Facilitated by blockchain technology, customers will soon be able to check the authenticity of their high-priced luxury brand purchases ensuring they haven’t purchased a fake.
The Authenticity Challenge
The problem of counterfeiting is nothing new and includes, but is not limited to, items such as pharmaceuticals, luxury handbags, purses and watches, consumer electronics, clothing and footwear. It is an amount estimated to cost 1.82 Trillion USD by the year 2020. While the rise of technology, facilitating the relative easy of making very accurate and convincing fakes, has contributed to the growing problem of counterfeits, technology can also be used to combat the issue and drive real connections between a brand and a consumer.
Blockchain Technology Delivering a Solution
LVMH, the owner of Louis Vuitton, as well as an additional 60+ iconic brands including Parfums Christian Dior, will launch a cryptographic provenance platform, code-named AURA, to track luxury goods providing supply chain verification and product authenticity.
At the core, a provenance platform provides a visibly transparent trail for a company to follow their product from start to finish throughout the entire supply chain. For example, where do the raw materials come from? are the ingredients organic? what’s the carbon footprint? are the workers being paid fairly? from which store was the product sold? All of these details and more, including the timeline of the supply chain, can be traced and tracked using blockchain certificates with the output being a unique digital identity for the product in question.
Provenance enables a company to garner trust with their customers and suppliers by outlining their supply chain and subsequently using publicly traceable data to backup any and all claims. This can be achieved not only for the end product but for all the components comprising the final product and is granular to the batch level. And this is exactly what LVMH intends to do with AURA.
“To begin with AURA will provide proof of authenticity of luxury items and trace their origins from raw materials to point of sale and beyond to used-goods markets.”
The key of course when dealing with counterfeits is to connect the blockchain traceability to products in the real world. This is done by linking the digital identity of the product with a secure tag such as an NFC tag or DNA fingerprint.
But there is more to the platform that just provenance. It can be utilised as a way for a brand to have a richer more meaningful relationship with the end consumer and it is here the opportunities are endless. Proof of ownership can be transferred at point of sale to the new owner as well as to any subsequent owner, along with the item’s history – for example, the blockchain can also record the service history of an expensive watch. Beyond authenticity, details regarding collectibility allow for a brand to continue the conversation with the customer far beyond the initial point of purchase which of course open up a whole plethora of marketing and communications options.
“The next phase of the platform will explore protection of creative intellectual property, exclusive offers and events for each brands’ customers, as well as anti-ad fraud.”
As with all blockchain projects it is the scaleability and network effect that so often determines the levels of adoption. And it is this aspect that makes the LVMH platform interesting. Built on the permissioned version of the ethereum blockchain called Quorum the platform will eventually be scaled to to cover the full portfolio of LVMH ‘s other 60-plus luxury brands, and eventually those of its competitors. For competitors the platform can be white labelled to allow for each brand to engage with and deliver a unique experience to their respective customers.
To ensure adoption by third parties, LVMH will donate all intellectual property (IP) to a separate entity and that entity, in turn, will be owned by the participating brands. While the data privacy tools should ensure that no information will be leaked between brands or their customers.
Image Source: Louis Vuitton
Original Source: Coindesk
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