How to profit from NFTs (A guide for stores on WooCommerce)

Integrating non-fungible tokens (NFTs) into WooCommerce stores offers merchants some unique opportunities. In this post, we’ll take a look at some specific use cases, complete with real-world examples, illustrating how Woo merchants can leverage NFTs for profitability and growth.

Let’s have a look at some NFTs to try to bring this somewhat abstract concept to life.

Nike .swoosh sneakers

Members of .swoosh were given the opportunity to buy NFT sneakers. In turn, these gave holders access to buy special edition real-world sneakers.

Layer3 cubes

Layer3 is a web3 educational site. When you complete certain quests, you gain the right to mint a Cube NFT. These represent micro-learning qualifications which are an interesting component of identity.

Event tickets

Event tickets issued on-chain allow folks to transfer or re-sell their tickets or get access to related on- and off-chain events and content.

This is the most straightforward use case and the foundation on which all the other use cases are built. Put simply, NFTs are a digital asset and can be sold. As of the date of this writing, the total market cap for all NFTs is nearly $10B, composed of over a billion NFTs and nearly two million collections, according to OKX.

NFTs as products

As a product, NFTs offer a lot of upside:

• Instant fulfillment: Digital delivery means no headaches on customs and shipping. Automatic fulfillment to the user’s wallet with public visibility on-chain means no ongoing effort required by the merchant and no fulfillment disputes.
• Always meet demand: You can sell as many NFTs as the market has appetite for; there’s no lag in production or scaling limit.
• High profit margin potential: The cost to design and deploy NFTs can be nearly zero given the capabilities of AI image generation and low cost blockchains. The costs don’t scale with production in the same way that physical goods do. The largest cost is time and file storage, which are financially negligible compared to warehousing of physical goods.
• Participation in the secondary market: NFTs come with the concept of royalties. This means that you can program and require* a fee from any secondary market sales. Even if you choose not to do this, you can see exactly what sales activity is happening.
• Organic word-of-mouth marketing: Your customers can choose to show off their purchase as part of their social profile, acting as ambassadors for your brand and providing free marketing for your business.
• Foundation for customer loyalty: NFTs create a permanent link between you and your customer. Once someone has bought an NFT, holds an NFT, or has interacted with an NFT at any point, anyone can query that data from the blockchain. We’ll explain this in greater depth later on in this post.

* There are some complexities around royalties that we won’t go into here.

Why sell NFTs with Woo?

You don’t need a whole ecommerce store to sell NFTs. You can make them available to mint directly on-chain, on NFT platforms and marketplaces like Zora or OpenSea, or even on crypto social platforms like Farcaster and Lens. However, using a Woo store to sell NFTs gives you some important advantages:

1. Meet customers where they’re already shopping: Sell NFTs alongside any other goods or services, in the same place and with the same context for your customers.
2. Provide and benefit from a seamless experience: Selling NFTs on your Woo store gives you control over the entire customer experience and allows you to benefit from analytics, marketing data collection, and other normal ecommerce features.
3. Centrally manage your business: WooCommerce NFT sales also allow you to manage all of your orders centrally in your Woo store admin.
4. Provide unique benefits: On your Woo store, you’ll be able to bundle products together (“buy this hoodie and get a free NFT”) with your NFTs, encouraging a higher order value.
5. Incentivize digital wallet connection: Selling NFTs on your Woo store also provides a reason for them to connect their digital wallets — establishing precedent for you to evolve this experience for faster transactions.

When you think of NFTs, you will probably think first of pictures of monkeys, punks, or art, but NFTs can look like (and represent) anything you want. This is truly an expressive and creative space — hopefully some of the ideas below will help inspire ideas that go beyond the stereotypes.

Who buys NFTs?

People have lots of reasons for buying NFTs, ranging from speculation through collection and onto fandom. The most active NFT buyers are millennials, and as a rule NFT buyers skew younger and more tech-savvy. Beyond that, the audience is global and estimated to total 360,000 unique people, according to EarthWeb.

Can I just give NFTs away instead of selling them?

Yes! There’s nothing stopping you from just airdropping NFTs to your customers or including them free with an online purchase. We’ll cover distribution methods in the next post of this series.

One key attribute of blockchains is their immutability — meaning that the records on a blockchain will never be altered. One way that this can be useful to creators is that it can be used to notarize content. This notarization can be linked to digital or physical assets in order to provide reassurance of provenance and authenticity to buyers.

Token-gating is just like using registration, data capture, or paywalls — it’s a way of managing who can access a digital asset or experience. The difference is that instead of asking for email addresses or logins, you gate access based on the contents or attributes of the digital wallet. So, with token-gating, you have the ability to limit access only to holders of your NFT(s). When might this be useful?

1. Rewarding loyal customers by giving them early access to a new product line, or protecting new drops from bots.
2. Giving current, verified customers access to an exclusive support or community channel.
3. Allowing only verified customers to see specific documentation or exclusive information.
4. Giving paying subscribers access to premium content.

By asking your customers to connect their wallet to your store, your store can provide these personalized experiences.

You can get even more refined than simply allowing a customer to buy a product. For example, you could offer NFT-holding customers an exclusive discount on specific products.

Now, here’s where we can get a little more creative, too. What about if someone holds a competitor’s NFT? For example, let’s say you’re Nike and a customer comes along, connects their wallet and their wallet contains an Adidas NFT? Would you offer them a discount to try to get them to switch brand loyalty? 

This is where the openness of crypto digital assets becomes really interesting: it’s not only your own digital assets (NFTs or other) that you can use to design logic on your store, but anything that can be in a wallet, or even just any historical transaction a wallet has made. That said, it’s important to consider local, regional, and global privacy laws when creating use cases for NFTs. 

While all crypto data is considered open and should be approached without the expectation of privacy, your customers might not be aware of how this impacts their data’s availability. Always be clear about your NFT and data usage when creating a digital asset or offering digital wallet connection.

One particularly cool use case is the ability to redeem an NFT for a physical product. As we mentioned earlier, you can sell NFTs almost anywhere. But how does that translate into an omnichannel commerce experience?

Let’s say you are playing Fornite and you see a sick pair of sneakers (OK I’ll admit it, this author likes sneakers) and want them. In theory, there’s nothing to stop you buying those sneakers from within the game, using in-game currency (V-bucks in this case). But you’re not going to want to pause your game and enter your shoe size and shipping information, so how do conversion and fulfillment work?

One way is that you could buy an NFT representing the right to purchase those sneakers — think of it as a 100% discount coupon. You would then go to the retailer’s website later on, connect your same digital wallet, and redeem your NFT. At that point you’re within an ecommerce context, so you can check the size and shipping details, and complete the purchase.

This distinction between buying the right to purchase and making the purchase introduces some interesting opportunities for merchants to explore where:

• People might want to buy a product but not take immediate ownership of it — e.g. a case of wine.
• There’s a good chance that the value will increase over time, like artwork or commodities, and trading of the ownership or right to buy might be more efficient in a digital-only marketplace.
• Purchase and fulfillment user journeys that are separated by experience — per the gaming example above.
• Merchants want to only produce 100% of the products they’ve sold: for an expensive or perishable product, it might be helpful to know exactly how many products you’ve sold before you order a custom production run.
• There are some aspects of the product or service experience that are digital as well as physical. For example, an artist could sell an NFT that grants rights to both digital music and a physical concert ticket. Perhaps a fan knows that they want to see the band, but doesn’t know yet which date and location will work best for them.

When a merchant chooses to gate access to token-holders, they are automating audience segmentation. One segment has the token and gets access to a product or discount, the other does not. However, NFTs allow a merchant to go beyond this basic segmentation into full personalization.

An NFT can — for example — represent a social media profile (e.g. Lens, pictured above, or Farcaster). That means a merchant can see all sorts of data about their customer: their profile picture, the contents of their public posts, their social graph, etc. This enables merchants to infinitely personalize their products or services. Maybe it’s just a case of using the customer’s profile picture for their on-site profile. Maybe it’s offering them a discount. Maybe it’s offering them a jacket embroidered with one of their own NFTs. Really, the opportunities are endless.

As mentioned above, the state of all wallets in a crypto network are open for all to see. So, it’s possible to get a list of wallets that own a particular NFT or who have transacted with any given address. That list is an audience, and there are lots of tools you can use to engage with that audience. Here are some ways I’ve seen it done:

1. Airdrop your NFT or tokens to holders of another token or NFT. You can use the token name, image, and text to tell the recipients who you are.
2. There are on-chain messaging services that build on the addressability of crypto networks to allow instant messaging, email, and even push notifications. Some apps use either these open protocols or their own to allow users to message; for instance, Coinbase’s Wallet has messaging, as does DeBank.
3. Some platforms, like MagicEden, OpenSea, and Zora allow people to follow creators and watch for new NFT releases.
4. Other services allow token-gating for private channels — e.g. Discord and Telegram. This route assumes you can get the users to join using another channel first, but once they’re there, they’re all yours.
5. Perhaps the most powerful medium are the crypto social platforms (again, Lens, Farcaster). These combine the power of social media (profiles, posts, social graph) with the ability to mint NFTs inline and create and token-gate private channels based on the NFTs a user holds.

NFTs offer compelling opportunities for Woo merchants. As a product they have a lot of ideal characteristics based on their low cost, flexibility, and digital distribution. But an NFT sale is also more useful than the sale of non-blockchain based digital goods because the NFT sale is recorded on-chain and available for use later on for community engagement and personalization. 

Ultimately, the open and public nature of NFT transactions mean that people can collaborate and innovate together across brands and platforms.