Why the Luxury Industry is Embracing Digital ID’s
For luxury brands, digital identification and authentication is an incredibly important part of an omni-channel strategy. Digitalisation of each individual product helps optimise resources and makes each step of the value chain more efficient and cost-effective. Authentique is an innovative solution that can transform how luxury brands digitise their products, providing an unbreakable link between physical assets and the digital world. Read on to understand why more and more brands are using Authentique’s technology >
1. Combat counterfeiting
The trade of counterfeit luxury products is growing at an alarming rate and is becoming a hot topic. According to the Harvard Business Review, the trading of fake luxury merchandise was estimated at over $3 trillion per year. How much does this issue impact your business, brand, and customers?
Counterfeit goods decrease companies’ profits and directly cannibalize products. Most current solutions to fight counterfeiting (NFC, RFIDs) are not efficient — they are easy to copy, tamper with, and can be removed. They are also invasive and can impact the manufacturing process.
What if your luxury items could be the custodian of their own identity without external components? With Authentiques solution, a tamper-proof and immutable digital twin of products is created, and a simple photo from any smartphone with the App can prove it authentic. This can be applied to various types of items such as apparel, art and collectibles, liquor, and much more.
Authentique allows brands, designers, and artists to receive the most of their business value throughout the product life cycle thanks to the developing Web3 economy. This provides buyers the trust and assurance they are looking for and allows businesses to develop new services and revenue streams.
2. Safe return — eradication of return fraud
In today’s omni-channel world and the constant growth of online commerce, managing a company’s return policy is getting harder and often results in a number of pain-points for the customer experience. On average, 10% of products sold online are returned, and an incredible number of these products (6%) are fraudulent. How much does return fraud cost your company?
With Authentique’s non-invasive authentication App, return fraud can be eradicated for good. A digital ID and twin is created for any item and stored in the blockchain with the proof of purchase. Any return can be authenticated just with a smartphone camera.
3. Proof of purchase and ownership
Many brands still use paper warranty cards or certificates of authenticity. Beyond the financial cost of such paper-based processes, there are significant environmental and labor costs of activating these cards as well as severe security risks. Customers can also lose or damage these physical certificates.
The Authentique App authenticates each item using a smartphone camera, linking its unique fingerprint to a digital ID and NFT then records it in the blockchain with the associated proof of purchase. The product becomes the custodian of its own identity and the decentralised records enable it to validate the product’s full history including certificate of origin and warranty conditions.
4. Controlling the grey market with unique product identification
Even authentic products can be thrown into the wrong market. In 2021, the gray market was estimated to be worth up to 8% of the $257 billion personal luxury goods market. Similar issues exist in other industries such as wine, cosmetics, and tobacco.
Authentique can help control this. By creating a unique fingerprint and digital ID to a luxury product at the manufacturing stage, each item is uniquely identified. When transferred to the distribution channel, each item can be connected to the official distributor. In case you find one of your items in an inappropriate channel, a simple picture of the item can find the item’s identity and track its history, including the distributor it was assigned to. Bottlenecks and pain points in the supply chain system are easily identified.
5. Circular Economy; join the secondary market and tap brand value
The global secondhand luxury goods market reached a value of $33 billion in 2021. Experts expect the market to grow at a CAGR of 10.3% from 2021 to 2026. We see more and more cases where a luxury bag, watch, or sneaker in the secondary market is more expensive than retail. Brands should ask themselves if they are getting the most of their brand’s value.
In the Web3 economy, the Authentique technology serves as the trust agent for luxury products in primary and secondary markets as well as enabling ownership transfer of the items and their associated digital ID’s and NFT’s.
NFTs convert digital images into unique, verifiable assets that can be bought and sold through the blockchain. Their growth this year captured the attention of both luxury shoppers and the media, with sales of memes, videos, and other digital art raking in hundreds of thousands of dollars. Some luxury brands have begun to sell branded digital art to collectors. For example, luxury watch brand, Jacob & Co, auctioned its first-ever NFT luxury watch. The highest bidder won the digital watch for $100,000.
6. Speak to the next generation of affluent shoppers
Millennials and Gen Z are now the most affluent luxury brand consumers and are the ones who are driving global luxury trends and sales growth. These consumers live and breathe digital, and have manifested strong preferences for personalised and seamless experiences integrated both online and offline. As a result, this tech-savvy generation will continue to force luxury brands to become dramatically more digital. By 2035, Generation Z will make up 40% of global luxury spending. Top luxury brands have started leveraging Gen Z habits and trends to reinvent and future-proof their businesses. According to one study from 2021, more than 94% of people who own crypto are millennials or members of Gen Z. They are also the metaverse generation.
7. Unlock the benefits of transparency in fashion
Transparency is the public disclosure of information that enables people to hold decision-makers to account. For the fashion industry, it means sharing information about supply chains, business practices and their associated impacts on workers, communities and the environment. With the Authentique App, every product sold through a brand’s channels can be associated with a tamper-proof identity in the blockchain, enabling a trustable decentralised circular economy guaranteed for businesses. The good’s origin, compliance with fair trade and sustainable production practices, and carbon footprint can be stored digitally. What markets and channels this product is authorised and distributed across may also be accessed. Web3 enabled trade will provide full transparency and integrity.
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