Three top competitors in the European luxury market—LVMH, Prada and Cartier—have united forces to leverage blockchain technology to combat the worsening challenge of counterfeiting. Counterfeiting remains one of the major challenges that luxury brands face. In the 2020 fiscal year alone, $1.3 billion worth of goods were seized by the US customs alone. To address this issue, these three brands have signed up to the Aura Blockchain Consortium, a non-profit that utilizes blockchain technology to tackle counterfeiting.
The Aura Blockchain was launched earlier in 2019 by LVMH, in partnership with Microsoft and Consensys to achieve the same goal as the newly formed consortium. Aura will gather data on products at every step of the supply chain. Thus, through the Aura Blockchain, consumers will have access to the entire history of a product as well as a proof of authenticity that will be received electronically as a digital certificate after purchase. Each product will come with its unique ID that will be connected to the digital certificate on the blockchain.
According to a statement by Aura, through the use of the blockchain-based tool, “Consumers can easily and transparently follow a product’s lifecycle, from conception through distribution, with trusted data throughout, and thus strengthen their relationship with their favorite luxury brands.”
The Aura Blockchain will be available for use to any luxury brand. Participating brands will be required to pay a license fee and a volume fee annually, and more brands are encouraged to join the system. “We invite the entire profession to join this consortium to design a new luxury era enabled by blockchain technology,” Cyrille Vigneron, president of Cartier and a member of Richemont’s Board and Senior Executive Committee, said in a statement.
According to a press release earlier in the week, Bulgari, Cartier, Hublot, Louis Vuitton and Prada are already using the system and “several advanced conversations” are being held with other luxury brands to join the Consortium. Emphasizing on the importance of forging an alliance to fight counterfeiting via the Aura blockchain innovation, Toi Belloni, LVMH managing director, commented that, “By joining forces with other luxury brands on this project, we are leading the way on transparency and traceability. I hope other prestigious players will join our alliance.”
The Aura blockchain will significantly improve the security of luxury brand products and help consumers to ascertain the authenticity of these products. Dr. Martina Olbert, founder of Meaning.Global, adds that this alliance can drastically change the future of luxury. According to the Meaning.Global founder, “The alliance of three big players signals something important about the future of the luxury market dynamic. Luxury isn’t a game of competition. Luxury is a game of value creation. It is based on embracing the unique identity, authenticity and inner essence of brands. To function that way again, the luxury industry needs to become collective and tackle challenges as a whole.”
The use of blockchain in the luxury market will be significant in the restoration of trust, which is critical to the growth and survival of the system. “Brands can take back control over the customer relationships and focus on creating long-term value for themselves by putting the customers first and giving the customers transparent access to the luxury brands for communication, traceability and purchase,” adds Dr. Olbert.
Commenting on the importance of this blockchain innovation to the luxury market, Chris Ramey, founder of Affluent Insights notes that “In a world full of counterfeiters and poseurs, protecting clients is vital to protecting the luxury brand.” He adds that “Aura will secure the traditional pillars of luxury which define luxury brands and protect their wealthy clients.”
LVMH, Prada and Cartier Join Forces To Use Blockchain To Fight Counterfeiting
By Kehinde OjewaleUpdated:No Comments3 Mins Read