Digital and NFT fashion: What, how and where

Digital fashion transcends physical boundaries to create value for garments and accessories in virtual spaces. This new segment of the fashion industry, including digital renders of clothes, avatar fashion items, and fashion pieces minted as NFTs, is taking the internet by storm. Though these digital alternatives to fashion will not replace physical ones, they could increasingly become a part of a customer’s wardrobe. Morgan Stanley reported that non-fungible tokens (NFTs) and gaming could expand luxury brands' addressable market by 10% within the next decade. With massive opportunities waiting to be capitalized on, this blog dives into the concepts of digital fashion, virtual fashion, and NFT fashion, highlighting how each differentiates from the other. The blog also touches upon the impact of digital technologies on fashion, their use cases, and their benefits for designers and brands.

What is digital fashion and why is it important?

Digital fashion refers to 3D representations of garments, shoes, or accessories that have been created to exist solely in digital environments. These fashion pieces are produced using computer technology and 3D designing software like Blender and CLO3D. Digitally rendered fashion is made to fit a human represented online or could be designed for a virtual avatar in games or the metaverse. Virtual dressing rooms are a great way for digital fashion to be tried on before shoppers buy an item. For instance, Gucci partnered with Snapchat to create a filter that allows users to try on their digital sneakers.

What is the point of digital fashion?

• Generates new revenue streams: Designers and fashion brands can earn an income by selling their digital fashion creations to a new segment of consumers willing to pay for virtual items. For example, The Fabricant, a digital fashion house, sold "diaphanous,” a digital dress, for $9,500.

• Creates sustainable fashion: DRESSX claims that digital fashion uses 97% less carbon in its manufacturing process than physical fashion brands. Digital fashion can also be used to optimize the production of physical garments by using 3D software to fine-tune the fitting of goods manufactured, reducing a brand’s carbon footprint by 30%, as reported by Cointelegraph.

• Allows for greater experimentation and creativity: Designing digital fashion is not restricted to traditional fabrics and physical constraints of the real world. Designers can also create genderless designs beyond classic human silhouettes and experiment with new materials. For instance, Toni Maticevski, a leading Australian fashion designer, made a garment with the glistening sea's texture and replicated the imagery of a sea urchin.

• Removes geographic barriers: Digital fashion can be experienced by anyone with access to the internet and a device to display digital products. Creating digital stores where consumers can access digital garments eliminates the need to visit physical counterparts increasing accessibility. For instance, the Tommy Hilfiger x Zendaya pop-up in New York allows users worldwide to navigate, browse and shop for clothes using augmented reality (AR).

• Foster innovative collaborations: Fashion and technology are converging, creating new collaboration opportunities that can drive creativity in the space. For instance, Nike acquired RTFTK, a digital fashion brand, to design sneakers that can be owned as NFTs. Adidas also collaborated with several NFT artists and creators to design exclusive virtual merchandise.

How is digital fashion different from virtual fashion?

The main factors differentiating digital and virtual fashion are as follows:

• Scope: Digital fashion refers to garments, shoes, and accessories that only exist digitally. This includes digital designs for real-world items, fashion goods minted as NFTs, and digital garment renderings on real people. Conversely, virtual fashion is designed for gaming and metaverse platforms to customize and accessorize virtual avatars.

• Sustainability: Digital fashion has a lower carbon footprint than traditional physical counterparts as fewer resources are allocated to its production. Alternatively, virtual fashion is often minted into NFTs run on blockchain networks that consume large amounts of energy, making them less sustainable.

• Creativity: Designers can use artificial intelligence and advanced designing software to create new materials while designing digital fashion. For instance, The Fabricant used liquid metal for one of its garments. Conversely, virtual fashion designs are limited to the gaming platform’s capabilities on which the garment is created. Platforms like Roblox and The Sandbox have voxel-style aesthetics, allowing you to develop garments with 3D cubes.

• Accessibility: All you need to access digital fashion is the internet and a smartphone, desktop, or tablet. Virtual fashion needs the exact prerequisites of digital fashion on top of requiring customers to be a part of the specific virtual game or platform where their digital wearable exists. For instance, in some cases, a wearable owned on Decentraland wouldn’t be available on Roblox or outside the specific metaverse.

• Revenue streams: Digital fashion brands can earn revenue by selling products rendered onto a person's photograph or providing AR try-on options to drive sales of physical products. In the case of virtual fashion, brands, and designers can mint their digital wearables into NFTs to be sold on virtual marketplaces in Decentraland, The Sandbox, or Roblox. Most platforms offer free or affordable fashion, but certain items can be sold for a premium price.

What is digital fashion in the metaverse?

Digital fashion is represented in the metaverse as photo-realistic clothing or garments created with game-like graphics for virtual avatars. These digital fashion pieces are popular among users who see the metaverse as an extension of themselves and want to customize their avatars to express their individuality.

Digital wearables could include anything from clothes, shoes, and accessories like bags or hats. Gaming metaverses also provide avatars with ‘skins’ or outfits that entirely transform the digital avatar’s morphology.

Avatars can purchase these items in-game, generating a revenue stream for designers or brands that create them. For instance, as reported by Forbes, NFL sold 3.3 million branded skins on Fortnite, generating $50 million in revenue.

What is the difference between NFT and digital fashion?

• Scope: Digital fashion refers to any fashion item or clothing that only exists digitally. Conversely, NFT fashion is a digital fashion item minted on the blockchain as a digital asset. These items are unique, define ownership, certify authenticity, and can exist as a photo, video, or GIF. This means a fashion NFT is a part of digital fashion, but not all digital fashion is an NFT.

• Distribution: Digital fashion can be sold online through any channel and is not restricted to blockchains to be traded, like in the case of NFT fashion. For example, DRESSX, a digital fashion company, creates pieces that can be worn online, but not every fashion item is minted into an NFT.

• Rarity: Digital fashion outfits can be replicated and reproduced without restrictions. Conversely, NFT fashion items are limited edition since each piece is designed as a one-of-a-kind style that cannot be mimicked. Nike and RTFKT launched a limited edition collection of 20,000 NFT sneakers, each offering unique ownership.

While both digital and NFT fashion is transforming the fashion industry, each has attributes that challenge digital garments' ownership, availability, and distribution.

What do NFTs mean for the fashion industry?

• Revolutionizing how fashion is bought and sold: Fashion designers and brands can design digital outfits and mint them into NFTs to be sold and traded on blockchain-based marketplaces. There is a broad scope of monetization opportunities because NFTs are limited and scarce, driving up the price of commodities. Dolce & Gabbana sold their nine-piece NFT collection for a record-high price of $6 million. NFT fashion pieces also have higher long-term value than traditional clothes, as designers can earn a commission every time an item created by them is traded on the marketplace.

• Countering issues of authenticity: Since NFTs are stored and traded on blockchains, a secure record of ownership is maintained. This allows digital fashion items to be certified as authentic and exclusive once minted as an NFT. For instance, when Louis Vuitton launched its video game with a set of NFT collectibles designed in collaboration with the renowned artist, Beeple, each digital collectible was certified as authentic and original.

• Opportunities to drive engagement: Using NFTs in fashion unlocks opportunities to be innovative and drive audience engagement through limited-edition drops. For instance, The Hundreds, a streetwear brand, created a limited digital collectible drop called ‘Adam Bomb Squad NFT’ that was only available to NFT holders. This strategy is a great way to reward loyal customers and keep them engaged.

• Eliminating the middleman: NFTs are democratizing the fashion industry by doing away with the need for traditional gatekeepers like fashion houses or retailers to sell a product while also requiring minimal funds to launch a fashion line. Independent designers can easily upload their creations to the blockchain and sell their designs directly to consumers as NFTs.

How do fashion brands use NFTs?

• Limited edition collectibles: Designers can control the exclusivity and scarcity of their designs by trading them as an NFT to create hype. Burberry partnered with Mythical Games to launch an NFT collection in their flagship game, Blankos Block Party, which sold out faster than any other collection on the platform.

• Interactive and immersive experiences: NFT fashion collectibles can be used in virtual fashion shows or to allow customers to interact with products and virtually try them on. For example, the luxury brand Rebecca Minkoff partnered with the fashion NFT marketplace, The Dematerialized, to create NFT wearables that customers could interact with using a smartphone.

• Leverage collaboration with artists and designers: Unique and innovative NFT fashion collections can be designed by joining forces with other creators in the space. A good example is Balmain and Barbie’s collaboration to launch an exclusive NFT apparel collection that audiences could bid to own.

• Community building: Launching an NFT fashion collection is a great way to nurture a community of fans. Mishka NYC, a streetwear brand, launched over 6500 NFTs as a ticket to their community, the MISHKAVERSE. Members joining would have access to exclusive discounts, NFTs, and merchandise.

What are the benefits of NFT fashion?

• Broaden brand reach: Independant designers or brands looking to amplify brand visibility can create NFTs for their fashion products with limited resources and reach audiences at scale.

• Create virtual stores: While designing NFT fashion lines, brands can also set up their virtual store in the metaverse for users to navigate, interact with products, and shop merchandise.

• Build customer loyalty: NFTs are an apt way for brands and designers to build loyalty programs. These NFTs can be used as tokens to access exclusive events, discounts, and community groups.

• Opportunity to create a phygital strategy: Brands and designers don’t need to restrict sales to the virtual world with NFTs. Fashion items sold as NFTs can also be bundled with physical products, driving sales offline.

Conclusion

Digital fashion is revolutionizing how garments are consumed and traded, creating the potential for designers and brands to generate new revenue streams, optimize for sustainability, experiment with designs and eliminate geographical barriers. Digital fashion can include designs for real-world items, digital garment renderings on real people, virtual fashion for avatars, and fashion goods minted as NFTs.

New revenue streams can be unlocked by creating virtual fashion in the metaverse to be sold to virtual avatars allowing individuals to customize their look. Another digital fashion strategy to capitalize on is developing fashion NFTs, whereby digital outfits can be minted into NFTs, sold, and traded on blockchain-based marketplaces providing unique, defined ownership and certification of authenticity. Each form of digital fashion opens up opportunities to garner benefits for different use cases. Brands and designers that identify the ideal strategy for their fashion goods will be able to capture a significant market share of this rapidly evolving industry.

Are you a fashion brand or designer looking to capitalize on the metaverse’s digital fashion capabilities? We can help you build, scale, and monetize your fashion label in the metaverse. Get in touch with us!