Nike Tuesday announced its first release on its digital platform, .Swoosh. But one industry expert is skeptical about Nike’s ability to translate its investments in web3 technology into tangible results.
Nike (NYSE: NKE) described .Swoosh as a way for its members to connect in a space where they can co-create virtual products such as shoes and jerseys when it announced the platform last year.
The first drop to .Swoosh’s more than 300,000 members is called Our Force 1, and is inspired in name and design by Nike’s most famous sneaker silhouette, the Air Force 1.
The drop only includes a virtual sneaker and cannot be translated into a physical shoe users can wear, though Nike said it will introduce exclusive physical products or experiences in the future to those who own the virtual product.
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Matt Powell, a retail adviser with Spurwink River, said Nike’s metaverse platform does a good job at connecting people and forming community, which is the reason Nike said it created it.
“They're trying to build community with their core consumers in a different way than we traditionally do. Theoretically, if I own a brand's NFT, I'm more loyal to them. It's adding value to a sale. If I buy a shoe and I get some sort of token with that, it's adding value for me,” Powell said.
But what it gains in community, Powell said he questions what it gains in tangible profit or brand progression.
Nike has a history of embracing new technology, and when web3 and NFTs gained popularity about two years ago, the company began making significant investments in it.
One investment was acquiring the virtual studio RTFKT, which creates virtual sneakers and collectibles, leveraging game engines, NFTs and augmented reality.
With this much money invested, it makes sense that Nike is using its web3 platforms, Powell said. But he questioned how beneficial .Swoosh and the company’s other web3 investments will be to generating real profit.
“You have a kid out there who … gets an NFT, and he's showing it to his friends on his phone, but I don't know if that makes people drop the baby and head out to get a pair of (physical) shoes. So I really don't see a path here to commercializing this,” Powell said.
NFTs also gained a reputation for being a way to make a large amount of money quickly. A collage showcasing hundreds of unique designs sold at an online auction for just over $69 million in 2021, and the same month, three pairs of virtual Nike sneakers sold for more than $3 million in minutes.
But many of RTFKT’s cryptokicks that came out last April now are listed on OpenSea for around 0.5 ETH, or about $1,000, and a 2021 study indicated that a majority of NFTs sell for less than $15, while less than 1% sell for more than $1,500.
