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According to a report by Global Brand Counterfeiting, a loss of nearly $100 Billion is estimated owing to the growing extent of counterfeiting in luxury goods. Before this parasite eventually consumes its host, let’s understand whether Blockchain technology has the power to fight back and protect its identity?
The luxury goods market is becoming a victim of its tactics for success. Brand awareness coupled with price tags, beyond the financial reach of all middle-class consumers, has fuelled the counterfeit industry that has now become a threat to the integrity of original manufacturers.
Image Source: Everledger
The power of trust
If we talk about values, trust should be your top priority. This idea expands furthermore than separating a designer handbag from a fake one. Consumers who are paying a good amount of money for their designer products want to know about their authenticity.
Also, to know the authenticity of their products, consumers want to know whether their article conforms to the highest ethical value. Can all the raw materials- especially animal skins and precious metals, diamonds, and gemstones- be traced to sustainable sources?
- Environmental footprint
The environmental footprint of the brands is now becoming a source of competitive advantage. Tracking raw material usage, water, and waste management, and proper use of chemicals are also becoming a part of the brand story.
Blockchain in Luxury Supply Chain- A United Response
When the products from a fashion label are found counterfeited, the reputations built on the craft, origin, and quality are heavily tarnished.
Various brands are integrating Blockchain technology into their garment industry that will allow consumers to view the full-time history of the product they are purchasing from the brand.
The main goal of every brand is to promote higher consumer loyalty, engagement as well as e-commerce. The brands want the consumers to love their clothes and set-up trade with each other, taking part in a much wider community of like-minded people. While every collaborator and stakeholder in this community is credited for their contribution, every consumer is invited to take the full value of their products, creating a new ecosystem for those engaged with the brand.
Equipped with the authenticity enabled by Blockchain, consumers can buy, collect, and sell items with 100 percent security and can be sure of the fact that this is one-of-a-kind and made by people who take pride in working for the brand.
Blockchain technology when coupled with the ability to program the business logic with the help of smart contracts enables the following:
- Transparency into the provenance of the consumer goods- from the source point to end consumption.
- Accurate asset tracking.
- Enhanced licensing of services, products, and software.
Benefits of Blockchain in Luxury Supply Chain
- Increased product security
Retail supply chains contain a complex network of suppliers, manufacturers, retailers, auditors, and consumers. A Blockchain’s shared IT infrastructure streamlines the workflow for all the parties, irrespective of the size of the business network and helps in building product security.
Blockchain with its tamper-proof digital ledger records, stores all the product-related transactions and traces the status of the product while in transit. This provides an additional layer of security and trust.
- Counterfeiting of Luxury goods
The provenance of the product is the most important parameter in the luxury goods industry. This is because consumers are very particular about the authenticity of the product as they consider the ownership of branded goods a matter of pride.
However, due to the plague of counterfeiting, there have been severe losses such as loss of trust and consumer c0nfidence. Since Blockchain technology can track the entire lifecycle of a product, it can help to clamp down the counterfeiting issues.
- Superior consumer service
The products in the retail fashion industry are delicate and expensive, therefore it becomes important to ensure optimum security. And to ensure security, businesses need trustworthy stakeholders for ensuring the safe delivery of products.
By integrating supply chain management in luxury industry, stringent security demands related to the products can be met. Hence, superior consumer satisfaction can be ensured with Blockchain technology.
- Fair pricing mechanism
Another factor that brings down the fashion industry is the absence of pricing transparency or standardized fair-pricing index. However, according to the current valuation system, there are drawbacks in this mechanism and the system fails to offer an objective measure of the value.
In a nutshell, Blockchain technology can be a blessing in disguise for the luxury goods market and can help target the main flaws to make the supply chains more transparent and efficient. Most of the solutions offered focus mainly on the counterfeit prevention and proofs of ownership- two main critical parameters in the fashion industry. However, the more Blockchain finds its place in the supply chain, the more ethical and visible the supply chains would be.
As leading players in the Blockchain space, Debut Infotech offers intuitive Blockchain solutions to businesses looking for secure and transparent solutions for optimizing their supply chain.
Want to know more about our Blockchain supply chain products? Get in touch with us now.