Other people's web3 strategies: Dolce & Gabbana
In this web3 strategy guide we deep dive into Dolce & Gabbana's history and the possibilities opened up when third parties approach established brands with a game plan.
La Dolce (& Gabbana) Vita
In the last 12 months, Dolce & Gabbana have released 3 NFT projects and launched the Metaverse Fashion Week. These efforts, combined, have netted them $23.67 million. All of this was done with the support of UNXD, a curated NFT marketplace that was founded by Shashi Menon and Alex Gonzalez.
- Dolce & Gabbana is a founder owned business, able to make drastic changes with things other than revenue in mind (read: the creative integrity of the brand).
- The brand is no stranger to off-kilter innovation and experimentation.
- Dolce & Gabbana ran a 9-piece NFT auction in September 2021 that netted $6 million.
- In April 2022, DGFamily was launched, a collection of NFTs that give access to events and drops.
- The web3 strategy is executed and ideated by a third-party organisation, UNXD, with the fashion house taking responsibility for the design work.
- The web3 collection placed a huge emphasis on the importance of bespoke, one-off items and human work.
Dolce and Gabbana?
Dolce & Gabbana is a fashion house that was founded in Milan, Italy, in 1985 by Domenico Dolce and Stefano Gabbana. You might have heard of them. They’re famous for bold animal prints, elaborate embroidery, funeraic lace, and outlandish florals.
They don’t do badly financially either; the brand did $1.4 billion in annual revenue in 2021, the highest to date.
While researching this piece I went down the rabbit hole of high fashion business models. Feel free to skip to Dolce & Gabbana’s web3 strategy to get straight into the web3 side of things, but trust me, haute couture business and the world of NFTs have some striking parallels.
Here’s the down low:
Most major fashion houses operate a high fashion (haute couture) arm (think catwalk fashion and custom-made gowns), and then more affordable lines, including ready-to-wear (i.e. the clothes you can actually buy in shops), beauty, eyewear and homeware.
Haute couture: the one-of-ones of the fashion world
Haute couture is the crème de la crème of the fashion world; bespoke garments which are works of art in themselves, created for fabulously wealthy clients.
Technically speaking, the term “haute couture” can be used exclusively by fashion houses that are assigned Haute Couture status by the Fédération de la Haute Couture et de la Mode (FHCM), the French governing body for fashion. This is the same kind of very French, government legislation that regulates how and where champagne is made (although there are loopholes).
Couturiers have to own an atelier in Paris with at least 15 full-time employees and present at least 35 looks in a show, twice a year. You can find the list of haute couture maisons that passed the government vibe check here.
The haute couture lines, in many cases, exist as a spearhead for the more mainstream subsidiaries of the brand, with catwalk styles trickling down to everyday fashion (there’s no better explanation of this than Miranda Priestly’s “cerulean sweater” rant from The Devil Wears Prada).
4,000 true fans
One of the wildest things about high fashion is how tiny the customer base that supports the entire industry is. It is estimated that there are only about 4,000 clients who are regular buyers of haute couture fashion. This small, dedicated group of big spenders is somewhat similar to the top collectors of NFTs, for example those listed in Superrare’s leaderboard of top collectors.
Being Italian-made, Dolce & Gabbana were never going to meet the haute couture requirements. As a result, when they launched their couture atelier in 2012, they named it Alta Moda (“haute couture” in Italian). Initially, they had a customer base of 100 people, which has since grown to 750, suggesting that it has been a successful initiative.
However, despite being an enormous part of the brand’s image, Alta Moda represents only 4.5% of the company’s total revenue.
Dolce & Gabbana is currently owned 40% by Domenico Dolce and 40% by Stefano Gabbana, with the remaining 20% shared among Dolce family members.
Being privately owned has allowed the founders to make bold business decisions that would not even be considered by a publicly traded company. These decisions are often the type that seek to maintain the integrity of the brand rather than maximise profits, for example axing the D&G line in 2012, a move which cost about €600 million in annual revenue. D&G had previously accounted for 29 per cent of the company’s net earnings.
Dolce & Gabbana’s web3 strategy
Dolce & Gabbana is no stranger to off-kilter innovations. My top three are:
- The Dolce & Gabbana Motorola Razr flip phone
- The Dolce & Gabbana Citroen C3 (the advert has not aged well)
- The album they released in 1996, D&G Music.
I guess creating outlandish products like these is one of the perks of the creative freedom that being a founder-led business allows.
It also meant that, relative to more traditional fashion houses, Dolce & Gabbana were a prime candidate to run a web3 strategy.
One of the most interesting features of the Dolce & Gabbana NFT drop is that it was ideated and strategised by a third-party organisation, UNXD, who pitched the concept to Dolce & Gabbana.
UNXD is a company that sits under the umbrella of Nervora Inc, a Dubai-based media company that runs Vogue Arabia, Wired Middle East and PopSugar Middle East. Nervora (and UNXD) is run by Shashi Menon, who was central in building out the UAE’s media sector, and Nick Gonzalez, who was the first employee at Techcrunch.
Nervora’s experience of working with top tech and fashion brands, via their publications, placed them in a sweet spot to run collaborations between the two worlds.
In an interview with Real Vision, Menon insisted that “the story of NFTs is about culture, not about technology” and asserts that this is an important part of the pitch when selling the idea of NFTs to consumer focused brands, like Dolce & Gabbana.
Pitching Dolce & Gabbana
As anyone who has ever tried to cold-market a web3 product will know, it is almost impossible not to trigger that “it’s a ponzi scheme” reflex that seems to be hard-coded into our reptilian brains.
In addition to Dolce & Gabbana’s openness to experimentation being on their side, UNXD’s founders had a ten year history of working with the team from their work with Vogue Arabia. This gave them a base of legitimacy and trust when approaching them with the idea of launching an NFT collection.
So, when they pitched them in April, they were able to get a “yes” from Domenico Dolce and Stefano Gabbana within 24 hours.
Rules of engagement
In an interview with Real Vision Menon describes how he set clear expectations from the outset in order to make the project a success:
- Dolce & Gabbana had to commit fully to the project. This meant that the team had to fully embrace the project and commit publicly to a clear roadmap of future projects. Essentially, it wasn’t to be done by half measures.
- Whatever they created had to be authentically Dolce & Gabbana. In other words, the project had to truly reflect the ethos and brand identity of Dolce & Gabbana. It wasn’t going to be a simple case of slapping a D&G logo on something- the NFT project had to truly be a Dolce & Gabbana product.
This set clear boundaries for the ideation process.
Collezione Genesi (September 2021)
Digital to physical experiences
Nick Gonzalez talks about how accustomed we are to porting our physical lives into the digital realm (for example uploading pictures to Instagram, applying filters etc.) but we are not used to experiences moving from digital to physical, which is an opportunity that the world of web3 unlocks.
For this collection, UNXD were keen to make a success of digital to physical. As a result, the NFT art in the collection was designed to give owners access to real-world experiences and, in some cases, to allow them to redeem a real world version of the digital item.
- A custom-designed metaverse wearable
- The corresponding physical asset
- The original signed sketch of the item
- A private atelier tour
- Access to Dolce & Gabbana’s most exclusive event of the year: Alta Moda Couture, which is a multi-day bonanza of fashion in Italy, with a star-studded guestlist.
The UNXD service
For the sale, UNXD built a custom auction platform, with an emphasis on two things:
The creator takes centre stage
Nick Gonzalez explains that they “wanted to create an environment that … helped celebrate that creator, made them the focal point”. While he admits that the UNXD site is pretty boring, I guess the same applies to many art galleries.
He went on to say, “because this is our own space and a curated space, we can go much deeper and pull out richer imagery, pull out richer photographs, pull out richer narratives around those tokens themselves.”
The user experience is simple
UNXD say they have tried to be as simple as possible with the way in which the site works. According to Menon, they started with a more engineered user experience before stripping back everything that was superfluous. This led to the platform being “very minimalist”.
In many interviews, UNXD insists that the technology needs to disappear into the background for a lot of luxury clients - they don’t need to know what’s going on under the hood. However, the sale ended up primarily attracting buyers who were already deep into the web3 world, suggesting that, at this stage, this perhaps isn’t the case.
The Collezione Genesi was officially launched in Venice in August 2021, followed by the auction that started on September 20th on UNXD’s site. There were different closing dates for each item category, ranging between September 28-30th. The auction took place on Polygon, with the NFTs minted on Layer 1 Ethereum.
The use of Polygon is likely due to a brand partnership with UNXD, which was publicised in July last year when they announced that they would be launching a $10 million “culture fund” together, although nothing has seemed to materialise.
The collection was sold for a total of 1778.54 ETH. This was converted to U.S. dollars (roughly $6 million), and used to pay Dolce & Gabbana, less an auction commission which was taken by UNXD.
According to UNXD, the 9 piece collection took about 4 months and 16,000 collective hours of work by highly skilled craftspeople to create, reflecting the haute couture approach. This means that each hour of work produced $40 of value, which sounds relatively low in the world of technology, but is perhaps normalised in the high fashion world. Like couture fashion, compared to sneaker drops for example, the Collezione Genesi is built for collecting and enjoying, not for flipping.
Items with redeemable physical assets were sold for an average price of 296 ETH, which was about 3 times more than those that were digital only, suggesting that the real-world/digital bridge was one of the most attractive features of this collection.
Interestingly, the gold “Dress from a Dream” sold for 37.4 more than the silver version, despite having no difference in utility of rarity of physical materials (both were made with coloured glass beads), suggesting that prestige and status paid a big role in the perceived value of the items.
The 9 items were bought by 4 buyers, only 2 of whom were private individuals. Somewhat unsurprisingly, these buyers had no overlap with Alta Moda or Haute Couture buyers; they were straight up NFT collectors; people and organisations who already have an inherent belief in the value of digital items.
- Dress from a Dream: Gold - 225.500 wETH
- Dress from a Dream: Silver - 188.100 wETH
- The Impossible Tiara - 99.900 wETH
- The Golden Impossible Jacket - 99.900 wETH
Total spend: 613.4 wETH
RedDAO is a DAO for digital fashion enthusiasts which has 3,978 ETH Contributed and 43 active members.
- Doge Crown - 423.5 wETH
- The Mosaic Impossible Jacket - 97.436 wETH
Total spend: 520.936 wETH
3) Boson Protocol
Boson Protocol is an exchange protocol which “enables the decentralized commercial exchange of any physical thing, without centralized intermediaries or trusted counterparties.”
- The Glass Suit - 351.384 wETH
- Lion Crown - 292.820 wETH
Disco Drip (March 2022)
The Disco Drip collection was first seen at a Dolce and Gabbana event during Metaverse Fashion Week (MVFW), which was co-hosted by Vogue and UNXD in Decentraland in March 2022. They were viewable in Dolce & Gabbana’s Decentraland boutique for a week and were available exclusively to DGFamily Box holders. Dolce & Gabbana said that this collection affirmed “the one-of-a-kind DGDNA 3.0 that truly transcends reality and the Metaverse.”
Last week, the Disco Drip collection became available as a linked wearable in Decentraland i.e. your avatar can wear them in metaverses like Decentraland. The current floor price for the collection (20 different digital wearables, with rarity, ranging from 1 of 47 to 1 of 820) sits at 0.025 ETH - much less than a real world Dolce & Gabbana item.
DGFamily Boxes (April 2022)
As promised when Collezione Genesi was launched, UNXD released a second NFT collection, DGFamily Boxes on 24th April this year. The sale took place on the Polygon network, with sales in wrapped ethereum that were later written the layer 1 ethereum.
UNXD described them as “digital collectibles that also serve as tiered membership to the exclusive Dolce&Gabbana universe.” The NFTs give access to additional airdrops, exclusive hoodies, t-shirts and sneakers, as well as real life experiences, although they are yet to be rolled out.
The collection comprises 5,000 boxes, which were “Glass” at the point of minting, but on a later “reveal date” became either Black, Gold or Platinum. This made it a blind sale, available to allowlist members who had won raffles and competitions via Premint and Discord.
The distribution of box type is as follows:
- 4,250 Black boxes (85%)
- 675 Gold boxes (13.5%)
- 75 Platinum boxes (1.5%)
However, a purchaser’s odds of getting a Platinum box were lower than it might seem since 60 platinum boxes were reserved for a private sale at a 40 ETH mint price. In reality buyers only had a 0.4% chance of snagging one of the 15 Platinum boxes in the blind sale.
The lucky 15
The 15 winners of the Platinum boxes are the only owners who will see a return on their investment, since all other boxes have a current floor lower than the initial mint price of 1.2 ETH (Black - 0.21 ETH, Gold 1 ETH), with Platinum boxes sitting at 22 ETH, lower than the private sale price, but considerably higher than the mint.
Moral of the story
There’s no denying that Dolce & Gabbana, along with UNXD, have put their best foot forward when designing and launching their NFT collections. The Collezione Genesi is visually stunning, and incredibly well executed. If there were any NFT I could own, it would be the Gold dress, and of course, I would be redeeming all the experiences attached to it. However, as yet, none of the physical items have been redeemed.
My hunch is that in order for NFTs to capture the imagination of the non-web3-native consumer, the story needs to feel more alive, more romantic and have a tangible sense of aspiration. There needs to be a real world story attached to the items.
If I were in Dolce & Gabbana’s position, with the founder privilege to focus on creative vision over profitability, I would keep iterating on the digital-physical haute couture bridge, as seen in Collezione Genesi. Disco Drip and DGFamily boxes be damned. The NFTs should occupy a similar position as Alta Moda - there to set trends, diffuse inspiration and establish brand image. After all, the revenue from these web3 collections represented a fraction of a percent of the company’s total revenue.
I would keep producing exclusive collections of haute couture physical items, with digital NFT clones, with the express intention of attracting consumers like Wendy Yu. We would then stand a chance of this consumer trend trickling down to aspirational fashion purchasers, thereby attracting a new customer to web3.