Hot take | Web3 DTC

January 31, 2023

Direct-to-consumer brands eschew selling through intermediaries (e.g. department stores) in order to ‘own’ their customer relationships wherever they can. This means owning their contact information for future marketing, as well as their first-party data such as preferences or shopping habits for personalized offers or experiences. Brands have shown that direct-to-consumer business improves retention, lifetime value, and profitability, so it’s no surprise this has been a dominant trend among B2C companies for the past 20 years.

In DTC it’s all about ‘who owns the customer;’ in web3, the customer owns the brand as much as the brand owns the customer, and we believe this symbiotic evolution is transformatively positive for both parties.


This co-ownership model is achieved through brand NFTs, fungible currencies (eg. $FWB), or both, but it essentially means ‘tokenizing’ brand IP and allowing consumers to acquire, use and sell brand tokens at any time – frictionlessly, instantly and globally. Consumers get to own the unique asset itself, with all its possible benefits, but also own a share in the brand’s overall equity. This direct incentive alignment drives consumers to take it upon themselves to grow the brand as co-beneficiaries in its success. This is any marketer’s dream: an army of brand evangelists with a built-in affiliate model. Meanwhile, consumers passionate about their favorite brands get rewarded more directly for their evangelism. Win-win!


Consumers are already buying digital products. Last year consumers spent $2 billion on Roblox and $5 billion on Fortnite alone… and billions of hours on these platforms interacting with brands. But these assets are landlocked and can only be used within their native platforms. Web3 enables different digital products. Instead of being landlocked and ruggable, NFTs are interoperable and fully owned.


Brands are creating their own web3 platforms, not just products. Consumer giants like Nike understand the potential of a digital product line, generating over $186mm so far from NFTs. Late last year, they announced the launch of .SWOOSH, a community-based platform for digital shoes and jerseys that also unlock access to events, physical products, and co-creation opportunities. They are selling these digital products direct-to-consumer with creative ways to upsell and cross sell.

Secondary markets offer new ongoing revenue streams. Consumer brands today rarely capture any value when their items are resold. Unlike physical products, NFTs can be encoded with a ‘royalty’ such that every time it trades hands on the secondary market, a fraction of the payment is sent to the brand automatically. Web3 native brand Bored Ape Yacht Club has generated tens of millions in primary sale revenue, and more than $100mm in secondary royalties. That’s a new business model, and major traditional brands have noticed. Adidas and TIME have generated $5mm and $4mm, respectively, and Nike has earned more than $90mm in secondary royalties alone. The leading brands are adding custom secondary markets to their sites to retain traffic, stickiness and margins through a complete buying experience for consumers.


NFTs are powering supercharged loyalty programs. NFTs don’t have to be pricey to be effective. Starbucks is moving their 50-million-person loyalty program, which generated $15 billion in revenue last year, over to web3 platform 'Starbucks Odyssey'. They see NFTs improving that program by making loyalty ‘stamps’ ownable, and gamifying engagement in exchange for tradeable benefits like discounts and offers. As all marketers know, it’s always more cost effective to retain an existing customer than to acquire a new one. The incentivized nature of web3 adds a new dimension to loyalty and evangelism that big brands are starting to leverage.


NFT communities are dynamic peer-to-peer brand engagement groups. NFTs not only offer a new kind of DTC relationship for brands, but also for consumer to consumer. Token-based brand communities represent ‘fellow owners’ who are actively and organically interacting with each other about the brand in places like Discord and Telegram. This is also a low-effort way for brands to sustain a lively and engaged community: peer-to-peer brand discussions rather than more unidirectional engagements on Instagram and Twitter posts.


There are rich new consumer data insights in web3. Direct-to-consumer brands obsess about ‘first-party data’, essentially proprietary insights they glean about customers through their browsing and buying habits within their own ecosystem. Otherwise, brands have virtually no idea what customers are doing outside their four walls. This means rich customer data is splintered into silos across each brand’s incomplete picture, with no brand able to deliver an optimal experience for lack of full visibility.


Web3 data is much more interesting and powerful because it’s ‘open’ and tied to a consumer’s wallet address on-chain. Take a look at what other digital products they own, from which brands, and how they’re spending their money across all of crypto. All of this information is available and actionable on the blockchain.


The vision for DTC was always for brands to create and sustain lasting relationships directly with their consumer. Instead of a consumption-based relationship with the consumer, in web3 brands and consumers “win” together in a more participatory model. In the traditional sense of DTC, the financial relationship comes down to a “buy now” moment. With web3 and NFTs, it is a ‘buy into now,’ with a value exchange loop that doesn’t end; brand and consumer are intertwined by shared incentives to create value for each other. Consumers benefit from utility and perks, or from resell potential from a liquid ‘always-on’ market. The brand or creator benefits from transaction volume via embedded royalties… in the words of Charlie Munger, “show me the incentive and I’ll show you the outcome."


It’s certainly not a straightforward to simple step for a global brand to integrate blockchain technology into its existing framework. Those that have succeeded in making the web3 leap like Starbucks, Nike, adidas and Sotheby’s have all done so in different ways – sometimes it’s through membership, sometimes it's through loyalty and rewards, sometimes it's simply through a new digital product line. Brands that will be the winners of this DTC revolution are the ones who see its potential to not only supplement their existing business, but offer entirely new kinds of value to their consumers.

WEB3 RESOURCES FOR BRANDS

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The end of a web3 loyalty program doesn’t mean the end of its value.

March 25, 2024

What Starbucks Odyssey taught us.

Recently, we examined why web2 toolkits like Reddit Pro aren’t the best option for brands that want to engage consumers and retain loyalty across their products and experiences.

So what is? Drumroll, please.

From art to sports, luxury fashion, and even credit cards, Web3 is ushering in an entirely new set of tools for brands that want to build deeper connections with communities across dynamic environments that they can customize to their greatest needs.

Let’s break down some of the benefits we talked about last week in greater detail, starting with web3’s ability to help brands:

  1. Gain insights into customer activity and behavior across both online and real-world touchpoints.
  2. Leverage new analytics by connecting data from wallet signatures and onchain activity to build richer profiles and segment audiences more effectively.

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Mojito Brought the Toledo Museum of Art’s Debut Web3 Collection to Market with 10,000 NFTs — and Zero Code

January 18, 2024

Learn how we helped the museum tell an essential cultural story through the power of digital art and community.

Mojito's technology breathes life into dynamic web3 experiences for brands. We simplify the complex backend, allowing the front end to effortlessly focus on the fun stuff – including sticky consumer engagement.

Our recent collaboration with the forward-thinking museum turned this vision into reality. Mojito worked with Toledo's team to orchestrate a digital art experience by Osinachi & Yusuf Lateef. Our community engagement portal enabled Toledo to provide a smooth minting process, hassle-free claims, turnkey community management and reporting for the museum. The result? A powerful drop of 10,000 NFTs.

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The Web3-ification of Credit Card Loyalty Programs

January 11, 2024

Visa's new web3 loyalty program is no accident.

Swipe (or nowadays, tap) your credit card, and earn points. A process that’s now commonplace has a lengthy history that can teach us more than a few things about customer loyalty — and its journey through technology. Let’s start at the beginning. 


From paper to plastic 💳


While the history of credit cards dates back thousands of years, things turned from stone to metal — and later paper and plastic — about halfway through the 20th century with the arrival of the modern credit card in 1950. Reportedly invented following a case of a forgotten wallet, The Diner’s Club Card (initially owned by Discover Financial Services before its acquisition by BMO in 2009) was the first multipurpose charge card credit card intended primarily for dining and travel expenses. 

The Diner’s Club was also the first to pair the concept of charging credit with fueling consumer loyalty through the inception of points. Through partnering with dining, entertainment, and later, travel entities (i.e., airlines, rental cars, and hotels), Diners Club cardholders paid a tiered annual fee to gain special perks based on how much money they spent. The greater the yearly fee, the greater the perks. 

About eight years following Diner’s Club in 1958, American Express entered the credit card industry with the world’s first international charge card, which initially had an annual fee of $6 (one dollar more than Diner’s Club). Shortly after, Bank of America and Mastercard followed suit. During this initial period, most credit cards focused on offering customers just that — credit — with loyalty and reward yet to take off.