ADOPTION 2023 Part 4: Consumer Goods
Table of Contents
1. Introduction
2. Strengthen Brand Loyalty by Adopting Web3
2.1. Starbucks: Building Community and Strengthening Loyalty with AI and NFTs
2.2. Christian Louboutin: The 3rd Great Change in Luxury, E-Commerce → Social Media → Web3
3. Meet Customer Needs by Building Web3 Community
3.1. Lotte Homeshopping: Aiming to Build “Super Fan” Community through Bellygom NFT 2.0
3.2. Hotel Shilla: Web3 NFT Membership has Potential to Know and Satisfy Customers
4. Improve Existing Business System through Web3 Transparency
4.1. Deutsche Automobil's Charancha, a Blockchain-enabled Used-car Trading Platform
5. LG Sciencepark: Need for Services to Change People’s Lives from Consumer Goods Companies
6. Series Wrap-up
1. Introduction
In ADOPTION 2023 Part 3: Gaming, we explored why leading Korean game companies are incorporating blockchain into their games, how they've fared since launching their services, and what they each see as the future direction of blockchain gaming. In Part 4 of this series, we’re going to touch on the views of consumer goods companies like Starbucks and Christian Louboutin on Web3 and reasons for their adoption.
2. Strengthen Brand Loyalty by Adopting Web3
2.1. Starbucks: Building Community and Strengthening Loyalty with AI and NFTs
The first speaker at the conference, Evan Rosen, Head of AI & Emerging Tech at Starbucks, stated that while the past was an era of mass production and mass consumption, the present era is one of personalization and customization. Thus, Starbucks proposed three keywords—immersive, accessible, personalized—and plans to actively utilize AI and NFTs.
<Starbucks Odyssey NFT held by Rosen, Source: Xangle ADOPTION, Starbucks presentation>
Thus, the Starbucks Odyssey NFT project was born. Starbucks Odyssey is an NFT program aimed at younger generations who are more open to NFTs. Starbucks customers can collect NFT stamps in the same way they collect e-Frequency stamps, and redeem them for offline experiences such as a Starbucks coffee farm activity or tour of the coffee supply chain. And this combination of on/offline experience is how Starbucks Odyssey aims to strengthen loyalty among younger generations. 
Lastly, Rosen presented the three frameworks for NFT adoption that Starbucks is using. According to Rosen, you can strengthen brand value and loyalty through NFTs, if you can follow these three frameworks to define the value of NFTs, manage risks, and even put them to practice. He emphasized profit for the value framework, saying that there is no reason to be in the NFT business if it doesn’t generate tangible profits. Also, he mentioned in risk framework that the crypto market is highly volatile, which requires anticipated response. Finally, for execution framework, he emphasized the importance of having a clear purpose for issuing NFTs and the importance of constantly communicating with the community and building customer experience to strengthen loyalty.
2.2. Christian Louboutin: The 3rd Great Change in Luxury, E-Commerce → Social Media → Web3
Elise Yoshida of Christian Louboutin stressed that the luxury market is once again undergoing a major change. If the first change was e-commerce, purchasing luxury goods without seeing them in person, and the second was social media, advertisement channels of the masses, the third is Web3. She also added that about 71% of luxury brands have realized the importance of Web3, and already have or are in the process of adopting NFTs.
However, Yoshida pointed out that there’s delay in mass adoption because customers still lack confidence in Web3 due to incidents such as the LUNA and FTX disasters and the collapses of banks this year. Since luxury brands value customer confidence, all of these incidents would have delayed their Web3 adoption. She also maintained on being cautious since there are some cases, such as the Porsche NFTs, that showed poor minting rates.
However, according to Yoshida, luxury brands’ entry into NFTs has only just begun. She saw Christian Louboutin's NFT, NO STRINGS ATTACHED, to be a success story for luxury NFTs, noting that the collection has a high redemption rate of 50% and an average holding period of 12.9 months (average wallet lifespan). However, she concluded that NO STRINGS ATTACHED is an early-stage project and that they need to have a long-term vision and develop their NFT business around utility expansion and customers.
3. Meet Customer Needs by Building Web3 Community
3.1. Lotte Homeshopping: Aiming to Build “Super Fan” Community through Bellygom NFT 2.0
Ho Jin, Vice President at Lotte Homeshopping, asserted that the company wants to meet the needs of new customers and create so-called "super fans" through Web3 adoption.
The problem with Lotte Homeshopping in recent years was that its target age group has been older generation. Home-shopping in the past was mainly done through TV, so it attracted purchases from middle-aged people. However, due to the material affluence of the new so-called “Zalpha” generation (gen Z + gen Alpha), the "generation without desire", the trend of purchasing is changing. Whereas the older generation was driven by needs, generation Zalpha is driven by wants, causing brands to shift from being “feature-centric” to “loyalty-centric.”
Another major change is that media trends are also changing. The influence of the unilateral legacy media, such as TV commercials, is steadily declining, while the bilateral interactive online channels are expanding with consumers becoming influencers and/or creators. As a result, we're moving from an era where companies needed to create the right message to succeed to an era where that success is determined by average customers.
In line with this shift in customer demographics and the media, Lotte Homeshopping launched Bellygom NFTs last year to attract so-called "super fans." However, Director Jin reflected that the customer utility-oriented Bellygom 1.0 was no different from the existing membership. In other words, Bellygom 1.0 was still a unilateral communication with Lotte providing benefits when customers purchased NFTs.
Thus, Lotte Homeshopping transformed Bellygom 2.0 into a community-oriented NFT program that fully reflects the changes in customer groups and media. Finally, Jin concluded the session by emphasizing that Bellygom 2.0 aims to turn participants into "super fans" of the Bellygom IP by allowing them to earn various rewards through continuous community activities, staking, and using the Jelly Market.
3.2. Hotel Shilla: Web3 NFT Membership has Potential to Know and Satisfy Customers
Director Tae-hoon Kim of Hotel Shilla, who participated in the panel session on the 12th, also expressed his concerns about customers. The hotel business is in nature a low-touch business. Customers make reservations online, and during active hours, they stay in their rooms or go outside. Therefore, the only time Hotel Shilla interacts with customers is during check-in and check-out. Because of this, Hotel Shilla is having difficulty identifying customer needs quickly. Therefore, Kim stressed that Hotel Shilla needs a new framework for intangible values to remedy this.
The "framework" that Hotel Shilla envisions is an NFT membership program. Kim emphasized that if Hotel Shilla proceeds with the NFT membership in the future, it will be easier for them to identify customer needs. For example, by using a pool party membership NFT, a community can be formed among customers to have them. And through this community, Hotel Shilla aims to identify customer needs and promote loyalty.
However, Kim believes that it is still unclear whether hotel guests will take part in the NFT memberships willingly. Therefore, Kim said that Hotel Shilla is still exploring customer needs and that the membership program should be created without compromising the existing customer experience and privacy.
4. Improve Existing Business System through Web3 Transparency
4.1. Deutsche Automobil's Charancha, a Blockchain-enabled Used-car Trading Platform
On the 11th, CEO Hyukmin Kwon of Deutsche Automobil touched on the challenges of the used-car market in the company’s Web3 paradigm shift. Kwon respectively defined Web1 and Web2 used-car market as an offline-trading market and an online platform-trading market, and pointed out their information asymmetry and low reliability due to lack of standardization. He also added that the current Web2 platform-oriented market hit limit due to siloed information systems, challenges in verifying dealer reputation, as well as different certification standards.
Kwon believes that these problems of Web1 and Web2 can be solved in Web3. He believes that if the used-car market adopts a Web3, participation from data producers will be encouraged by incentivizing data providers, and verifying used-car purchase information and reputation of data providers can be further strengthened. In saying that, he emphasized that Charancha, a Web3 used-car trading platform launched by Deutsche Automobil, is one of the solutions. Finally, Kwon wrapped up by emphasizing that Charancha will not only provide services such as curation in Web2, but also organize forums (communities) of actual owners, and transparently manage the history of used-cars (vehicle history) through blockchain.
5. LG Sciencepark: Need for Services to Change People’s Lives from Consumer Goods Companies
At ADOPTION 2023, we learned why Starbucks, Christian Louboutin, and other consumer goods companies are adopting Web3 and what services they are launching. These consumer goods companies are focusing on NFT technology, using NFTs to build to build communities, strengthen brand loyalty, and understand customer needs. Meanwhile, they are also trying to use Web3’s transparency to improve their existing business systems. Jinho Jang of LG Sciencepark emphasized that “for Web3 technology to be more prominent, services that can make a real difference in customers’ lives are needed.” And it indeed seems important for consumer goods companies to focus less on tokens and more on improving customer experience.
6. Series Wrap-up
A walk through this year’s conference made clear the incredible growth that the Web3 market once again saw in just a year since Xangle’s ADOPTION 2022 last year. While companies were still figuring out how to adopt blockchain technology last year, they are now finalizing their strategies and rolling out Web3 services to the market. What's even more remarkable is that there are way more global giants entering the Web3 market now, such as Starbucks, Adidas, HYBE, Deutsche Motors, Lotte, and LG. And this indicates that interest in Web3 has moved beyond the technology and is now at the stage of recognizing its practical business value. So we wrap this ADOPTION 2023 series up with the hope that the insights gained from the conference will help companies create and execute sustainable growth strategies for the Web3 industry.
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