The luxury sector is up against a unique challenge in the face of digital evolution. It's an industry affected by forgery—which represents a threat to both turnover and jobs—and with the unprecedented acceleration of e-commerce, this challenge is even more daunting.
Enter blockchain, an immutable register that stores information, and also a solution to the challenge of product traceability. What does this mean for luxury brands? Possibly quite a bit...
A "for good" blockchain is, above all, a useful blockchain
The first use case for blockchain in luxury goods is undoubtedly anti-counterfeiting. Luxury goods are among the most counterfeited items in the world, and are also the most resold items on second-hand websites. It's particularly difficult to trace the origin of these goods. A blockchain solution can identify an object in a unique way and record this reference in a registry. This allows the traceability of the object in question, which automatically reduces the opportunity for fraud.
The owner of a luxury bag, for example, would have an unalterable certificate of authenticity and could also consult the list of all previous owners of the object. This certificate of authenticity would be transferred along with ownership in the event of a sale or donation, thus guaranteeing that the product is real. This technology would also be useful to claim theft and prevent fencing, as without the evidence of ownership history provided by blockchain, it would be significantly more difficult to resell the object.
This brings us to one of the biggest challenges in this arena— to be useful, consumers have to use it! If it doesn't become a ubiquitous part of day-to-day life, blockchain won't revolutionise the market the way we'd like it to. Simply put, its usefulness depends on how it's received by intermediaries in the supply chain or the chain of owners.
The second major challenge lies in the veracity of the information captured. If this information is not automated, it will remain at the mercy of different links in the chain (and their good faith). To overcome this challenge, imagine a system of NFC chips incorporated into products. If their level of sophistication reaches that of bank card chips, for example, we'll be in business. It's important to keep in mind that in order for blockchain to be useful, it must be integrated into larger systems that we ourselves create and embrace.
Striving for practicality and omnipresence
Blockchain hasn't quite broken into the mainstream in today's world, and at the moment, the technical challenges that lie before us are too complex for the average consumer. The underlying, nascent technologies it relies on, namely data protection, make it complex to implement at scale. There are also other, more institutional, systemic obstacles. This is at once a unique challenge and one common when it comes to technological revolution—it could be massively beneficial, but adoption is unfortunately more complicated than consumers simply saying "sure, I'm on board!"
When all is said and done, in order to bring it to the masses, it must be easily understood and painless to incorporate into our daily lives. So, where to next? How can luxury brands cope with this change while using blockchain to their advantage? Drop us a line with your own experience and challenges.
Keep exploring:
• Blockchain luxury goods: helping to improve trust and sustainability
• 6 ways blockchain is changing luxury
• Blockchain through the whole supply chain
