← Back to Library

Crossing the Digital <> Physical Chasm

Ariana Layton
October 26, 2023

Brands are no longer exclusively tied to just a digital or physical market. 

Instead, brands are breaking down the silos and crossing over the digital and physical chasm — many have termed this concept as “phygital”, the combination of engaging customers in digital and physical markets.

Forbes published an article titled The Future of Retail Is Phygital, persuading retail brands to rethink their marketing playbook; “Creating an effective phygital strategy will be essential to win and retain customers and employees in this new retail landscape.”

Mike Hughes, the author of this article is not wrong — in fact, some of the most successful brands are already taking this new approach to customer experiences. 

Brands Are Integrating Physical and Digital Markets to Create Immersive Customer Experiences

The physical market has been around since the beginning of time — there has always been a circulation of physical goods whether it be from trading or selling goods in stores. 

The innovation of the internet created new opportunities for physical goods to be sold online instead of in brick-and-mortar stores (i.e. ecommerce). The internet has enabled us to own digital goods for decades — users have had digital ownership over content like music, books, movies, tv, games, etc. More recently, digital experiences are becoming even more immersive in metaverse games and emphasizing consumer ownership with web3 digital collectibles. 

Whether a brand is deemed as a physical or digital-based company, both industries are massive. Recently, there has been a greater emphasis on brands to adopt digital business models and move into new spaces. Digital experiences empower consumers to own and engage with brands on a regular basis. As a society, we’re placing more and more value on digital goods and experiences.

Brands focused on customer engagement understand that integrating both markets leads to more immersive experiences for their audience. The main leaders in this movement are top-tier brands — they integrate the two worlds in major ways. 

Many brands are starting to use emerging technology, such as the blockchain and web3 to create phygital experiences and empower consumers to own digital goods. Here are four examples of some of the best brands bridging physical and digital experiences with web3 technology.

4 Examples of Successful Brands in Web3 and Physical Markets

Pudgy Penguins 

Pudgy Penguins is an iconic web3 brand that has seen major success from their famous NFT collection — the collection consists of 8,888 unique tokens of chubby cartoon penguins. Each Pudgy Penguin has a rare trait within the cartoon art — such as a special shirt, hat, glasses, background, etc. 

After accumulating over $400 million dollars in digital NFT primary and secondary sales since 2021, Pudgy Penguins decided to make a strategic move into physical markets as well. 

Luca Netz, the CEO of Pudgy Penguins, is the driving force behind bringing Pudgy Penguins into physical markets. In May of 2023, Pudgy Penguins made a grand debut on Amazon (an online marketplace) — they sold over 20,000 plushy penguin toys, equating to over $500,000 within the first two days on Amazon.

Their crossover success doesn’t stop there — fully entering the physical space, Pudgy Penguin toys are now sold in over 2,000 brick-and-mortar Walmart stores. Each physical toy gives the customer an online experience as well — the toys come with a unique access code to interact in a digital penguin world, much like Club Penguin or my childhood favorite, Webkinz

Pudgy Pegniuns is a prime example of tapping into digital and physical markets — nevertheless, combining the experiences of these markets to make more immerses opportunities for their consumers. 

Listen to episode 17 of the Holder podcast to learn more about the digital-to-physical Pudgy Penguins’ marketing strategy.


In an opposite example, Crocs formally is known as a physical good. Love them or hate them, Crocs are iconic all across the world. 

Interestingly, Crocs are a fashion fad that hasn’t ever withered away. They’ve remained popular because of a consistent innovative marketing strategy. The brand stays relevant through strategic partnerships that crossover into the digital world. 

Avery Akkineni from Vayner3 said it best on the Generation C podcast — “Crocs are the masters of collabs,” (Restaurants, Loyalty and Getting $FLY With Ben Leventhal, Founder and CEO of Blackbird Labs).

Of Croc’s many phygital partnerships, most recently, they’ve partnered with VeeFriends, an NFT collection of over 10,000 tokens. In this partnership, Crocs and VeeFriends have collaborated to make Halloween-themed jibbitz™ charms. Each charm represents a VeeFriend character — Vibe’n Vampire, Well-Connected Werewolf, Jolly Jack-O, Zealous Zombie, and Skilled Skeleton.

Any NFT Holder of a featured character can claim a free VeeFriends x Crocs Jibbitz™ Charm. 

If you’re not a special holder and you’re interested in purchasing a VeeFriends x Crocs 5 Pack Jibbitz™ Charms, purchases are currently open to the public. 

Louis Vuitton 

Louis Vuitton’s marketing playbook consists of a physical and digital experience as well. They have done a variety of digital activations, ranging from launching apps, games, podcasts, virtual reality shows, and digital art exhibitions to creating campaigns on blockchain technology.

In June of 2023, Louis Vuitton created ‘Treasure Trunk’ NFTs that were selling for about $41,600 at the time. Louis Vuitton only made a “few hundred” available, limiting the supply to make it most accessible to their most loyal customers. 

Each ‘Treasure Trunk’ NFT was a soulbound token, meaning that it’s non-transferable after it has been purchased. 

The phygital piece comes into play for all the ‘Treasure Trunk’ holders — holders of the special NFT received a physical replica of their digital Treasure Trunk, with a unique serial number that matched their NFT. A special Louis Vuitton surprise like a scarf, wallet, perfume, or even jewelry came in every trunk as well. 

In addition, the NFT unlocks exclusive opportunities for immersive events. But that’s not all — it also grants holders access to Louis Vuitton’s design house, Maison, where they can see never-seen-before creations and designs.

Louis Vuitton is known for making the luxury goods industry more interactive and for providing customers with unmatched brand experiences.  

The ‘Treasure Trunk’ can be seen here!


If you have an invested customer base like Nike, it only makes sense to reward loyal customers.

Nike crosses the physical-to-digital chasm with the help of web3 technology. Nike, a traditional sneakers manufacturer since 1964, uses the blockchain to develop online rewards, experiences, and exclusive deals to better engage with loyal customers.

Back in 2021, Nike entered the web3 space, dropping NFT collections and inventing .SWOOSH, a Nike web3 marketplace platform. On .SWOOSH, Nike creates NFTs that depict uniquely designed Air Force 1s

Members on the platform are able to buy and own digital collectibles, which enables them to get special perks and offers. This is how Nike rewards and interacts with their loyal audience. 

Although there is a laundry list of digital activations the brand has done, there is one particular one that comes to mind when I think about brands integrating the physical world with the digital world — this initiative is known as the ‘TINAJ’ shoes (a witty acronym that stands for “This Is Not a JPEG”).

The ‘TINAJ’ initiative makes all Nike holders of Our Force 1 NFTs (bought before October 16th) eligible to buy the exclusive ‘TINAJ’ shoe for $120 on October 20th. 

All the purchases had to be made through the SNKRS app, granting limited access to the first Nike .SWOOSH IRL sneaker. 

Clearly, Nike understands the power of aligning digital and physical markets. Customers want exclusive offers, deals, and phygital experiences with their favorite brands. 

It has become quite clear — customers enjoy being rewarded for their loyalty to a brand. Whether your brand is inspired to drop an NFT collection, revamp your loyalty program, or even customize your B2C communication, at Holder, we can help you get started.

Subscribe for Email Updates

Subscribe for Email Updates

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.