What Dior’s NFT sneakers say about luxury’s Web3 future

To become a Vogue Business Member and receive the Technology Edit newsletter, click here. The rollout of Dior’s first major Web3 drop — a physical version of Kim Jones’s B33 sneakers paired with an NFC chip and authentication NFT — has been quiet, to say the least. There’s been little fanfare around the announcement, no big PR push, community endorsements or influencer tie-in, à la Louis Vuitton. What’s the deal? In the world of carefully orchestrated product launches, the quiet drop is no accident. It reflects the current era of luxury’s relationship with Web3: it’s open to and excited by the potential for the technology to re-invent loyalty and authentication, but it’s hesitant to focus on the tech for fear of backlash from both Web3 and traditional consumers. It could still have a major long-term impact. The brand plans to implement the technology in all future iterations of the B33 line. This could potentially be extended to other products, but the focus for now is on sneakers, a Dior spokesperson said. “We want to guarantee authenticity throughout the product life cycle with more than just a physical card in a shoebox.” The native community is responding. The design of the drop so far has been “perfect”, says the artist known as Fvckrender, who copped a pair when they dropped last week. “They just released the shoe. You go buy the shoes, and now you think about the digital part. That’s why I like to refer to it as a Trojan horse.” That is, luxury brands recognise that these new technologies can ultimately benefit the industry, but often their introduction to customers is best when it’s slightly hidden. That’s because people might be either unfamiliar with the technology or because it has suffered a particularly polarising notoriety. Quietly experimenting and distributing the tech among existing customers who are already drawn to luxury products rather than cater to Web3 early adopters — whose fortunes have cratered amid a crypto crash and so-called “metaverse winter” — is the new playbook. “This is good to get Dior customers, not NFT people,” Fvckrender says. “Bringing new people [into Web3] is the best way to do it.” Coded language The Dior Web3 launch was announced on 29 June via an article in men’s fashion publication Hypebeast and a tweet, soon followed by details on Dior’s website. Nowhere were the words “NFT”, “Web3” or “blockchain”, but rather “encrypted digital key” amid more standard descriptors such as “enchanting” sneakers punctuated with “iconic codes” and elements including mohair, toile and denim. Only those who are accustomed to looking for Web3 signals might have also noticed more telling details about the multi-part drop: each shoe has an NFC (near-field communication) chip in the sole of the right foot that gives access to a blockchain-based certificate of authentication. Scanning the NFC also will reveal information on the manufacturing process and future sneaker launch announcements. The first styles to be released, available for $1,350 on 6 July, were limited to 470 pairs. These online exclusive turquoise and brown sneakers also include access to an additional NFT: a “soulbound” token on the Ethereum blockchain that can’t be transferred from the wallet that mints it; it also includes a digital twin that can be worn on Snapchat and allows early, exclusive perks starting with the Spring 2024 collection. The first collectors are set to receive these shoes this week, but they won’t receive their soulbound token until 33 days later. The other limited-edition styles — there will be a total of four material combinations and eight colorways which all include an NFC chip — will become available on 13 July as part of the new “Dior Tears” men’s capsule collection, which was modelled by artist and composer Cktrl. They are expected to be sold at a slightly lower price, in line with previous B33 styles. All of the shoes come with an NFC chip that gives access to claim an authentication certificate NFT, which is provided via the private blockchain created by the Aura Blockchain Consortium and accessible within owners’ smartphone wallets, like credit cards or boarding passes (not in their crypto wallet). Scanning the NFC and accessing the information is optional, meaning there’s no barrier to entry for anyone not interested in Web3 access. But it paves the way for future perks for both the brand and its customers. The brand might, for example, share promotions, suggested product pairings and exclusive products or events. Future owners from the secondary market also benefit because they maintain this link to the brand. A number of these details indicate how the luxury brand, number two on this spring’s Vogue Business Index, is working to avoid some of the more unstable elements of the early days of NFT drops, such as flippers and speculators, and a focus on the “floor price”, all tracked via transparent blockchain records and promoted for weeks, if not months, in advance. This resulted in volatile prices and disincentivised loyalty, as often people would quickly buy, then sell, high-value NFTs for profit. Notably, customers of the new B33 sneakers, even the ones with the bonus NFT, can only pay in fiat currency. The authentication certificates are also private, and people can’t track sales and transactions. (The 470 soulbound tokens, when minted, will be public.) Dior’s approach is similar to Nike’s Dot Swoosh NFT sneakers and Starbucks’s NFT loyalty rewards programme, says M7 Innovations founder and president Matt Maher, who advises luxury brands on Web3 strategy and collects many of the Web3 fashion projects, including the new Dior sneakers. “They are hiding the Web3 wires. And probably what will happen in the future is you will expect these things as a luxury client,” he says. Louis Vuitton took a different tact when it launched its Via Treasure Trunk NFTs in June. The Treasure Trunks cost €50,000 and were introduced via a number of high-profile influencers in the fashion and Web3 community, and the first available exclusive product was revealed during a runway show that shut down the Pont Neuf bridge in Paris. What they have in common is a rejection of flippers (LV’s Treasure Trunk NFTs are also soulbound), and luxury hand-holding as purchasers were vetted, curated and guided through the process. Dior’s mechanics have a similar traditional e-commerce ethos. Maher, for example, wanted to exchange his sneakers for a different size a day after he bought them; a Dior associate was happy to accommodate this with no delay in shipping. This type of customer service isn’t typically built into the Web3 ecosystem. One key detail of being soulbound is that Dior can’t earn royalties on secondhand sales the way it could if the NFTs linked to the shoes were not soulbound. Nike-owned Rtfkt, for example, has earned millions in revenue on secondhand sales of Rtfkt’s NFTs, and Web3 native brands Cult & Rain and 9dcc have built-in product transfers designed to facilitate these types of transactions. “Everyone is doing soulbound, and I get it, but there is an inherent tension on anything soulbound,” Maher says. Not being able to transfer the NFT to a more private wallet is one potential future security risk, he points out, adding that many of the crypto whales, including founding members of Red Dao, don’t hold most of their assets in their public wallets. “It’s like, ‘Here is my wallet!’ and thus, ‘Here is who I want to steal from in the future!’ I can’t move it from one wallet to another.” However, there are still benefits to Dior in the way this drop has been structured: the certificates of authenticity help mitigate fakes and enable the brand to maintain communications and promotions with future owners if the shoe ultimately changes hands. Plus, Fvckrender says, there are already workarounds to this among collectors who’d rather not share revenue with NFT creators. It’s yet to be determined how Dior, and its new Web3-enabled customers, will embrace the new potential. But the (Trojan) horse is out of the barn. Comments, questions or feedback? Email us at feedback@voguebusiness.com.

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