The article first appeared on The Business of Fashion.
PARIS, France — Luxury brands were notoriously late to embrace e-commerce and social media. But some of the industry’s biggest players are determined to be ahead of the curve on blockchain.
LVMH, the world’s largest luxury conglomerate, is planning to use the technology to track luxury goods and prove their authenticity, blockchain news site CoinDesk reported last week. The platform, dubbed “Aura,” is expected to go live as soon as May with Louis Vuitton and Parfums Christian Dior, before being extended to the group’s other brands and competitors.
Meanwhile, Paris-based non-profit Arianee, which boasts advisors from LVMH rivals Richemont and Kering, is preparing to launch a similar database collectively managed by participating brands. Pilots are planned for later this quarter.
Arianee and LVMH are addressing the same problem: how to safeguard the authenticity of luxury goods in a market flooded with strikingly similar fakes. The global market for knock-offs is booming, with various estimates totalling annual sales of fakes in the hundreds of billions of dollars. The rise of online resale sites is creating a new market for counterfeits that has resisted traditional methods of policing.
Blockchain is the catch-all term for technology that permanently records transactions in a digital, tamper-proof database. Information is distributed across a network of computers rather than being controlled by a single entity, and is accessible to anyone in the network, but cannot be altered or deleted.
Blockchain’s highest-profile use is to enable Bitcoin and other crypto-currencies, but the technology is beginning to take hold in the global supply chains of large companies. Walmart will soon require suppliers of leafy greens to put their produce on the blockchain, making it easier to trace tainted vegetables back to their source.
"What the blockchain can do is form a database that many companies agree with the results of."
In the opaque, highly competitive world of luxury fashion, blockchain’s main role is to connect brands and retailers that normally wouldn’t share information with rivals. For example, consignment sellers and even individual consumers could verify an item’s authenticity by comparing its digital signature to entries in a decentralised database. Brands could similarly track materials to ensure they were produced by ethical manufacturers.
“Many people apply blockchain to a project that a database could be used to do,” said Ken Seiff, venture capitalist and managing partner at Blockchange Ventures. “What the blockchain can do is form a database that many companies agree with the results of.”
In the diamond industry, big brands like De Beers and smaller start-ups like Taylor & Hart use blockchain to help trace their supply chains from mine to shop floor. De Beers led an industry effort, along with five other diamond manufacturers, to develop an open-source blockchain platform called Tracr, announced in May last year.
Taylor & Hart partnered with blockchain start-up Everledger. Currently, the jeweller is using the technology to authenticate the provenance of its diamonds. Chief executive Nikolay Piriankov said he hopes to introduce a “blockchain wallet,” where customers could keep appraisals of their jewellery. An easily accessed, un-forgeable appraisal would help with insurance proceedings, and give customers a greater sense of ownership for custom-made designs.
Read the full article on The Business of Fashion.