Amazon Arrives Late to NFT Party

Amazon has been teasing its foray into the NFT world since January 2023. Claiming to have the marketplace in development stage, a new report by the Blue Whale claims that Amazon will be ready with their NFT platform by April 24 of this year. The platform is set to be available as a separate tab—‘Amazon Digital Marketplace’—at the site. It will be available in the United States first and will open to the rest of the world later. 

Since Amazon is a retail ecommerce marketplace, the introduction of NFT on its platform will be a first of its kind. As of last year, Amazon is said to have over 310 million users. With its wide reach and legacy built over the years, Amazon’s adoption of NFTs among their customers might be interesting to observe. 

It is reported that Amazon shoppers can purchase any NFT on the platform and pay through normal payment options such as credit and debit cards or through a possible crypto wallet. The new NFT marketplace will also host blockchain-based gaming for users to earn NFTs. 

The timing of the launch, however, raises a lot of uncertainty. Is the move to enter the NFT market too late for Amazon? 

Slow and Risky Move

Andy Jassy, CEO of Amazon, has always had an optimistic view towards cryptocurrency. In an interview in April 2022, he said that he expects “NFTs will grow significantly”. However, this statement came at a time when the NFT craze was at its peak. It has witnessed a huge decline since. The volume of NFT sales is said to have dropped 83% year-on-year (YoY). The monthly sales had dropped from $2.8 billion in January 2022 to $492 million in January 2023. Amazon, which is looking to have “play-to-earn” NFT games on their platforms, is slow to enter this space as the NFT game sales have also dropped. NFT game sales have dropped by $326 million YoY, which is a substantial drop of 90%. This is a direct result of cryptocurrency value drop. Over $2 trillion in 2022 was lost in the crypto market, with Bitcoin losing over 60% of its value last year. 

To add to the uncertainty in cryptomarket, the collapse of Sam Bankman-Fried’s cryptocurrency exchange FTX due to lack of liquidity and mismanagement of funds—to be precise, $9.3 billion in funds—has made the scenario more dicey. 

Playing Catchup

As an upcoming entrant in the NFT space, Amazon will have to compete with already established players in the marketplace. Going against players like OpenSea, Rarible, Binance, and many others who have been in the market for years, leaves Amazon behind in the race. Blur, a new NFT marketplace and aggregator, launched in October 2022, had recently surpassed ‘OpenSea’—an established NFT player—in trading volume. 

Amazon is not the only player in retail to explore the Web3 segment. Retail giant Walmart had been planning to enter the crypto space since 2022 and last month, the company filed for crypto and NFT trademarks via Sam’s Club, a membership-only retail warehouse club owned by Walmart Inc. The exact plans of the company are not concrete. 

Amazon: A Serious Blockchain Player?

Amazon’s official website mentions that developing blockchain and ledger applications is simple and efficient with Amazon Web Services (AWS). Amazon Managed Blockchain simplifies the process of setting up blockchain networks by reducing the time required to host Hyperledger Fabric frameworks by 60%. Among all cloud vendors, AWS is the most trusted for blockchain and ledger technology workloads. Additionally, 25% of all Ethereum workloads are run on AWS. 

The company is expanding its Web3 platform and it is reported that Amazon workers have contacted blockchain companies, including blockchain gaming companies, for partnering with Web3 oriented developers.  

AWS tied up with Ava Labs, the team behind Avalanche blockchain, in January. With this partnership, Avalanche has become the first L1 blockchain to be associated with 100k partners across 150 countries. Ava Labs has also enabled “one-click node deployment” on AWS marketplace which facilitates easy deployment of NFT marketplaces.