Many luxury brands have partnered with blockchain technology to track the provenance of products and materials from manufacturing to delivery. The key value of distributed ledger technology is its tamper-proof nature and the speed at which transactions can be processed: its decentralized approach and immutability add trust and integrity to the process.
“The same technology is able to guarantee the authenticity of products, which is essential to retain value or to support a buoyant second-hand market, as well as to identify counterfeit models. Many luxury brands have also chosen to launch limited-edition NFTs to satisfy consumers’ thirst for the next trend: an ironic twist for an industry that promotes tangible goods at the grassroots to stimulate market appetite,” said Sarah (SJ) Beaumont, an attorney at Baker Botts.
The pandemic has led to fundamental shifts in consumer behavior, which has had a significant impact on extended supply chains in the luxury and prestige fashion industries.
“Their supply chains will seek comprehensive shifts in agility, resulting in more speed, more predictability and even more precision. As a result, there will be significant investments in new era technologies to achieve global agility goals.Blockchain will be one such investment among a few others.Blockchain enables retailers to improve their operational efficiency in multi-party exchanges, improve product traceability, track details affecting risks, compliance and penalties, and revenue streams while providing consumers with the authentic provenance information of luxury goods, leading to benefits for luxury brands such as increased customer satisfaction , reduced downtime, improved brand value, and stronger data protection. nt, is not without risks, such as the risk of mismanagement of keys leading to unauthorized access. Successful blockchain implementations will be based on careful management and execution,” said Karmesh Vaswani, EVP & Global Head of Consumer, Retail & Logistics at Infosys.
Brands get creative
Brands like Gucci, but also newer brands across the spectrum such as Prada have recently taken a deep dive into web3 and blockchain. In May 2022, Prada published several NFTs on the Ethereum blockchain and recently Guicci became the first major brand to accept ApeCoin, a newer but very high profile cryptocurrency associated with the luxury brand Bored Ape which was born out of the crypto and web3 communities. Finally, McLaren, a brand of luxury cars, also recently published MSO lab’s exclusive NFT digital pass driving their foray into the web3 industry.
“The bulk of these brands jumping into blockchain are all associated with future direct-to-consumer (D2C) marketing and business-to-consumer (B2C) marketing. What it allows brands to do is engage in direct market sales, as well as secondary market trading using existing infrastructure – Ether
PIECE OF MONEY
Luxury brands could choose several paths to adopt DLT as the next step in their business operations: by developing in-house expertise and driving organic growth, by partnering with established start-ups/emerging technologies designed to meet to their needs, or by acquiring a business or technology directly.
New innovations are popping up everywhere. Recently. Yvel, an Israel-based fine jewelry house, expanded into the world of financial products with the launch of INFS (Independent Non-Fungible Security). INFS is a trading platform that merges blockchain technology with customizable real-world collateral in the form of unique 24-karat gold coins decorated with precious stones.
“INFS is our vision to evolve the way blockchain financial products can serve investors in any business or project,” said Eliaz Gabay, CEO of Yvel.
Whether it’s a designer handbag or a piece of luxury jewelry, next-generation blockchain technology can facilitate data management between the many parties involved in the creation of luxury products.
“Whether it’s solving problems in data silos, helping with real-time communication with partners, and supporting supply chain tracking, next-generation blockchain technology can providing a digital thread of authenticity, which is so essential when it comes to luxury items. There are use cases where having 70-80% accurate data is sufficient. But knowing that your $40,000 Hermès bag is only 80% authentic? It probably wouldn’t work with most luxury brand consumers,” said Shruthi Rao, co-founder and CBO of Vendia.
Another recent blockchain use case is wine. Crurated, a member-based, blockchain-based wine community, leverages blockchain and NFTs with every bottle of wine that enters their warehouse.
“Every bottle that enters the Crurated warehouse is assigned an NFT. Recorded forever on the blockchain, the NFT verifies the authenticity of the bottle and provides other important details including ownership history, vintage, vineyard location, grape variety and other key details. NFTs are easily accessed by tapping an NFC or RFID enabled phone. The bottle history is also updated via a new blockchain record each time the wine is resold and the token is passed from one customer to another,” said a company PR representative.
There is going to be increased pressure from all sectors of the market to rethink business strategies, and the luxury industry is no different.