Lessons from RTFKT’s Cryptokicks drop: How brands can manage NFT holder expectations
Web3 design studio RTFKT, which Nike acquired last year, released its first IRL “smart” sneaker, the Nike x RTFKT Cryptokicks, during Art Basel in Miami on December 5th. The company specializes in virtual sneakers and collectibles.
However, the launch revealed a number of problems RTFKT’s approach and the expectations of NFT holders. Among them were the company’s lack of global shipping, customer confusion about the various NFT projects, and the unexpected cost of the IRL sneakers. These issues led to a floor price drop to 1st ($1,232) for the MNLTH NFTs. The results offer a learning opportunity for brands on how to manage NFT holder benefits. First, communicating with the community, ensuring worldwide participation and preparing a roadmap are key.
Nike’s NFT initiative is not the first of its kind. Brands such as Rebecca Minkoff and Balmain has also experimented with NFT projects in the past year. Below is an explanation of the Cryptokicks product, the backlash surrounding their release, and the best takeaways from the activation, according to experts in the field. RTFKT did not respond for comment.
What is Cryptokicks?
The RTFKT Cryptokicks are innovative IRL shoes that come in four colors. They feature automatic lacing, a feature Nike announced in 2019. The IRL shoes also feature improved lighting, haptic feedback, motion control, gait detection, a move-to-serve mechanism, app connectivity, machine learning algorithms and wireless charging via an RTFKT Powerdeck.
There are only 19,000 units of the sneakers. They are sold as digital collectibles that can be redeemed for their physical counterparts in a process RTFKT calls a Forging Event.
The functionality of the sneakers is unlocked through the RTFKT IRL app. Sneaker owners can verify their IRL sneakers using their digital counterpart through RTFKT’s World Merging NFC chip, a physical chip on the bottom of the shoe. The brand has hinted that it will launch IRL missions, where users can use the move-to-earn mechanic and engage with other community members and Cryptokicks owners.
What went wrong with the fall?
The Cryptokicks launch was connected to RTFKT’s MNLTH NFT which was officially launched in April. As is typical for NFTs, MNLTH NFT buyers were promised exclusive access and benefits.
Since access to the MNLTH NFT sale was first sent to holders of previous RTFKT NFT projects in February, many assumed that the MNLTH holders would be rewarded for their loyalty by receiving first access to Cryptokicks. As such, RTFKT received a flurry of backlash from NFT holders on Twitter when this was not the case.
Also, most RTFKT NFT holders had to pay full price for the sneakers. Only holder of the MNLTH 2 – an iteration of the original MNLTH NFT – got $150 off the $500 shoes. Most expected not to pay for the sneakers, as the first MNLTH NFT went for $30,000 at the time of sale.
Worldwide availability proved to be another sore point. The IRL shoes are not available to those outside the US. RTFKT has since solved the problem by allowing European customers to secure distribution from the US to Europe through services that ship first to USPO boxes.
Grant Flannery, vp of planning at creative growth acceleration company Huge, owns about 100 NFTs from brands like Bored Ape Yacht Club, Gutter Cat Gang and RTFKT. He bought a MNLTH 2 NFT.
“The reason the community was most upset about the launch was that it wasn’t communicated in advance that the shoes would only be available in the U.S. Plus some people, including myself, invested a lot of money only to be told I had to pay more money to actually get something and the original [NFT purchase] was almost worthless, said Flannery, who is based in New York. “All of this could have been avoided if they had been clear from the start that the product was only for the US […] When they said this, they responded quickly, communicated and listened, and made immediate changes to help the community get what they wanted within 24 hours.”
Flannery said NFT holders value honesty above all else. “We all know there is a risk [in buying NFTs], and the market is dependent on speculation. So most holders want to be kept informed so they can make the right decisions themselves, he said. “The first thing brands need to think about is their vision and purpose in the space. […] Holders expect frequent updates and value to be given to them and not extracted from them.”
The redemption period, or the time people can exchange their Cryptokicks NFTs for physical sneakers, was originally set to run until December 19. After feedback from customers and criticism on Twitter that the time frame was too short, the deadline was moved to 1 May.
MNLTH holders too complained about public access to the shoes. They assumed it would be an exclusive product, although a public draw was offered from December 7-9 for any leftovers. In addition, some users criticised the growing number of small-scale NFTs luxury brand collaborations and drops, saying they are diluting the value of major projects like MNLTH.
Ultimately, the complications seem to have driven the NFTs’ value down: The value of the MNLTH NFT has fallen from 2.8th ($3,450) to 1st ($1,232) since December 4th. The value of the separate RTFKT X Nike Trillium Lace Engine NFT that provides access to coining for one pair of Cryptokicks has also decreased, from 1.6th ($1,971) to 0.2th ($246) since December 4th.
How could this be mitigated?
In Rebecca Minkoff’s opinion, an NFT project manager is essential for brands leveraging NFTs. Minkoff partners with NFT marketplace Mavion, which manages the experience on behalf of the brand. “We have a very tightly managed benefits plan with Mavion, and they are leading the benefits and timelines for our NFT launches through September 2023,” Minkoff said.
For web3 brands like fashion designer Charlie Cohen’s RSTLSS, continued investment and long-term planning are essential. “We need to move past this 2021-2022 narrative of NFT projects and jpegs and instead think about how NFT’s underlying technology can be used in a way that is authentic to a brand’s vision,” Cohen said. “Ownership, collectibles, ticketing, access, verification and tracking of physical objects, interoperability – this is what the technology is here for. And brands have only scratched the surface.”
Cathy Hackl, head of metaverse and co-founder of metaverse strategy firm Journey, said it’s also important for brands to use NFTs to speak to their communities, not at them. “Explore what they want to see from your brand in 2023; ask them what’s of value,” she said. “You can’t please everyone, but most times your community can tell you how to prioritize them. Brands should ask themselves how they add value to their existing communities and the communities they want to bring further into their ecosystem.”
Anne-Liese Prem, brand strategist and web3 educator, owns 30 NFTs from leading fashion-related projects in space. “This is a very rare time when brands can travel into the future with their customers, she said. “As an educator and NFT holder, I look for continuous surprise, entertainment and special opportunities that are only for the NFT community.”
According to Prem, brands should use NFTs to test new concepts such as co-creation, token-gated access and limitless creativity. “Brands should stay authentic and true to their DNA, and be honest when they mess up. This space is very new, and things go wrong all the time,” she said. “If brands move now and have a smart roadmap for the next few years, they can take advantage of a unique opportunity to engage with early adopters and be part of the culture in creation.”
