From Streetwear resale to NFT trade, the evolution of the Drops model

Direct-to-consumer relationship
We know that top streetwear companies build their brand awareness via direct interaction with the community of buyers. They are building a tight-knot relationship with a tribe that expect an authentic and personal connection with the brands they purchase.

Large majority of the streetwear movement community come from the web native, generation Z and 70% buy their items online via brand site or resale platforms following social network recommendations.
We believe that NFT and Metaverse stores will continue to develop the D2C streetwear commerce initiated in web2, offering new experiences that will reinforce the relations, inside the community and with brands.

The streetwear movement is also built on exclusivity. And to satisfy this need, sneaker and streetwear brands rely on the ‘drops model’, where fans all over the world wrestle to get their hands on brands limited supply.
This drops model is a perfect fit for Web3 and NFT marketplaces which have the capacity to leverage it.

The codes of streetwear drops are based on few rules:
. First, supply must be under the demand, because the tipping point between supply and demand is crucial for the drop model.
. Brands must propose regular drop schedules to feed the frenzy, like Supreme’s famous Thursday morning droplist.
. Intentional leaks on social networks, that get fans to line up outside of stores or on whitelist, while spreading the word on their social media accounts.
. Collaborations with artists, celebrities, musicians and other popular brands.
. Last but not least: variety. Variety is the cousin of exclusivity, and helps sustain high demand.

Streetwear brands have also proven the viability of a completely digital model. Driving shoppers to the web page in time for a drop remains crucial. This underlines the immensely powerful role of social media as ‘the’ medium of communication, because the platforms are almost singularly responsible for giving consumers notice about new merchandise and forthcoming drops.
With drops announced on social media, customers are encouraged to be the first in line, to secure products, with limited quantities making it likely that pieces will sell out. The promise of new goods is a powerful lure for young shoppers, especially when bolstered by experiential events.
Consumers are willing to wait in line for a product drop, which is highlighting the consumer’s eagerness for streetwear items. Having been taught that drops are only offered in limited supply, shoppers are trained to view every item drop and product release as a once-in-a-lifetime moment

Maintaining limited supply is also a crucial component of the drops model because it rewards customers who are willing to put in extra effort for new items and feeds a growing resale market. Now, most of the streetwear drops are selling out immediately, despite limited returns on the secondhand market.

Next to the original drop, is the resale
The drivers of streetwear resale value are based on a bunch of factors including those key ones:
. As we explained above. supply is the most important factor by far. Streetwear and sneakers that were produced in limited numbers sell out fast, causing prices to lift off.
. Artists and brands limited collabs are safe bets.
. Time since release, as (StockX) data shows that many hyped releases follow a price curve, where prices are at their highest before a release, drop sharply right after release and then steadily climb back to their early highs.

Resale as the streetwear’s barometer
The drops model has resulted in a booming secondhand market. Buyers who can’t access drops will turn to resale shopping, while those who successfully purchased items will often look to make a quick buck.
The resale market is thus a barometer for a brand’s success.
What differentiates streetwear drops from fashion at large is that Streetwear offers two ways to enter: waiting in line to get a change to bag an original or paying a premium on a second market.

Now, how web3, NFTs and TheFamous, can help to solve some weakness while leveraging this streetwear drop and resale market.

. Access to trustable information
Buyers can now access as much information as sellers have.
The consumer is going to actually see all the data and everything else. So there’s full transparency about price, product, creator and holder(s).
TheFamous created an NFT passport that is giving transparency into the market demand and supply. This should give people greater access and more fair opportunity to buy products on secondary market, via NFTs.

. Facilitate resale while fighting counterfeit
The resale market is moving to a new area with the possibility to collect and trade NFTs. Collectors and fans can purchase items backed NFTs and decide to be delivered or to only receive the NFT with the goal to trade it on the secondary market. The NFT can change hands several time before to see a new owner deciding to receive the (IRL) item linked to the NFT.

When resale is about collecting unique or rare pieces, the authentication of item origin become much more crucial.
NFT (and TheFamous passport) facilitate the access to authentication data and ownership history of an item. The NFT can be also paired with NFC technology for interactions and access to verifiable elements but also to allow the issuer to connect with the holder and reward him based on achievements.

. help the market to be more ecofriendly
Customers are becoming wiser to the impact fashion has and, in turn, are making savvier purchase decisions to reduce their impact.
TheFamous, create a process where NFTs are sold on the marketplace, before the release of the physical goods which allows brands to gauge demand before actually manufacturing and distributing them. This strategy allows to control the supply chain and go to a ‘no stocks’ situation.

. Unlock new experience IRL and IVL
With web3 and metaverse, the relation between brands and consumers are set to look different in coming years. The line between physical and digital environments will blur more and more. Brands are starting to bet on strategies that combine digital ownership and utilities with physical goods, linked to NFTs and digital twins, to offer consumers both real and virtual experiences.

Conclusion

the second hand (resale) market is growing 11 times faster than traditional retail and is set to be worth $84 billion by 2030 .. NFT and Web3 will contribute to its growth, offering more security, transparency and experiences to the streetwear fan community.

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