By Aziz Vora, Director of Marketing
Amazon, the global e-commerce behemoth, is rumored to be making a significant move into the digital assets market with the introduction of an Amazon NFT Marketplace. The company has reportedly been exploring the development of a digital collectibles platform for some time, and is said to be working with various industry leaders, including layer-1 blockchains, blockchain-based gaming startups, and digital asset exchanges.
While Amazon has remained tight-lipped about its plans, sources indicate that the company’s primary focus is on blockchain-based gaming and related NFT applications. This suggests that the new offering will be designed to entice Amazon customers to play crypto games and claim free NFTs in the process. If successful, this could represent a significant new revenue stream for Amazon, as the popularity of NFTs picks up pace following the 2022 crypto winter.
Other Players in the Blockchain Space
The concept of using NFTs to reward users for playing games or engaging with other online content is a growing trend within the blockchain space. By leveraging the unique properties of NFTs, such as their scarcity and provable ownership (also referred to as provenance), companies like Amazon can create new, engaging experiences that incentivize users to spend more time on their platforms. Additionally, by integrating NFTs into their ecosystems, these companies can create a range of new revenue streams, such as transaction fees or commissions on NFT sales. Play-to-earn (P2E) games, while still a new concept, have been tested out by crypto natives with titles such as Decentraland, Sandbox, and Axie Infinity. These games, while all featuring slightly different mechanics, typically require users to purchase supplies or tokens before beginning to earn via token economics.
The Amazon NFT Marketplace initiative is expected to launch in the spring, and it remains to be seen how successful it will be. However, given the company’s track record of innovation and disruption, it’s certain that this move will be closely watched by competitors and investors alike. If Amazon can successfully create a compelling NFT platform that appeals to gamers and NFT collectors alike, the platform could potentially create a whole new market for digital assets, onboarding a more mass-market audience and convincing skeptics of the legitimacy of the blockchain space.
Amazon’s entry into the NFT market could have significant implications for the crypto space. Although the company has not made an official announcement about its plans, sources suggest that Amazon will make its crypto ambitions public in April 2023. With Amazon’s reputation as the world’s largest e-commerce company, its move into the NFT space has the potential to shake up the market and disrupt the existing players.
Details on Amazon’s NFT Marketplace Initiative
It is unclear at this point who within Amazon is leading the NFT initiative. However, it has been reported that executives leading the push have already reached out to at least one family office in recent months. Despite being in the development phase, Amazon’s move into the NFT market is seen as a significant development. One source stated, “We knew it was possible, but now it seems like it’s really happening. That’s going to affect the existing players in the space — if they execute and do this right and are smart about it.”
It is also worth noting that the platform is set to run out of Amazon proper, rather than its popular web-hosting platform, Amazon Web Services (AWS). While the details of the platform are still unfolding, the Amazon NFT Marketplace is expected to have far-reaching implications for the crypto market, potentially bringing a new level of mainstream adoption to the technology.
The platform is likely to offer a simple, user-friendly experience to cater to the expectations of Amazon’s existing customer base. While this may seem obvious, the impact on web3 will be outsized—many solutions on the market either struggle with brand awareness or include a lot of friction in the user onboarding experience, both of which are barriers to mass adoption of the technology.
Although Amazon has not been known for exploring the crypto or blockchain arenas in the past, the company’s recent moves suggest a shift in focus. Previously, Amazon’s involvement in the crypto space has been limited to postings on AWS for developer and engineer roles in the Web3 realm, as well as the Amazon Coins program that was introduced in 2013. However, the Amazon Coins program is more akin to a straightforward loyalty program than a crypto initiative.
Now, Amazon’s Web3 blueprint appears to have significantly evolved since earlier iterations. The company has partnered with industry power player Ava Labs, the company building out layer-1 blockchain Avalanche, through its Amazon Web Services (AWS) to scale blockchain adoption among governments and other institutions. They are also reportedly working with blockchain-based gaming startups and developers, and digital asset exchanges, to develop a digital assets enterprise that includes an NFT initiative. The focus is on blockchain-based gaming and related NFT applications, with a goal of getting Amazon customers to play crypto games and claim free NFTs in the process.
Although the details about the Amazon NFT Marketplace platform are still unfolding, some sources suggest that Amazon may be planning to compete with well-established NFT marketplaces such as OpenSea and Rarible. This move would represent a significant threat to these established players given that Amazon’s customer base includes over 160 million just among Prime Members. Furthermore, the fact that Amazon is reportedly planning to run this new platform out of Amazon proper, rather than its popular web-hosting platform, Amazon Web Services (AWS), suggests that the company is making a serious effort to establish itself in the Web3 space.
Potential Pitfalls of Amazon’s Platform
While there is no indication of the full extent of Amazon’s Web3 ambitions and end goals, the company’s move into the crypto and blockchain space is a significant development for the industry. As one source commented, “We knew it was possible, but now it seems like it’s really happening. That’s going to affect the existing players in the space — if they execute and do this right and are smart about it.”
Web2 companies have certain barriers to entering web3 in the “right” way for a successful project. While Amazon’s capabilities and the partners it is currently working with suggest the company is taking the space seriously, there are also certain values behind the web3 experience that may have a value mismatch with the web2 e-commerce behemoth. The technology is designed to foster transparency and community while offering tamper-resistant security. That may be difficult for a company so notoriously secretive as Amazon, who once had a representative respond to a reporter with, “Off the record, no comment.” Amazon has also been criticized for its lack of transparency about health and safety policies for employees during the COVID-19 pandemic and for being one of the last tech giants to issue transparency reports on government data requests. But perhaps the company is looking to change. After all, Human Rights Watch applauded their 2019 decision to adopt a transparency pledge and publish details of over 1,000 facilities that produce Amazon-branded products.
Still, the retailer has a long way to go to embody the values that power blockchain innovation, which draws questions about how the company is looking at web3 and what strategic potential NFTs and blockchain represent for its leadership. Through our experience watching and participating in the industry, we know that web3 natives do not appreciate a cash grab. If that is how the Amazon NFT Marketplace is being framed, we expect even a platform with a polished and streamlined UX will fall flat with customers.
In a recent interview with Tech Crunch, Howard Wright, VP and global head of startups at AWS, said, “Looking forward, web3 and blockchain is inevitable. The velocity of this [growth cycle] seems like it’s accelerating and we’re just excited to be a part of this.”
Potential values mismatch aside, Amazon has made it clear the company is serious about expanding into the Web3 and blockchain space. The Avalanche blockchain is known for its high scalability and low transaction fees, making it an attractive option for developers looking to build decentralized applications. By partnering with Ava Labs, AWS is providing developers with an easy and accessible way to experiment with and test blockchain applications without the need for a significant investment in hardware and infrastructure.
Amazon’s foray into the blockchain space has been long-awaited by industry observers. While the company has occasionally posted job listings for roles in the Web3 realm, its focus on blockchain and cryptocurrencies has been relatively muted until now. The fact that the company is now actively exploring Web3 initiatives and NFTs—and not routing these projects through AWS—suggests that the ecommerce giant sees significant potential in the space.
The move also highlights the growing interest in blockchain and cryptocurrencies among mainstream web2 companies. With the increasing adoption of blockchain technology across various sectors, it is becoming clear that blockchain has the potential to revolutionize the way we do business. By getting involved in this space, Amazon is positioning itself at the forefront of this revolution and is well-positioned to take advantage of the many benefits that blockchain technology has to offer. But again, success in this space is about more than just the technology, but the underlying motivations behind its use and adoption. Blockchain may revolutionize the way we do business, but it promises to do so by increasing transparency with traceable, immutable records… which may not be a strategic direction Amazon is interested in pursuing.
The Amazon NFT Marketplace is on our Watch List
It will be interesting to see how Amazon executes its digital assets enterprise and how it plans to compete with existing NFT marketplaces like Rarible, Blur, and OpenSea. The fact that Amazon has a customer base of over 160 million Prime Members means that it has a significant advantage over other players in the market. However, it will need to offer a compelling value proposition and polished user experience to attract customers and gain market share. More critically, it will have to do so for the right reasons to power meaningful adoption by the general public and web3 enthusiasts.
Amazon’s move into Web3 and the blockchain space is a significant development that could have far-reaching implications for the crypto industry. While the full extent of Amazon’s Web3 ambitions and end goals remain unknown, it is clear that the company is taking this initiative seriously and is committed to exploring the potential of blockchain and cryptocurrencies. As the industry continues to evolve, it will be interesting to see how Amazon’s digital assets enterprise takes shape and how that will impact the broader blockchain ecosystem.