Crypto is crashing, but the tech behind it could save luxury brands billions
Counterfeits are a huge problem for high-end designers around the world: luxury brands are lost $98 billion value of counterfeit sales in 2017 alone.
These losses can hurt both profits and reputation. That’s why some brands are now turning to technology to protect their products, their brand equity and their consumers.
Although it is a competitor, the conglomerate of luxury brands LVMH
(LVMH) partnered with Prada and Cartier in April 2021 to create the Aura Blockchain Consortiuma nonprofit platform that creates a “digital twin” for designer products.
Blockchain is a digital ledger which cannot be changed, modified or altered. It is the same technology that underpins cryptocurrencies, the prices of which have recently fallen. But it has many other applications – and Aura uses it to give luxury goods a unique digital identifier that will help customers make sure their purchase is the real deal.
“Blockchain is such a rapidly evolving technology and it is really complex,” says Daniela Ott, General Secretary of Aura Blockchain Consortium. “Aura’s goal is to make blockchain easier for luxury brands.”
To date, more than 20 brands use Aura’s software, with more than 17 million products registered on the platform, Ott says.
“These brands are competitors in every other aspect, but they are collaborating on this technology to move forward faster, in the safest way,” she says.
Creating a “digital twin” for physical products like shoes or handbags, Aura’s software compiles a record of information such as the type and source of the material, where and when it was made, and how much have been produced.
Ott says it will give consumers a greater level of proof and protection by acting as an authenticating digital certificate that uses “bank-grade encryption” and is “impossible to forge” – foiling counterfeiters. Digital twins, accessible via a web page or mobile app, will provide more information about product origin, improving “traceability and trust” around sustainability and ethical issues for conscious consumers, she says. .
Blockchain does have its limitations though – information is only as reliable as the person entering it, says Ott, and warns that “if a brand doesn’t have a good relationship with the supplier, blockchain won’t help” .
Sustainability is a major concern for the consortium. As a private blockchain built from the ground up, Aura claims its platform uses less energy than public blockchains. The platform also gives brands control over the information they share and protects brand and consumer data, says Ott.
Aura launched its cloud-based software in early 2022. Ott says its plug-in technology will allow brands to integrate the product into their existing operations with “zero blockchain knowledge”.
And more and more brands are getting on board. Designer Streetwear OTB group became a founding member in October 2021, and last month diamond and gem specialist Sarine Technologies also joined the consortium. Founding members contribute to development costs and have more say in governance, Ott says, while all members pay a fee for software services and each digital twin produced.
Other fashion brands are also using blockchain tools. Audemars Piguet and Vacheron Constantin have joined the Paris-based open-source blockchain platform Arianeewhile Karl Lagerfeld Photo Archive is being authenticated on Lukso Network public blockchain.
Creating a digital identity could be increasingly important for second-hand luxury retailers, a rapidly growing market. Online platforms like I hardly ever wore it and Communal changing room must authenticate products before selling them, which is a multi-step process involving both digital and physical checks, explains Victoire Boyer Chammard, global head of authentication at Vestiaire Collective.
“Counterfeiting has been around for decades and continues to grow,” says Chammard. Vestiaire’s team of 60 authenticators verifies digital documentation, including photos, before reviewing each item. AI and blockchain could help speed up the process of digital authentication, Chammard says, adding that it would help human authenticators rather than replace them.
“We would still need an expert to do a physical exam to verify all the digital data,” she says, adding that if luxury brands use the same technology, it would help retailers easily access and use them. information.
Blockchain could also be useful beyond fashion, says Ott: luxury sectors like art, cosmetics, perfume and home furnishings could benefit. In the future, Ott says, the ledger could also contain product maintenance and upkeep information, helping to better determine a product’s resale value.
The most recent addition to the Aura consortium is the German automaker Mercedes-Benzwho joined as a founding member and plans to use the platform to explore different aspects of digital branding, such as creating NFTs (non-fungible tokens) for in-car digital art experiences.
“Our measure of success is to integrate every luxury brand,” says Ott.