On the latest use cases for NFTs in retail

1. NFTs & Digital Goods
Market Analysis
Alicia Novoa Fall 2021
Confidential &
Proprietary

2. Commerce Ventures PROPRIETARY & CONFIDENTIAL 1
Executive Summary
—
Topic Overview
NFT Overview
1 ▪ What is an NFT?
▪ The life cycle of an NFT
Market Growth
2 ▪ Users and transactions
▪ Value of assets
3 Framework ▪ The component stack
4 Creation
▪ Code-based / developer-based platforms
▪ Low / no code platforms
6 Use Cases ▪ Authentication
▪ Digital goods
▪ Collectibles
▪ Marketplaces
▪ Digital environments / metaverses
Distribution
5

3. Commerce Ventures
A non-fungible token is a unique unit of data
stored on a digital ledger.
What is an NFT?
—
2
Creation
• Turning a digital
file into a token
on a blockchain.
Distribution
• Where users
can buy and sell
NFTs.
Storage /
Payment
• Individuals can
store NFTs in
digital wallets.
Utility
• Use as a digital
good, store as a
collectible, or
utilize for
authentication.
NFT Life Cycle

4. Commerce Ventures PROPRIETARY & CONFIDENTIAL
Framework for Discussion
—
Focus on creation, distribution, and use cases of NFTs
2
Digital Wallets
used for storage
Blockchain
Creation Layer
Distribution Layer
Utility Layer
Code-based Low / No Code-based
Marketplaces
Digital Goods Collectibles Authentication
Focus
for
analysis
Note: Crypto infrastructure is not explicitly covered in this analysis
Infrastructure Layer
Cryptocurrencies
used for payment
Education
Digital Environment / Metaverse

5. Commerce Ventures PROPRIETARY & CONFIDENTIAL 4
NFT transactions are increasing in number and value
—
NFT transactions were relatively flat since creation in 2017 until mid this year
5
%
Sources: Glassnode; Cambridge: 3RD GLOBAL CRYPTOASSET BENCHMARKING STUDY (September, 2020)
Number of Transactions
(by month)
Total $ on Completed
Sales
(by month)

6. Commerce Ventures PROPRIETARY & CONFIDENTIAL 5
NFT breadth of usership is also growing
—
The number of unique users is increasing
Number of NFT Users
(worldwide)

7. Commerce Ventures PROPRIETARY & CONFIDENTIAL 6
Creation can be code-based or low / no code
—
Developer-based platforms skew corporate, while no code skew toward individuals
Creation Layer
To create (tokenize) any kind of NFT, a variety of platform types can be used. Corporate
organizations with in-house developers use both code-based and no code platforms, whereas
individuals typically use no code platforms.
Company $ Raised Model / Focus Partners
▪ The market is extremely fragmented, with
many more players than listed. No clear
market leader for fashion yet, and many are
collaborative with each other
▪ While creating an NFT previously required
coding know-how, it’s now fast and simple
for anyone to create an NFT
▪ Several creation platforms also serve as
distribution / marketplaces to buy / sell
Context
Corporate Activity
Several brands have created NFTs using
popular creation platforms and marketplaces.
Nascent Advanced
$345M Code-Based
$5M Code-Based
$21M Code-Based
$636M Code-Based
N/A No Code Individuals
$16M
No Code +
Marketplace*
-
N/A Code-Based
$15M
Snoop Dogg,
Gary Vee
Both
$100M
No Code +
Marketplace*

8. Commerce Ventures
Digi-couture
dress
Iridescence sold
for $9,500
PROPRIETARY & CONFIDENTIAL 7
Code-based creation examples
—
Several enterprise brands use developer tools to create NFTs
One NFT
auctioned for
$53,000 and
others are sold
out
120 digital
artworks sold for
$1 each
One ring
auctioned for
$9,000 and others
continue to be
sold

9. Commerce Ventures
p
“Nameless” allows brands
to launch NFT collections
without code through
partners
PROPRIETARY & CONFIDENTIAL 8
No code creation examples
—
Simple marketplace / no code platforms democratize NFT creation for individuals
Allows users to upload
digital files and download
NFTs
An upcoming platform to
allow individuals to easily
and quickly mass generate
and mint NFTs

10. Commerce Ventures PROPRIETARY & CONFIDENTIAL 9
Distribution is even more fragmented
—
Buying / selling can occur in marketplaces or within a digital environment
Distribution Layer
Several marketplaces exist to enable the buying and selling of NFTs, either in their initial sale
(primary purchase) or in a secondary transaction. In addition, users can purchase NFTs (as well as
non-tokenized digital goods) in digital environments or metaverses (including gaming environments).
Company $ Raised Model / Focus Partners
▪ Marketplaces for buying / selling are even
more fragmented
▪ Incumbent players like Christie’s are also
playing among startups
▪ Several creation platforms also serve as a
distribution / marketplaces to buy / sell
Context
Corporate Activity
Widespread adoption for marketplaces among
individuals and brands.
Nascent Advanced
$16M Marketplace
$100M Marketplace
Metaverse
Mythical
Games
Marketplace
$9M
Metaverse
N/A
Marketplace
Polygon
Studios
Marketplace
Naomi Osaka,
Virgil Abloh
N/A
Marketplace
(Crypto)
$35M
Marketplace
N/A

11. Commerce Ventures
Users could buy
virtual Gucci
clothing in the
Gucci Zepeto
village
PROPRIETARY & CONFIDENTIAL 10
Distribution
—
The artists’
rendition of a
Birkin sold for
$23,500
A collection of
Nars NFTs worth
$500 sold on
Truesy
Users could
purchase Zara
clothes for their
avatars in the
Ader Error x Zara
store
Mason Rothschild & Eric
Ramirez

12. Commerce Ventures
Jimmy Choo
auctioned virtual
shoes worth at
least $13,672
each
PROPRIETARY & CONFIDENTIAL 11
Distribution
—
Digital collection
sold out in 30
minutes on
Rarible
Givenchy
auctioned 15
NFTs on
OpenSea
Nine-piece
virtual/physical
collection sold
for a record $6
million on UNXD

13. Commerce Ventures PROPRIETARY & CONFIDENTIAL 12
Utilities: digital goods, collectibles, and authentication
—
Many potential use cases exist
Utility Layer
Existing digital environments and gaming platforms enable the use of digital goods (even if non-
tokenized) for social status, whereas crypto wallets store collectible items. Authentication is one of the
most practical use cases.
Company $ Raised Model / Focus Partners
▪ The growth of “the metaverse” or digital
environments in which people can represent
themselves is increasing the need for digital
goods.
▪ The market growth in NFTs is causing
speculation in collectibles (buying + holding
for increased value at a later date).
▪ Authentication allows brands to validate their
products.
Context
Corporate Activity
Widespread adoption for brands launching
products in existing environments.
Authentication still early.
Nascent Advanced
Existing
Digital Good
Environment
Epic
Games
Authentication
Non-
Profit
Existing
Digital Good
Environment
Public
Authentication
$13M
Authentication
$18M
Digital Goods
Acq.
Nike
-

14. Commerce Ventures
The Gucci Garden turns
avatars into mannequins
and dresses them in Gucci
creations
PROPRIETARY & CONFIDENTIAL 13
Digital goods
—
Vans World skate park
allows gamers to customize
their Vans gear and
skateboard
Virtual restaurant gave real
burritos to players dressed
in Chipotle skins

15. Commerce Ventures
Exclusive Nike Air Jordans
outfits could be purchased
in the in-game shop
PROPRIETARY & CONFIDENTIAL 14
Digital goods
—
Balenciaga-inspired
clothing sold in an Item
Shop
In-game outfits

16. Commerce Ventures
Hublot watches
have an e-
warranty via
visual
recognition in
Aura’s
blockchain
PROPRIETARY & CONFIDENTIAL 15
Authentication
—
Since February,
all Breitling
watches have a
digital passport
in the blockchain
VeChain
provides H&M
products with IDs
to track their life
cycle
Radio frequency
identification
tags could be
scanned to reveal
product
information

17. Commerce Ventures
Retweets entered users into
NFT giveaway
PROPRIETARY & CONFIDENTIAL 16
Collectibles
—
e.l.f. cosmetics sold nine
collectibles on Bitski
Digital collection sold out in
10 minutes on OpenSea

18. Commerce Ventures PROPRIETARY & CONFIDENTIAL 17
Next Steps
—
Alicia to send out full partnership list
1
Alicia to send out full startup list for CV outbound
2
3 CV team to narrow list to reach out for intro calls
4 CV team to conduct intro calls to better understand problem spaces + assess investment potential