Blockchain Is Creeping Into the Fashion Industry
Article by Tom Serres
Blockchain has come a long way since it was known only as a support for cryptocurrencies. Today, blockchain systems are starting to have an impact on the way business gets done. This technology also has a future in the fashion industry. In fact, it was introduced into the fashion world at the Shanghai Fashion Week in late 2016, and its future in fashion looks bright.
What Is Blockchain, and Where Is It Going?
We recently published a whitepaper titled “Introducing Asset Chains – The Cognitive, Friction-Free and Blockchain-Enabled Future of Supply Chains.” In it, we discuss the impact that blockchain can have on supply chains.
We believe that, as blockchain technology becomes more sophisticated and more integrated into business operations, marketplaces will become decentralized. OpenBazaar is a current example of this. It’s an open-source marketplace where there is no central authority or intermediary.
As the technology continues to advance, supply chains will become more decentralized and more types of technology will be leveraged, including blockchain systems, AI and IoT. The logical outcome will be cognitive supply chains that learn and discover new opportunities for systemic self-improvement in efficiency and responsiveness.
Why Would the Fashion Industry Use Blockchain Technology?
The fashion industry is no different from any other industry. Organizations will adopt blockchain technology one step at a time as they discover how they can benefit from it. One of blockchain’s biggest contributions to the fashion industry will be to help brands achieve transparency and confirm authenticity throughout the supply chain.
For example, as seen at Shanghai Fashion Week, Babyghost teamed up with technology providers to allow everyone in the supply chain, including customers, to confirm the authenticity of its clothing. The company embedded small chips inside their clothing and accessories that anyone could scan to determine if the garment was authentic.
Blockchain Can Address Concerns About Counterfeiting
The concern over authenticity is widespread in the fashion industry, especially among luxury brands. The Global Brand Counterfeiting Report, 2018 estimates that online and offline counterfeiting of clothing, textiles, footwear, cosmetics, handbags and watches has reached $98 billion. As a result, anything that can help brands fight that trend is likely to be embraced enthusiastically.
As the technology spreads throughout the supply chain, customers will obtain even more information from an embedded chip. Eventually, the customer will know where the raw material for the item was obtained and where the item was manufactured. Consumers will have the information they need to reject products that are counterfeit or that use materials and production facilities the consumer doesn’t ethically support.
Blockchain Can Improve Efficiency in the Industry
Currently, many participants in the fashion industry supply chain maintain their own records, some of which may be paper-based. When an entire supply chain is using a blockchain system, however, those records will be maintained on a central digital platform. Once that type of a system is in place, it won’t require weeks to determine the original source of the materials used in a product — the answer will be available online.
Another big advantage to blockchain systems is that no one can alter, lose or destroy records once they’ve been added. In addition, while a large amount of useful information will be available throughout the supply chain, the system won’t need to store sensitive data. For example, a supplier won’t need to disclose the discounts given to various customers. Developers will need to understand those types of issues as they design central systems.
A great example of the value that blockchain can realize for those in the fashion industry can be seen in the work of Lukso, cofounded by Marjorie Hernandez and Fabian Vogelsteller. As Hernandez describes it, “Lukso [is] building a decentralized innovation and trust platform for brands, start-ups, and customers, providing the foundation for new forms of automated economic interactions and ownership management. Facilitating the opportunity for brands and customer to engage in an unprecedented fashion.” These new forms of interaction, will as Vogelsteller highlights make “life after the sale . . . more important than just the sale itself. This new life will bring more attention to the products, more activity around them, and opens the door for innovation around the ownership and access to high-end fashion products.” In short, blockchain can inaugurate a system where consumers are empowered and innovation given fertile soil to take root.
The blockchain industry is growing at an amazing rate. It’s estimated that the industry will reach $13.96 billion by 2022. We expect to see blockchain continue to make inroads in the fashion industry.
Blockchain can help the fashion industry improve efficiency, fight against counterfeiting and become more transparent to their customers. In the face of stiff competition, these advantages can help give consumers one more reason to remain loyal. To learn even more, download the Animal Ventures Asset Chains report.