for the S&P 500.

Nike, like other retailers that depend on manufacturing plants in Asia, has been hit by supply chain issues resulting from the Covid-19 pandemic. Second-quarter profit could fall about 20% from the same period last year, analysts forecast.

The company said in September that shipments take twice as long to arrive in the United States, but that it has enough inventory for the holidays.

Selling NFTs could be a way for Nike to quickly avoid the supply crunch.

Justin Bazdarich, restaurant owner and self-proclaimed sneakerhead, said he was excited about Nike’s purchase of Rtfkt. Mr Bazdarich, of Brooklyn, NY, owns several NFTs, one of which cost $ 2,000 and is paired with a rotating virtual shoe that Rtfkt created in partnership with streetwear designer Jeff Staple.

“If a big brand like Nike comes in then it’s going to help educate people that this is the way of the future and allow other industries to participate,” the 44-year-old said. year.

Write to Inti Pacheco at [email protected] and Sarah E. Needleman at [email protected]

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