The benefits of blockchain in the fashion industry

by Esther Pérez

Blockchain technology enables companies in the sector to access the production, supply, distribution, and marketing chain in real time to obtain a complete view of product traceability and track products in authorized sales channels with a high level of detail.

Today, this “chain of blocks” technology has begun to be adopted by multiple industries interested in promoting transparency, security, and responsible production, among which is the fashion industry.

What would be the advantages of using blockchain technology for companies in the sector?

  • Providing transparency in the supply chain

The supply chain of an apparel product can be carried out separately in several countries. For this reason, it is difficult for brands to control which materials are used in this process.

With this technology, companies can track the entire production phase, from the shipment of raw materials to the factory to the moment when the product is finished and enters the distribution channel, to be finally delivered to the buyer.

For their part, consumers, through product labels (tag blockchain), can access the history of the clothing instantly through a QR code or an RFID tag and find out where it was made, who made it, what materials were used, etc.

The use of this technology provides transparency to both the manufacturer and its customers by allowing product traceability and real-time access to information, responding to the demand for information requested by the market. This transparency can become a factor of choice for those customers who increasingly seek to know how and where the clothing they buy has been manufactured and under what standards of sustainability and quality or even the compliance with the applicable regulations throughout the manufacturing process.

In addition, the delocalized nature of this technology means that records cannot be altered, lost or destroyed.

  • Avoiding product counterfeiting

Blockchain technology can be useful to digitally authenticate a product, allowing as we have already indicated to verify by the owner, distributor or retailer and buyers the detail of the production chain, the value creation that the product has undergone in each of its phases, and the complexity of the manufacturing process, putting in value the brand and the product.

Moreover, the application of this technology allows designers to document each step of the design process, generating unalterable proof of their authorship. Brand owners who license their designs can even rely on this technology to track sales and royalty payments derived from the use of their licenses.

  • Improve efficiency and reduce operating costs

The use of blockchain eliminates intermediaries, improves the efficiency of the processes by automating them and reduces operating costs, allowing the management of inventories and the supply chain in a more agile way than the traditional one.

In this way, the use of blockchain technology improves business control by companies by reducing their costs, risks and the impact of any aspect that may arise from the process of production and marketing of the product.

An example of its use in the sector can be found in the presentation of Aura Blochain Consortium, last April 20, which is the first blockchain in the luxury sector, developed by LVMH together with Prada and Richemont (Cartier). This collaboration begins in September 2019 when they had a meeting in Paris to develop a blockchain platform with Microsoft and Consensys that would allow them to verify the authenticity and provenance of their products.

“We were talking about every point together, such as, what is the appropriate legal entity? what are the governing principles?”, says Timothy Iwata Durie, Cartier’s global innovation director, who participated in the discussions. (Vogue Business)

The result of this collaboration is Aura Blockchain Consortium, a blockchain for private use, which allows its use only to the companies of the network, being the data of the brands and customers accessible only to each brand, and on the other hand for open use, to any brand in the luxury sector that wishes to become part of it.

Aura identifies the products by assigning to each one of them a unique digital identity that holds information about the origin and ownership of the products, allows access to information about the history of these and even performs a post-sale follow-up, such as, for example, the rental and resale of the products, a very useful aspect now that the sale of second-hand clothing is a booming practice now.

However, Aura’s technology also joins others in the sector such as: Arianee, which works with Bas&sh, Audemars Piguet, Vacheron Constantin and VeChain, which have worked with Givenchy and H&M.

Consequently, the use of this type of technology and the collaborations that various brands in the sector are carrying out shows us a change in the mentality of the industry to offer companies in the sector more security and efficiency in their processes while offering their customers a more responsible and informed purchase of their products.

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