Amazon is building an “Opensea” for Real-World Assets

Amazon, the web2 e-commerce colossus, will be venturing into web3 in no distant time. The company will launch an NFT marketplace platform on the 24th of April, with a genesis 15 collection available on release. As the company continues to broaden its e-commerce business, it has eyes on extending its services on the Blockchain. It is doing so by setting the path for its customers to purchase NFTs tied to real-world assets delivered to their doorstep. 

The company plans to notify every Amazon Prime customer – at least in the US – of its digital collectibles initiative once it goes live. These collectibles will be defined and labeled in groups; for example, there will be grocery-oriented NFTs, gadgets-oriented NFTs, etc., and Amazon shoppers, for instance, would be able to purchase a fashion-oriented NFT tied to a pair of jeans — and pay with a credit card, just as they would with any other Amazon purchase. 

The Marketplace will be called “Amazon Digital Marketplace”. The Amazon NFT initiative has been in development for months, and the company has been taking progressive steps towards incorporating more Web3 features into its platforms.

With the launch of its NFT Marketplace, Amazon joins the growing list of companies venturing into the world of non-fungible tokens. It will be interesting to see how Amazon’s foray into the NFT market affects the industry and how it will compete with other well-established NFT marketplaces.

What Blockchain will Amazon be building on?

It is unclear which blockchain Amazon will utilize to develop its new project. Speculations have suggested Ethereum, some others, an in-house blockchain, while the rest of these have thrown the Avalanche blockchain into the conversation. Avalanche is a decentralized, open-source proof-of-stake blockchain with smart contract functionality. With 55 active subnets, Avalanche currently has one of the largest throughput metrics in the industry at an average of 4500 transactions per second and a time to the finality of 1 second. 

Asides from the fact that this makes Avalanche an excellent option for Amazon, Avalanche entered into a partnership with Amazon Web Services (AWS) earlier this year. That happened on the 11th of January. One which Emin Gun Sirer, Founder and CEO of Ava Labs, described as a big deal, explaining that Ava Labs was paying nothing to AWS, but instead, AWS, together with Alibaba, understood the future and prospects of blockchain technology and wanted to partner with the one chain that is delivering the vision. He also mentioned at the time that AWS would be contributing substantial amounts of AWS credits to projects looking to deploy subnets on Avalanche. 

However, in January this year, Amazon reportedly launched a digital assets enterprise involving NFTs, partnering with web3 firm Ava Labs – the parent company of Avalanche to accelerate the adoption of blockchain technology. Ava Labs even tweeted that it was joining forces with Amazon to help enterprises and governments build compliant blockchain solutions. Is Amazon one of these enterprises? Can’t say for sure but spot on for speculation, one would assume.

What Amazon needs to do to launch successfully

Several web2 brands have, in the past, tried to break into web3. Some of them have succeeded, while most of them have failed. Pepsi, Chevrolet, and Porsche are good examples. Therefore, Amazon needs to study failures and learn from them. A few of what these failed web3 endeavors could have gotten right include;

  • Target existing audience. Most brands’ biggest mistake is forgetting their existing and/or new audience. Amazon has a vast user base; if they target those users the “right way,” it can be a grand launch.
  • Take a web2.5 approach. Web3 is not yet ready to onboard new naive users directly. Sign-up and navigation processes are still too complex. Statistics show that most newbies take hours, sometimes days, before making their first transactions, while most do not even go beyond setting up wallets. To solve this, a web2.5 approach – which is a hybrid of both web2 and web3 features, will be perfect for the customers of Amazon. The optimal hybrid framework will look like this, web2 frontend – web3 backend.
  • Have a range of entry-price point collections. The first 15 collections they are launching should have a floor price of around Amazon’s average order value so the maximum number of people can participate. A range of different price points from cheap to expensive will be excellent.
  • Have a variety of collection types. Having different types of collections, like avatars (PFP), arts, gaming, exclusive memberships, ticketing, phygitals, etc. To create “something for all” at launch, the genesis 15 collections could feature unique characteristics targeted at different audiences within both web2 and web3. NFTs of various types, different sizes, different prices, etc
  • Give more than just a marketplace. Amazon should provide more stuff than a usual marketplace. They should educate users on and allow sellers to use phygital NFTs. They could add functions like mint, burn to redeem, etc. They could also allow brands to sell loyalty cards on the Marketplace etc. Hey Amazon, get creative!
  • Keep Things Simple. This is, again, the most important thing. Keeping everything simple. Users should not even feel like they are dealing with Blockchain. They should be able to use the same Amazon account as a crypto wallet while paying for NFTs with USD or their Amazon Pay balance.

The Rise of Mainstream NFTs

As reported by CryptoPotato, more and more giants from different industries are turning to NFTs to boost their sales. From sportswear companies like Adidas, Puma, and Nike to luxury fashion companies like Dolce & Gabbana and Gucci, they have all launched their NFT collections to stay competitive in an industry that demands innovation.

According to Dune Analytics, Nike is the company that has benefited the most from the sale of NFTs, earning nearly $186 million in revenue, followed by Dolce & Gabbana with $23.6 million. Although these figures may represent a small amount of money compared to the sums earned by both companies, they demonstrate that it is a growing niche that can be profitable if appropriately leveraged. Therefore, Amazon’s initiative could take NFT adoption to another level. The company has a massive subscriber base of approximately 167 million users to its Prime service, who will be the first to receive information about the Marketplace launch directly from the company.

What to Expect

With its large customer base, Amazon is sure to inflict robust competition to existing NFT marketplace players such as OpenSea and Rarible. Also, it is generally believed that Amazon will focus on physical goods; therefore, it is set to dominate a potentially explosive niche within the industry. The NFTs that customers purchase will be stored in their wallets while the underlying goods will be delivered to them. This is revolutionary and could open doors to several blockchain integrations with real-world assets, widely believed to be the next driver for wider crypto adoption. However, it remains to be seen how the new Marketplace will compare to existing platforms like OpenSea regarding functionality, user experience, and sales volume.

Interested in marketing your blockchain/Web3 project? Please contact Off-Chain Communications for a free consultation and quote.

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