Blockchain in fashion industry

Blockchain in Fashion: the insights you never had

Spotted: your clothes coming right from Bangladesh, no authenticity for the brands you choose, exploitation of human power… what does blockchain have to do with this??

Blockchain is right there to make the nightmare disappear!

In most cases, when we talk about blockchain, Bitcoin is the first thing to come to one’s mind, but let us be clear, blockchain is revolutionizing almost all the industries one by one. Having a passion for the fashion industry and having an understanding of how the blockchain technology works, I decided to dig deeper and find out the benefits of the technology for the industry players. Long story short, let us uncover the main challenges and problems that the fashion industry faces today.

 

  • Supply Chain Transparency

According to Fabio Cesari, the head of research and development at YOOX NET-A-PORTER GROUP, a company that is consistently at the forefront of technological advancements in retail, supply chain management represents “one of the [fashion industry’s] biggest challenges”.

Even very diligent brands experience difficulties in terms of oversight and  transparency due to the trans-national nature and inherent complexities of modern-day sourcing and manufacturing.

Transparency in fashion is close to non-existent, and the only tool customers have to look up a source of where the garment was produced is a simple “made in” label, which can also be deceiving. Majority of  garment production can be done elsewhere and then the items will be shipped 80% complete to their local city to finish it there, which would allow the producers to put “Made In ___” cool-sounding city to appeal to their customers. Blockchain technology could allow brands and their customers to review every step of production and be assured that the information is accurate, since it’s protected by this secure, decentralized data storage solution.

One of the most discussed use cases is the collaboration of London designer Martine Jarlgaard and the blockchain company Provenance, who took the initiative to produce the unprecedented “smart labels”in 2017. The consumer can scan the clothing item to see every step in the production process ranging from raw material to final product. This kind of transparency will likely be a selling point for consumers who increasingly want to know how and where their clothes are made.

 

  • Product Authentication

It is clear that product authentication is a natural extension of transparency. Once a brand incorporates supply chain tracking with blockchain, it will be able to offer their customers  insight into the complete journey of a product, and fakes will cease to exist, as those companies won’t be able to hack into the secure blockchain network or to mimic the complex and detailed production journey of a real item.

There are still very few blockchain experiments that focus on the issue of fashion counterfeits. Fashion brand Babyghost played around with BitSE and VeChain. BitSE is a blockchain company and VeChain is a product management solution which is integrated with blockchain technology. Each product from Spring/Summer 2017 collection was embedded with VeChain Chips, having unique identity codes that were stored on Blockchain. This allowed potential customers to learn about the story behind the garment and gauge the proof of product authenticity via a special phone app.

Digmus is a Russian-based start up that claims they developed an authentication technology applicable to any industry.

 

  • Inventory Control  

We have already entered the era of the 4th Industrial Revolution. The understanding we have about the fashion industry is gone forever, because the technology is here to make the necessary improvements. Customer feedback going straight  to the manufacturer, smart warehouses, transparent and trustful delivery systems, etc. This all can be a reality very soon. What we need is to give the technology a try. With the mixture of AI, machine learning and IoT, blockchain can become a very important ingredient that will boost the transformation of the industry.

In centralized systems, that most inventory management technologies use, there’s only limited visibility and insight into where all products are at any given moment. With a distributed system, each transaction is monitored and distributed, which prevents data from leaking, being tampered with or removed without this transaction being tracked across the whole system. This also allows agile and secure data collection, immediate data extraction for product insights, and  seamless and transparent communication between the retailer, supplier and manufacturer.

 

  • Creative Intellectual Property

When digging through this topic, I ran into a termin evidence of creatorship, which, in my opinion, is one of the most important things that blockchain can ensure for the fashion industry. Here is a very impressive company- Bernstein, that aims to secure IP in fashion and design,

 

  • Ethics behind fashion

There are so many social activist groups going against big fashion brands for harming animals, the environment, or for unethical practices. A lot of consumers are also chary of buying anything that is made of animal skin. So, how about a concept where users know where exactly their purchased product is coming from?

On the other hand, today we see how many talented people dwell in remote places making intricate fabrics of great value. Most of the times, large fashion brands hire these poor people at a very low wage. This is practically exploiting people. What if blockchain can empower people in fashion? How about clothing production moves back to the local, distributed hubs? Does blockchain have anything to do with ethics? Definitely, yes!

At the end of the tunnel, there’s always light. Likewise, the end result of blockchain is to integrate and include people in the economy who have been neglected till now. Since blockchain enables P2P trade inherently, there is no need for middlemen in the middle. People can directly buy from people rather than the brands. This would certainly take production back to the local, distributed hubs.

 

What about the luxury brands?

Luxury goods are becoming more, well, luxurious. Brands have been haunted by counterfeiting parasites for far too long and this will eventually all come to an end as more and more luxury brands embrace blockchain technology.

Luxury brand conglomerate LVMH, owner of the Louis Vuitton Malletier, popularly known as Louis Vuitton, is on the verge of completing modalities that will see it apply blockchain in confirming the genuineness of luxury goods. Between May or June, all eyes will be on the AURA, the cryptographic provenance platform which is expected to host the Louis Vuitton and another LVMH brand, Parfums Christian Dior. Should this work, LVMH plans to extend it to its other 60-plus luxury brands, before finally extending it to brands managed by its competitors.

This was however, not an easy task for LVMH, who had to set up a team to work closely with ethereum design studio ConsenSys and Microsoft Azure. The AURA was built as a permissioned version of the ethereum blockchain known as the Quorum.

According to French startup Arianee, which boasts former employees and advisors from luxury brands such as Tiffany’s, Omega, Balenciaga and the Richemont group, the same technology can be used to help these firms create unique identities for bespoke handbags and expensive watches. What Arianee did to test that theory was create a new blockchain – a copy of ethereum which combines both permissioned and permissionless elements through its use of a consensus mechanism called  “proof-of-authority.” It’s permissionless in the sense that users who want to sell products to one another can interact with the blockchain, but the verifying of the ledger and issuance of new tokens is controlled by the participating businesses.

 

Important to mention, there are also interesting attempts to tokenize the industry, here is Fashion Coin for your consideration and another one by our beloved Fashion TV- FTV coin deluxe

Also would suggest to read this article to get more about the use cases: Fashion Blockchain Startups

 

Xoxo,

Your Blockchain Insider

 

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