The crypto membership project Konnect (KCT) is transforming the duty-free distribution industry since the COVID-19 pandemic shrunk the market. Many industries worldwide have suffered, but the duty-free distribution industry — various fields such as tourism, shopping, medical service and entertainment — is one of the most affected.
The market has grown significantly in East Asia and reached 100 trillion won ($79.34 billion) in total transaction volume in 2019 before the pandemic began. However, COVID forced many countries to rapidly implement movement restrictions that effectively halved the entire market in 2020.
Starting this year, KCT will offer Konnect crypto memberships.
Konnect garners attention because it can foster sustainable service expansion based on existing businesses. The platform has secured duty-free distribution infrastructure in more than 15 countries, including the United States, China, the European Union, Australia, Vietnam and Indonesia. As of 2019, Konnect had also conducted transactions worth 6 trillion won ($4.76 billion) with more than 50 key partners. It provides a significant discount rate to its membership subscribers by securing goods and services through the business-to-business (B2B) network of existing operators.
Although the crypto industry is maturing, it constantly attempts to integrate with physical-goods markets. Konnect wants to be the bridge that expands cryptocurrencies based on existing-business strengths. Konnect can compete with current crypto membership projects, such as Crypto.com and Swipe, and secure a space in the crypto industry.
Other crypto membership-project users have expressed the difficulty of surviving independently without the support of significant payment providers — e.g., Mastercard or Visa — and the subpar benefits compared to membership cost. Many projects struggle to provide long-lasting benefits as they expand without proper business infrastructure — e.g., when Crypto.com updated a policy plan in early May that reduced its previous benefits. It’s unrealistic to expect sustainable cryptocurrency-membership growth in these conditions, which is why Konnect is using existing infrastructure to expand its position.
“Due to the pandemic, the duty-free distribution industry has suffered. However, during that time, Konnect has been preparing for new challenges. We are confident that we will make the most of our B2B duty-free infrastructure, which is our strength, to secure more customers, including the cryptocurrency population, and expand the market. In addition to the benefits of a significant discount rate that differentiates us from other companies, we will continue to develop elements for KCT-membership subscribers to pursue a fun experience on the platform. We will continuously work hard to make Konnect have more meaning than just a place to trade goods,” said Mark Jeong, chief technology officer of Konnect.
To attract more users, Konnect wants to provide fun experiences beyond membership discounts. The platform’s expansion is diverse, from mystery boxes to profile picture (PFP) nonfungible tokens (NFTs).
While mystery boxes use a random lottery method for NFTs, PFP NFTs are based on the story of earth and a dog-type alien race called Duman. NFT functionality will broaden as Konnect gradually reveals the narrative. Members can check their purchase histories on the Konnect platform or use earned mystery boxes as components for PFP NFTs.
The result of the Konnect ecosystem combining its existing duty-free distribution business network and cryptocurrency is difficult to predict. Despite the future’s uncertainty, it is essential to secure new members and connect with other businesses to grow and flourish in the market. It will be interesting to observe how new users utilize their strengths in the ecosystem to grow their markets.