Counterfeits remain a huge problem for high-end designers around the globe: in 2017 alone, luxury brands lost $98 billion worth of sales to counterfeits.
As damaging it can be to both profit and reputation, here is why some brands are now turning to tech to protect their products, brand value and consumers.
Luxury brand conglomerate LVMH (LVMHF) joined forces with Prada (PRDSY), and Cartier to establish the Aura Blockchain Consortium in April 2021 despite being competitors, a non-profit platform that creates a “digital twin” for designer products.
Blockchain has many other applications, and Aura is using it to give luxury products a unique digital identifier that will help clients ensure their purchase is the real deal.
“Blockchain is such a fast-moving technology, and it’s really complex,” says Daniela Ott, the general secretary of Aura Blockchain Consortium. “What Aura is all about is making blockchain easy for luxury brands.”
Ott said, more than 20 brands are using Aura’s software, with over 17 million products registered on the platform.
“These brands are competitors in every other aspect, but they are collaborating on this technology to move this ahead faster, in the most secure way,” she says.
Creating a “digital twin” for physical products like shoes or handbags, Aura’s software compiles a ledger of information for instance the material type and source, where and when it was made, and how many were produced.
This will provide clients with a greater level of proof and protection by acting as a digital certificate of authentication that uses “bank level encryption” and is “impossible to fake”, according to Ott. She further added that the digital twins, which can be accessed via a webpage or mobile app, will provide more information into the product’s origin, improving “traceability and trust” around sustainability and ethical issues for conscious consumers.
Blockchain has its limitations though. As Ott has said, the information is only as reliable as the person inputting it, and warns that “if a brand doesn’t have a good relationship with the supplier, blockchain will not help.”
“Counterfeiting has existed for decades and is constantly advancing,” says Chammard. Vestiaire’s team consists of 60 authenticators who check digital documentation, including photos, before examining each item. AI and blockchain could help to fast-track the digital authentication process, says Chammard. She further added that this would aid the human authenticators rather than replace them.
If luxury brands use the same technology, it would help resellers easily access and use the information, says Chammard. She further added that “We would still require an expert to conduct a physical examination to verify all of the digital data,”.As a founding member to the Aura consortium, Mercedes-Benz 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.