Blockchain is one of the fastest-growing sectors in tech, and the fashion industry is taking note.
Investment in blockchain startups has increased at a compound annual growth rate of 90 per cent over the past five years, according to Nathan Pacer, co-founder and chief research officer of research firm Venture Scanner. “At its core, blockchain is all about proof of exclusivity and anti-counterfeiting — areas that are important to fashion. Blockchain is still a relatively young technology, but it is showing signs of traction.”
“In fashion, authenticity is important, limited edition is important, being the first to wear or discover something is important — and it’s impossible to prove the authenticity of a digital thing without blockchain,” adds Roham Gharegozlou, CEO of Vancouver-based Dapper Labs, which created the $140,000 CryptoKitty.
Here are six ways luxury companies are already using blockchain.
Track diamonds even after they’ve been cut
This month, San Francisco jeweller Brilliant Earth will introduce blockchain-integrated diamonds through a partnership with London-based Everledger, which has created a unique digital record of more than 2.2 million diamonds.
By registering a diamond’s unique markings, Everledger tracks and permanently records every step in a gem’s lifecycle. This includes location origin, rough carat weight, customer ownership and videos of the rough diamond, all accessible through Brilliant Earth’s website. Brilliant Earth’s co-CEO Beth Gerstein says that this appeals directly to millennial and Gen Z customers who want to purchase socially conscious products and engage with cutting-edge technology.
Brands who already use Everledger’s platform have observed “material” increases in both the value of the diamond customers are willing to buy online and how quickly they buy them, says Everledger head of commercials Evgeny Gokhberg.
Similarly, Paris-based non-profit Arianee has developed a blockchain-based protocol that creates a digital identity for valuable goods, such as bags, sneakers and watches. Advisors include execs from Richemont International and Balenciaga. Its first projects include verifying vintage timepieces for a leading watchmaker, which will debut 1 June, as well as a proof-of-concept for a high-end sneaker brand.
The digital identity is like a passport that assures the authenticity of both new and vintage goods and records information such as transfers of ownership or when the item is serviced. Depending on the brand, the passport can be linked to the item through serial number, chip or QR code, accessible through an app.
As this process becomes standard, it will be challenging to sell fakes at scale, explains Arianee co-founder and CEO Pierre Nicolas Hurstel. “You can always create a fake, but if you are not able to generate the digital certificate, no second-hand platform will list it,” he says. In future, the Arianee protocol can add new features, such as the ability to declare an item lost or stolen, which could make it difficult to cross borders with stolen goods.
Communicate with customers after a sale
Arianee’s platform also allows the digital passport to act as a customer service channel. The brand and the customer can communicate while allowing the owner to remain anonymous — even if the object changes hands. In this way, a brand could share information or the customer could submit a customer service request, which would be documented on the item’s record.
To participate in the Arianee consortium, a brand must apply to become a member. Costs depend on the size of the company; the price of issuing an individual certificate is 10 cents (USD), and customer messages are 15 cents each.
Record and share supply chain information
Seattle-based Fuchsia uses blockchain platform Provenance to share details about the workers who hand-make the brand’s shoes in Pakistan. Six months after adding the information to its e-commerce product pages, the company saw a 31 per cent increase in online conversions and a 45 per cent boost in engagement.
Additional Provenance clients include knitwear designer Martine Jarlgaard, whose smart labels trace garment timelines back to the alpaca farm, and vegan accessories brand Mashu, which shares details on its bags’ Greek origins via in-store QR tags.
The Provenance platform provides supply chain details through in-store QR codes or e-commerce product pages.
Provenance clients tend to be fast-growing, direct-to-consumer brands, and they often have sustainability and transparency built into their DNA, says Provenance founder Jessi Baker. “As that happens more, it will be vital that [supply chain information] is calibrated, stored and measured in a way that everyone can trust, and the use of blockchain tech to be that single source of truth will be vital if brands are starting to compete on impact,” she says.
Evaluate worker welfare
In April, Levi Strauss & Co began testing a worker well-being survey that records factory employees’ answers anonymously on a blockchain platform, starting with a Mexico vendor that employs 4,000. In a post on the company’s blog, Levi Strauss Foundation’s Kim Almeida said that because some employees might be hesitant to share personal health details and speak out about direct managers, the anonymity of blockchain is “critical”.
The company is already seeing benefits in terms of how quickly it can collect feedback and share results, which show on screens on the factory floor. The results from one survey were processed within 48 hours of its completion, and three other sets of responses were processed in less than a week.
“This is the first time ever in my 30 years of researching work and health that the workers were the first to see the results of the survey and not management,” says Eileen McNeely, director of SHINE at the Harvard T.H. Chan School of Public Health, which worked on the project. “This is groundbreaking transparency.”
Transfer ownership of digital clothing
On 11 May, Dapper Labs auctioned off a one-of-a-kind digital garment at New York’s Ethereal Summit, designed by Dutch digital fashion studio The Fabricant. The winning bid was $9,500, and the winner will have the option to be digitally fitted in the garment. (Last year’s auction — the Cryptokitty — garnered $140,000.)
Ownership of the garment is transferred through blockchain, making the digital design impossible to counterfeit. “Blockchain allows us to create digital one-offs,” says The Fabricant founder Kerry Murphy. “It’s a way to create uniqueness and desirability.”
“The further I delve into blockchain, the crazier it gets,” he continues. “When the internet first started, we also couldn’t foresee all the things it would supply us. Then you see it adding value to people’s lives, and it isn’t an abstract concept anymore.”
A previous version of this article stated that Levi Strauss & Co began testing its worker well-being survey in January. The article has since been updated. 14 May, 2019.
To receive the Vogue Business newsletter, sign up here.
Comments, questions or feedback? Email us at firstname.lastname@example.org.