Luxury brands are embracing the future of digital. Traditionally slower to adapt, many are now positioning themselves to seize opportunities stemming from early adoption of emerging technologies surrounding the Metaverse. From Virtual Idols to NFTs, luxury brands are recognizing the value of leveraging blockchain technology to provide what is at the essence of luxury; exclusivity, traceability and premiumness.
Home to some of the world’s biggest tech giants, the most digitally savvy consumers, and by 2025, two-thirds of the global luxury market, it would seem China is the perfect ecosystem for brands to explore this new frontier. However at the time of publishing cryptocurrency mining and transactions are banned in China, digital collectables are untradable and there is uncertainty as to how heavily regulated the industry will become. Where does this leave luxury brands looking to leverage these emerging technologies in China? While the execution and strategy will differ from other markets, the opportunity for luxury brands in this space cannot be ignored.
NFTs in China
Unlike in other countries, where NFTs run unregulated on platforms such as Ethereum or Solana, most trading platforms in China control their blockchains. Many of China’s tech giants including Baidu, Tencent and Alibaba have launched their own platforms. To date, Alibaba and RED are two platforms worth luxury and premium brands’ attention.
In November of 2021, during China’s largest annual e-commerce shopping festival, Double 11, luxury brands Burberry and Coach were among the first luxury brands in China to offer NFTs through Tmall’s “Double 11 Metaverse Art Exhibition”. This first foray into NFTs relied heavily on the presence of physical items that were sold in tandem with the NFT. Listed for $435 each, Burberry sold 1000 limited edition scarves that came with an interactive deer NFT.
RED launched R-SPACE in November in 2021 and differentiated themselves from other trading platforms by allowing users the ability to purchase the collectibles directly on the app and display them from their accounts. Currently RED is collaborating with different individual artists and designers such as ZhangFan and Ruanguanxiong as well as with Virtual Idol Ayayi to promote the platform.
Virtual Idols in China
Virtual Idols (influencers) have been on the rise for nearly two decades. Japan’s Hatsune Miku and Luotianyi in China were some of the early Virtual Idols. In 2019 Vogue China announced that it will exclusively represent Noonoouri, fashion-focused Virtual Idol created in 2017, in all matters related to Greater China. Brands such as L’Oréal, McDonalds, Tommy Hilfiger, Mentholatum have all developed their own in-house Virtual Idols.
The response from consumers has been encouraging. It is reported that Virtual Idol live-streamers have outperformed real human hosts by 3x in terms of engagement on China’s video platform Bilibili. The platform has reported a 225 per cent increase in monthly average viewing times of virtual idol live-streams, between January and October 2020.
Virtual idols offer a myriad of benefits for brands. First, they are more customizable and tailored to what a business may need. Much like a brand is constructed as an intangible asset used to tell a story, a virtual idol can serve as a medium to deliver that story in a more powerful way than ever before. Second, virtual idols are easier to manage, in terms of both schedules and risk, and can be tapped for a range of different service offerings. A virtual idol can be available for 24/7 live-streaming and client services, all while avoiding devastating scandals so many real-life influencers have found themselves in.
In 2020 for China’s Valentine’s Day known as Qixi, Givenchy collaborated with fashion media outlet SuperELLE and Virtual Idol boy group The Futurer. The five group members, styled in Givenchy’s Qixi collection, were featured on the cover of SuperELLE. In addition the group dropped a new single and short film for the occasion.
Brands such as Louis Vuitton, Givenchy and The Middlehouse have collaborated with rising Virtual Idol star Ayayi. A hyper-realistic creation from Hangzhou based company RM Inc. Ayayi was launched in 2020 and gained 40,000 followers in the first night. To date she has over 119,000 followers on RED (Instagram + Pinterest like platform) and 543,7000 on Weibo (similar to Twitter).
The strategic move of the creators and companies behind each of these virtual influencers are the key to the making of successful virtual influencers. A company’s decision on aesthetics, timing, technology and quality content creation will all be of consequence.
Putting it all into Practice: three ways for brands to create value
Because local regulations restrict blockchain activity and trading of NFTs brands must instead focus on how to leverage these technologies for branding and marketing purposes.
1. Explore the opportunities with existing Virtual Idol IPs & platforms
Create a brand owned virtual IP to engage with young customers and bridge the experience from traditional channels with the Metaverse world.
Tmall and Ayayi Launch NFT Collection
Tmall, a traditional e-commerce platform, collaborated with Virtual Idol Ayayi to release her own series of NFTs which became available in a lucky draw in December of 2021. A total of three NTF, “SHIFT SOUL” set of 200, “LOGIC AND INSPIRATION” set of 200 and “METASENSORY” set of 100 were all captured by users.
2. Release NFT products/digital collectibles to excite the customers and generate brand buzz
Luxury brands can run the risk of being seen as slow moving, or even old-fashioned, a dangerous position to be in when the next most powerful consumer group is under the age of 25. Creating a buzz around NFTs and Virtual Idols can help luxury brands create an image that resonates with Gen Z and position the brand as fast-moving and tech-savvy. Using NFTs as VIP gifts or to accompany limited edition items can increase engagement and excitement among younger consumers.
Coach x GQ China to release 6 limited edition NFTs
The brand made their first move into the world of NFTs announcing that they will work together with the GQ China team to create an elevated interactive experience on China’s Twitter-like platform Weibo. In order to be entered to win one of the 6 NFTs users needed to mix and match designs to submit their own creation.
3. Extend retail and customer experience into the virtual world with more immersive interactions
In the future shopping will not purely be online, nor purely offline but a blend of both. Luxury brands can leverage the premium VIP experience offered offline and blend this with digital solutions such as AR interactions within the retail store to give customers a hybrid experience. With the maturity of hardware equipment such as AR glasses, mirrors, we can expect that these solutions will become much easier to apply in the offline setting. In addition, luxury brands can also build out their capability to provide a premium experience online through virtual product try-on or an entire virtual store hosted on a WeChat mini program.
Tmall launched a “Double 11 Metaverse Art Exhibition”
During China’s largest e-commerce shopping festival, Alibaba owned e-commerce platform Tmall invited luxury brands such as Burberry, Coach and Longines to create NFTs for the sales period. Most of the NFTs offered were combined with a limited-edition physical item.
Written by: Luxury Conversation
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(Source: Luxury Conversation)