While many businesses have not yet ventured into the world of Web3 and NFT sales, there are clear signs that they will be at the center of online retail in the future. For business owners who are eager to capitalize on the rapidly developing opportunities created by NFTs, launching an NFT marketplace is an enticing prospect.
However, because this is uncharted territory for many business owners, there are pitfalls that could limit success from the outset. To ensure a successful NFT marketplace launch, organizations should first consider five important factors.
NFT Marketplaces Explained
An NFT marketplace is an online platform that a business can use to sell non-fungible tokens. These tokens are unique digital assets that use blockchain technology, which is also the foundation of cryptocurrencies like Bitcoin and Ethereum.
Although NFTs have existed for several years, their popularity has dramatically increased since 2020. The demand for NFTs is often attributed exclusively to media hype and celebrity trends, but the reality is that they are revolutionizing the way that things are bought and sold online.
It's possible to sell any number of items as NFTs. Some of the most popular thus far include:
- Concert tickets
- Video game skins
When businesses launch an NFT marketplace, they create a space for content creators to sell their work and buyers to search for and purchase desirable items. This results in a dynamic atmosphere in which artists, performers, and organizations can sell items directly to consumers without involving intermediaries or paying commissions.
However, because NFTs are sold on a blockchain, all purchases are made using a form of cryptocurrency. This means that buyers will need to purchase crypto before they can participate in an NFT marketplace.
Factors Involved in Launching an NFT Marketplace
The realm of NFTs is in its early stages, so businesses are still experimenting with the techniques and strategies that result in the most successful marketplaces. However, there are some essential issues that every business should consider before deciding to officially launch a marketplace.
One of the first decisions businesses need to make is whether they want to build an entirely new NFT marketplace or make use of an already developed framework provided by a third-party service. One of the determining factors in this choice is whether a business has an in-house design team with the skills necessary to build a functional, attractive marketplace platform.
Another aspect of development to keep in mind is currency. Many pre-existing NFT marketplaces restrict purchases to Ethereum. This means that buyers who have invested in other forms of currency have to convert their tokens before making a purchase.
While some retailers find success in marketing to essentially everyone, in general, businesses fare better when they target a niche of likely buyers. This involves identifying a specific demographic of people based on attributes like age, location, and hobbies. With this knowledge in mind, the business can mold the marketing and design of the marketplace based on the interests of a target buyer.
Another key issue at play when determining clientele is deciding how exclusive the marketplace should be. When developing an NFT marketplace, businesses can make the platform:
- Public: anyone can sell or buy NFTs
- Semi-private: anyone can buy, but only specific users can sell their creations
- Private: both buyers and sellers have to be granted access to join and participate in the marketplace
A marketplace's level of exclusivity is largely dependent on the type of NFTs being sold and whether it is a personal storefront or a larger enterprise with a variety of sellers.
Design & User Experience
Even web users who are not particularly technology-savvy can recognize if an app or site is poorly designed. With NFTs, which are largely sold to a more technologically literate audience, fine-tuning the user experience is even more important.
When designing an NFT marketplace, consider how to make it simultaneously accessible and aesthetically pleasing. In particular, make sure that you include vital features that every marketplace needs to function properly:
- A simple way to create accounts and user profiles
- A user wallet with the user's crypto balance, currently held NFTs, and previous NFT purchases and sales
- A storefront that displays all available NFTs
- Search and filter functions so that users can locate specific NFTs and browse based on certain characteristics
- A straightforward process to create new listings
While there are additional features that can enhance the experience for both buyers and sellers, these are fundamentals that must be incorporated in order for a business to create a viable marketplace.
NFT marketplaces do not have specific regulations or regulatory bodies, but there are certain aspects of the law that should be taken under consideration. This helps protect a business from inadvertently failing to comply and thus becoming vulnerable to lawsuits or fines.
Some specific legal concepts that should be analyzed and implemented on an NFT marketplace include:
- Codes of conduct describing appropriate interactions on the platform
- Details about smart contracts, which identify the specific economics of each NFT sale (including sales prices and royalties)
- The platform's terms of service
- Consumer protection and data privacy compliance
- Intellectual property protection so that each user's property rights are clearly defined throughout every NFT transaction
As NFTs and Web3 continue to expand and develop, it is possible that new legislation will emerge that offers additional protection to marketplace participants. For that reason, it's critical that business owners stay abreast of any changes or updates.
The launch of a developed marketplace may seem simple. Business owners sometimes believe that the marketplace either succeeds or fails based on the quality of the NFTs and the platform design. In reality, developing an effective launch strategy can be equally important.
To prepare for a launch, consider how it should be promoted and what marketing materials should be distributed. In addition, it is vital to have properly trained staff on standby to assist and offer support to users when they encounter problems or have questions.
How to Launch an NFT Marketplace
One of the most exciting aspects of NFTs is that they have almost limitless applications and offer the possibility of incredible financial growth. Experts have high confidence in NFTs, with projections showing a drastic increases in the market value over the next several years.
While launching a branded NFT marketplace offers a unique and profitable opportunity for organizations, as with any new endeavor, it doesn't come without risk. Contact Anterdit today to demo a white-label NFT marketplace solution and receive guidance from our team of industry experts.