Masked shoppers line up in front of the Louis Vuitton store on Bond Street in London. Getty Images.
LVMH, Richemont’s Cartier and Prada SpA are joining forces to offer a blockchain solution to their customers looking for an additional seal of authenticity for the goods they purchase.
The alliance of the world’s largest luxury goods manufacturers plans to make a blockchain-based solution available to all luxury brands to provide shoppers with the assurance that what they are buying is authentic, the companies said in a joint statement on Tuesday. In addition, the products are traceable in a transparent manner.
Blockchain technology is a digital way of certifying a transaction. This solution allows consumers to know whether a product is a counterfeit or not by providing a coded warranty certificate, said Antonio Belloni, LVMH CEO in an interview. Such certificates have been around in the industry for a long time, but blockchain’s reputation as a hitherto unshakable tool means that this project, dubbed Aura Blockchain, may work better.
At stake for luxury brands are billions of dollars in revenue lost from counterfeits. According to research firm Frontier Economics, the global trade in counterfeits will rise to $ 991 billion by 2022, nearly double that of 2013. That estimate includes luxury goods, consumer products and several other categories, such as pharmaceuticals.
Aura Blockchain is likely to evolve as it is still a young technology, said Cartier CEO Cyrille Vigneron. Cartier has already tested a feature with online returns of products, which allows shoppers to take a photo and upload it to the blockchain to prove that the condition of the product they are returning has not changed between the time they received it on at home and the moment they return it to the brand.
“It’s a simple thing, but it means that trust is strengthened between the two parties,” said Vigneron. He added that the auction houses may be interested in using such products when they sell art.
LVMH’s Belloni said the consortium is a way of setting an industry standard rather than having each brand develop its own solutions individually. He said Aura Blockchain is in touch with other luxury groups but declined to say which brand would join next. The customer data encrypted on the blockchain will not be accessible to rivals, he added. Within LVMH, Louis Vuitton, Bulgari and Hublot have already tried out the technology, while Tiffany & Co. is the next “obvious” candidate, he said.
“Trust is the only key our industry is based on and that we really want to keep,” said Belloni, adding that all customers, but especially the younger ones, are concerned about the problem.
Such solutions also make it easier for people to sell luxury goods in the secondary market.
While the technology is powered by blockchain, there are no plans to accept payments for such goods in cryptocurrencies, both executives said. Microsoft Corp. and ConsenSys help the luxury groups develop the technology infrastructure for this solution.
By Angelina Rascouet