In the end of 2021 Prada and Adidas collaborated to launch an NFT project on Polygon Blockchain. Together the Adidas for Prada Re-source Project was created.
Adidas for Prada Re-source Project
The main goal of the collection was to create an innovative first of its kind NFT that utilized and highlighted user generated and creator owned art.
This project selected 3000 random participants and assigned them the task of creating individual NFT tiles. These participants were from a vast range of industries including fashion, design, crypto, and more. After converting this digital data into crypto collection/digital assets, which are recorded on the blockchain, all the separate NFT tiles were combined into one NFT file. This compilation was done by Zach Lieberman, a digital artist.
Once the final NFT was done, it was auctioned on SuperRare. Super Rare is a very popular exclusive crypto art marketplace that auctions and sells NFTs. Prada and Adidas decided that they wanted to use this project as a way to give to charity. Therefore, most of the profits went directly to Slow Factory, which is a non-profit organization that works to create education and better opportunities in local communities. The project was extremely successful and the final NFT sold for 30 Ethereum which converted to around $97,559.10.
What is an NFT?
To start off, it is crucial to understand what an NFT is. NFT stands for non-fungible token. Non-fungible means that it is something that is completely unique and cannot be replaced with something else. NFTs are completely digital items but can be pretty much anything. Some examples are digital artwork, collectible items, music, a house, a video, and anything else you could possibly imagine. It is a digital asset that can make or lose you money by gaining or losing value, like any other investment can. NFTs are based on blockchain technology and are usually sold through an auction system.
Recently, digital art and digital fashion have become pretty popular within the Metaverse in general. Many different fashion brands have started to experiment in the virtual world by participating in collaborations with different video games to offer products and experiences within games such as Roblox, Minecraft, and Animal Crossing. Prada and Adidas have taken this one step further by creating their own NFT project on Polygon Blockchain’s network. After the project was completed, it was auctioned off.
What is Polygon Blockchain?
Polygon Blockchain is a technology platform that allows blockchain networks to connect and scale. This platform uses Ethereum blockchain to operate and be able to be the connection between buyers and sellers. Ethereum is the basis for the cryptocurrency ether and it also has functionalities that are sought after like smart contracts. Anyone can use Ethereum to create secured digital technology such as NFTs. Adidas and Prada chose Polygon because it is backed by Ethereum that provides the necessary security. To get a better understanding, cryptocurrency is a digital currency that utilizes cryptography in a decentralized system to ensure that transactions are verified and records are kept.
Why Create a Project in The Virtual World?
There are many reasons why physical companies should enter the Metaverse. The Metaverse brings benefits such as secondary sales profits, engagement, innovation, large margins, no inventory discrepancies, accessibility, and high personalization to fashion companies.
Secondary Sales Profits
Creating and selling an NFT can be profitable in a longer term than creating and selling a physical product. Because of the smart contract feature within cryptocurrency there are terms and conditions with any purchase of an NFT. Many times these terms and conditions include that if the NFT is resold, the original creator automatically gets a percentage of the sale. This is not possible with physical item purchases in the real world because there is no way to keep track of secondary sales.
Engagement within these new kinds of technology is extremely different from in person or e-commerce engagement. The Metaverse allows companies to engage with their consumers in an extremely exciting way that will thrill them since it is so innovative. Utilizing technology also allows the exhibitions and experiences to constantly and easily change so the experience can be different and unique each time someone partakes in it.
The fashion industry is all about creativity and innovation. Brands constantly try to outdo themselves and each other to create the new “it” items of the season. This innovation and creativity in the real world has boundaries such as gravity, limitations of fabric, and budget limitations. However, these boundaries barely exist in the Metaverse. It becomes much easier to be innovative and creative when creating digital products. Creators have utilized this to its top potential by creating looks using liquid gold, fire, water, and many other items that would not be possible in the real world. This is a very exciting time for the fashion industry as creativity and innovation will just keep increasing with time in the Metaverse.
The margins when comparing the sale of physical products to digital ones is vastly different. When creating digital projects a lot of obstacles such as sourcing raw materials, figuring out supply chain logistics, finding space for operations, hiring skilled labor, and predicting inventory levels that come with physical products are no longer relevant. This in turn tremendously decreases the costs associated with creating the products. Digital products and designs take exponentially less time to create and complete, but still sell for the same or more than physical products. This causes extremely high margins for the companies who create NFTs and digital products.
No Inventory Discrepancies
One of the biggest struggles of fashion companies world-wide is inventory oversupply and shortages. It can be very difficult for companies to predict the demand for their products extremely accurately. This causes companies to over and under produce their products with most releases. When products are over produced, companies are wasting money with their costs. When products are under produced, companies are missing out on profits when the products are sold out but still demanded. With digital products and NFTs there are no inventory issues or necessary projections because it is created only when the item is ordered/purchased.
The Metaverse and digital products immensely decreased the barrier to entries in the fashion industry. Fashion is a very complicated industry to get into and can be difficult to maintain success. There are many reasons for this but one is the necessary role of intermediaries. However, by selling digital products it eliminates the need for intermediaries and allows the entry into the fashion industry to be significantly easier and more manageable.
The fashion industry has never been very personalized. Companies create clothing pieces that will appeal to the majority of their consumers and the clothes are created in the masses. This leaves very little uniqueness to people’s wardrobes unless they make clothes themselves or pay an unfathomable amount of money for personalized pieces. In the Metaverse it is possible and relatively easy to offer digital fashion that is customizable. Companies offer pieces that allow for customization in all aspects even very small details. This adds to the value of the pieces because it makes it truly one of a kind.
Some Background on Adidas
Adidas is an athletic apparel company. The brand has a large variety of products ranging from clothing to sporting goods to shoes. Although Adidas is a multinational corporation, it was founded in Germany and has its headquarters there. In 1924, Adi Dassler registered the company with the goal of providing athletes with the most top tier equipment possible. In 1949 he registered a show that encompassed the registration of the 3 stripes that became Adidas signature characteristic.
Adidas products include:
- Workout & Gym
- Outdoor & Hiking
- Sandals & Slides
- Platform Shoes
- Hoodies & Sweatshirts
- Sports Bras
- Tights & Leggings
- T-Shirts & Tops
- Matching Sets
- Dresses & Skirts
- Bags & Backpacks
- Hats & Headbands
- Water Bottles
These products range from being available to men, women, both, and/or children.
Adidas’ Other Virtual World Investments
In Addition to the NFT collaboration with Prada, Adidas has also participated in the metaverse with NFTs before. Adidas purchased a plot inside The Sandbox. The Sandbox is a decentralized NFT gaming metaverse that bridges the gap between NFTs and non-tech savvy users. Adidas is planning on utilizing this plot to offer exclusive content and experience to the consumer base. Access to Adidas plot in The Sandbox includes virtual wearables for Sandbox and other platforms along with matching physical products along with other additions. Adidas has also created a virtual Ozworld experience, which allows users to create a completely unique and one of a kind digital version of themselves.
Adidas realizes the promising future of the Metaverse and how quickly the success has come to this new way of business and investments. Adidas sees the Metaverse as an exciting development and it is important for the brand to make its presence in the virtual world as an apparel brand that carved the path.
Some Background on Prada
Prada is a luxury fashion brand created in 1913. It was founded in Milan by Mario Prada which led to the first physical store being opened in Galleria Vittorio Emmanuelle II. The brand has expanded a lot since its early days, it has gone from selling only leather products to a large range of products including bags and clothing.
Prada’s products include:
- Lifestyle Accessories
Their products include items for men and/or women.
Prada’s Other Virtual World Investments
Prada has created a virtual world experience that allows their consumers to connect to faces, places, and items within the brand’s collections. The experience takes the watcher through the streets, squares, and cities where Prada has a big presence. It also goes through different exhibitions, initiatives, and events that Prada participates in. It allows consumers to virtually “touch” and look at all of the brand’s clothing and accessories. Some specific aspects of the experience include going through Tokyo, New York, Milan, Venice, and Prada fashion shows. This experience is available on Youtube VR, Oculus, Youku, and Facebook’s VR options.
Prada has realized that if the company does not take the initiative to make a presence in the virtual world, it could possibly lose the appeal from some customers. Many fashion companies have begun to experiment with the virtual world and the Metaverse, so Prada creating this experience was a very smart play. Additionally, it is an easy way for customers who may not live near these Prada landmarks or have access to experience the brand in person to feel more connected to the brand. It made the brand more accessible to all of those who wish to learn about it.
Prada and Adidas’ NFT Powermove
Prada and Adidas’ NFT was extremely successful and showed the potential of fashion in the Metaverse. People are very interested in the innovation and new opportunities within the Metaverse which causes NFT projects to be very lucrative. When new technology comes to light, people want to invest in it early in order to maximize their profits, so fashion companies who are taking advantage of this opportunity early will likely have very good results, very similar to how successful Adidas for Prada Re-Source was. The NFT sold for 30 Ethereum which converted to around $97,559.10 and although most of it was not realized by the companies because it went to charity, it showed how successful the project was.