November 24, 2022

11th Edition: Re-Imagining Commerce With New Tokengating Solutions

Shopify promises to simplify the process of buying and selling NFTs. Also, the company is committed to developing tokengated commerce by adding utility to NFTs.

Tokengated commerce is not an entirely new concept.

According to tech analyst Packy McCormick

“Tokengated commerce starts with an observation: that there’s a new kind of internet user out there in the world, called people with wallets.”

People with digital wallets want to use them to get into discord channels, gated platforms, and NFT marketplaces. Compared to simple login credentials based on centralized structures, these wallets allow people to enjoy a higher level of personalization.

As McCormick explains:

“NFTs aren’t an output of commerce; they’re an input for commerce. NFTs aren’t a kind of product; they’re a kind of buyer.”

According to the analyst, buyers can arrive at the storefront, connect their digital wallet, and suddenly enjoy a fully customized storefront based on their NFTs.

For example, they may:

  • Unlock a special product
  • Enjoy a limited-edition drop
  • Unlock high-quality art prints or 3D models of their NFTs
  • Access an exclusive community  
  • And more

Tokengated commerce is great for celebrating this social contract between brands and their customers, as it allows people to connect their wallets and get recognized. One can’t achieve this feeling with customer accounts and loyalty programs.

As McCormick highlights:

“Customer accounts are fundamentally part of the store, not part of the buyer. In contrast, “connect your wallet, get recognized” is a feeling that I promise you, people don’t get from logging into their loyalty account. It’s not the same.”

Customer emotions impact growth and revenue the most. And Shopify is one of the first eCommerce platforms to empower its brands to achieve this level of connection with their customers.

How?

The company has recently introduced a tokengated commerce solution as part of its platform, allowing its merchants to launch tokengated stores.

NFT screenshot

Entering the NFTs and blockchain world, Shopify will enable the brands selling on its platform to connect with their fans and drive sales by giving token holders exclusive access to elements such as:

  • Merch
  • Experiences
  • Communities
  • Products
  • Collections
  • Events
  • And more

Apart from nurturing meaningful connections with token holders, brands that sell on Shopify will enjoy a wide variety of tokengating benefits, such as:

  • Security: NFT ownership is verified through the blockchain. There’s no way one can forget token ownership.
  • Cost-effectiveness: As Shopify specifies, “One of the main benefits of token gating, and NFTs in general, is that it puts distribution, and therefore profits, directly in the hands of the NFT creators. Because there are few “middleman” costs associated with creating and selling NFTs, creators take home what they earn.” In other words, the brands creating these NFTs for their customers will be able to ensure higher and ongoing revenue.
  • Building buzz: In most cases, store customers will be attracted by word-of-mouth, curiosity, and fear of missing out on the opportunity to become owners of specific NFTs.

Also, as Shopify notes:

“Exclusive product access is one of the most practical token gating use cases for retailers. With this strategy, limited edition items are only available to NFT holders.”

It’s not clear yet how token gating will change the retail world. Still, according to Shopify:

“Token gating’s security features, profitability, and built-in marketing power make it useful to businesses of all kinds.”

Currently, US-based merchants and brands can access the tokengated solution by invitation only. Once they get access to the beta version of the tokengating products, they’ll be able to:

  • Build a tokengated shop for mobile, or create gm (gated merch) shop natively on the Shop app.
  • Sell gated merge in-store with POS, or add tokengating to in-store shopping and pop-up spaces.

This new, NFT-based connect-to-consumer initiative may change (e)commerce forever. However, it’s important to remember that blockchain technology isn’t enough to change buyers’ habits. Instead, blockchain-based marketing and sales processes require a careful emotional design to help brands increase awareness and drive sales like never before.