The brutal customer experience lesson of Nike's RTFKT NFTs
Nike sinks as Adidas rises in the NFT world.
This isn't a story about Nike NFTs. It's a story of brutal customer experience.
But first, let's flash back three years, when brands such as Gap and PacSun were issuing non-fungible tokens (NFTs). Salesforce at one point floated an NFT platform for its users to market their own NFTs. Art collectors had poured hundreds of millions of dollars into NFTs, and corporate brands wanted a piece of the action -- and enthusiasm -- in this Web 3.0 creative world.
The apparel companies' idea was that buyers of branded NFTs could show off virtual threads in gaming environments or wherever they had a digital avatar. Furthermore, some NFTs held actual monetary value and could be sold and traded with other collectors. But not everyone was sold on NFTs, as their environmental costs could be absurd, depending on the blockchain with which they were associated.
Many, however, bought in.
Three years later, for NFT buyers, the market is way down from its volume and pricing peaks earlier this decade. One pundit describes the current time as "NFT winter."
For the companies supporting NFTs, it leaves a dilemma: Keep customer enthusiasm going by adding NFT content at some cost of maintenance, or archive and mostly devalue the digital commodities you've sold?
If Nike's experience is any yardstick, your company had better plan to keep the NFT lights on for longer for three years. Nike did that, selling its RTFKT (pronounced "artifact") NFT digital shoes to collectors and profiting every time an NFT traded hands on secondary NFT markets such as OpenSea.
But then Nike shut down the project in January. It quit producing RTFKT NFTs, causing the value of existing NFTs to plummet. That got plenty of attention, drawing brickbats from social media.
To add insult to injury, the NFTs became temporarily inaccessible as Nike moved them from one blockchain to another.
And it gets even uglier.
Nike opens the door to rival
Earlier this month, Nike found itself a defendant in a class-action lawsuit filed by RTFKT NFT owners, who claim the NFTs were "unregistered securities." They also claimed they wouldn't have bought the NFTS, had they known Nike was planning to shut down the project.
It's a new legal theory that may or may not stand up in court. Plaintiffs who sued DraftKings over its own NFTs used the argument to net a $10 million settlement.
But that doesn't matter for Nike: In the court of public opinion, the damage to the shoe company's reputation may already be done.
Ethical considerations and business considerations aside -- and focusing on just the customer experience aspect of this story -- Nike completely blew it with RTFKT. The loss of street cred among gamers and young, technology-focused customers will be difficult to earn back. Nike's .SWOOSH" Web3 division still makes "soulbound" -- meaning they can't be traded -- digital twins of some shoes, but would you buy in?
When Nike started the RTFKT NFT project, the plaintiffs in the class-action suit who bought in thought the digital artworks were more legitimate than other NFT series. The times were the wild west for investors; some NFTs were sketchy or outright fraudulent. In contrast, the Nike NFTs were tied to a company publicly traded on the New York Stock Exchange with yearly revenue around $50 billion.
Meanwhile, this whole Nike NFT mishegoss makes rival Adidas look good, as Adidas continually releases new NFTs. Its latest series comes tightly targeted to the gamer audience playing Xociety.
Adidas knows that nature abhors a vacuum in customer experience. Whether we're in an NFT winter or not, Adidas appears to have a much better Web 3.0 game -- and has posterized Nike like Michael Jordan dunking on Patrick Ewing.
Don Fluckinger is a senior news writer for Informa TechTarget. He covers customer experience, digital experience management and end-user computing. Got a tip? Email him.
