When glamour meets technology, the corollary is very widely accepted by people over the world even though tech-enabled fabric would cost a little extra. Most of the big brands today are changing the course of conventional fashion towards a more outré fashion. In this 7 min read, we discuss how blockchain is altering the fashion industry.
The most exciting aspect of blockchain is its ability to protect digital identities and establish authenticity, which will have far-reaching consequences for the luxury and fashion industries.
The fashion industry, just like many others, has chosen to join the blockchain revolution in a bid to introduce more transparency in their processes.
We can say that blockchain technology 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.
Two years ago, Levis launched a SUPER DOPE smart jacket in collaboration with Google especially for people who commute on a bike. It costs $350 (certainly more than an average person would spend on a jacket) yet it is gaining a lot of popularity. You can listen to music, enable Google maps, answer phone calls and enable text on your jacket while on-go.
Likewise, most sports gear brands such as Nike endorse themselves as more of a tech company than an apparel company. Nike is constantly coming up with radical solutions with state-of-the-art sensors to measure heart rate, speed, calories burnt, and distance run while performing any activity.
Historically, the fashion industry has faced backlash over how they operate, employ cheap labor to cut costs, and overpricing. Now, blockchain in fashion aims to bring more transparency and traceability by optimizing their end-to-end processes.
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.
Let’s discuss what problems people face in the Fashion Industry:
- Problem 1: Blockchain’s novelty engenders from its unique ability to bridge the gap between the physical world and the digital world (tokenization) to create a REAL digital identity on the blockchain. Often, a cryptographic hash or “serial number” is the primary physical identifier that can be traced back to the product. This concept precludes the manufacturing of counterfeit items because a “fake” hash cannot be generated.
- Problem 2: Consider the most famous tag in the fashion world: MADE IN _______. Who knows if the place mentioned on the tag is actually the place where it was made?
- Problem 3: There are so many social activist groups lambasting big fashion brands for harming animals, the environment, or for unethical practices. A lot of consumers are also cautious about buying anything that is made of animal skin. So, how about a concept where users know where exactly is the product they are purchasing coming from?
- Problem 4: So many talented people dwell in remote places making intricate fabrics of great value. Most of the time, large fashion brands hire these poor people at a very low wage. This is practically exploiting people in an oppressive way. What if blockchain can empower people in fashion? How about clothing production moves back to the local, distributed hubs?
In 2017, London designer Martine Jarlgaard, in collaboration with the blockchain company Provenance, took the initiative to produce the unprecedented “smart labels”. 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.
This proves that the product is authentic, it proves where it is coming from, it puts forward the whole lifecycle of the clothing item rendering 100% transparency which is currently 100% opaque.
Likewise, the end result of blockchain is to integrate and include people in the economy who have been neglected until now. A DApp can be created for the people who are living in a deplorable condition to give them a livelihood. Since blockchain enables P2P trade inherently, there is no need for middlemen in the middle. People can directly buy from people rather than brands. This would certainly take production back to the local, distributed hubs.
Relevance in the Fashion Industry
As with any industry, the fashion industry also has its own set of challenges. One of the biggest such challenges is counterfeit products flooding the market and taking profits away from established brands while reducing the quality of items, thus damaging the brand’s reputation. Another challenge is the shipment tracking and timely delivery of products with the right specifications. Blockchain carries to potential to solve a majority of these problems.
What Blockchain Introduces in the Fashion Industry?
When receiving new shirts you had bought online, or bought some jeans from one of the fashion stores on your street, the question that may have come to mind then was, “how did these items get to be in my hands?” The answer is supply chains.
So, let’s see what blockchain can do in the fashion industry:
- Blockchain technology prevents product fraud in supply chains: Blockchain brings complete transparency to the fashion industry. Suppose, you ordered a pair of shoes from your local store and it is labeled “Made in Italy”. How can you be so sure that the shoe really was made in Italy? Visual Capitalist reports that counterfeit goods have caused damage worth around $300 billion to the global economy. Considering how large the counterfeit goods industry is, we cannot always depend on product tags to accurately show the origin of a product. Blockchain solves this problem by keeping unalterable records of the product journey from raw material to finished product, which makes it impossible for fake products to be verified on the network. Decentralized applications for verifying the origin of purchased goods will enable customers to scan the product code and see the product journey.
- It prevents accounting fraud: Blockchain technology solves the problem of accounting fraud in supply chains by creating blocks of records that cannot be altered. For example, if Supplier A were to supply through a traditional supply chain, accounting problems may be encountered on both the supplier and the consumer end because information throughout the supply chain can be altered and the middleman could change the amount being supplied, which poses an issue for verification. On the other hand, if Supplier A is sending 50 shirts to Consumer B through blockchain technology, the number of shirts and the amount to be paid for the shirts cannot be altered on the network, thereby preventing fraud.
- Blockchain supply chains are faster than traditional supply chains: Any fashion supplier knows the importance of delivering new waves of stock faster and more efficiently. Even though transactions on a blockchain can take between 10 minutes and several hours to undergo verifications due to limits on the network’s transaction volume, some new blockchain projects now have improved transaction speeds. The speed of a blockchain network can ensure that verifying the authenticity of supplied fashion goods is completed within microseconds of arrival, and with the removal of middlemen from the supply chain, goods can be supplied at a faster rate, improving the efficiency and quality of goods supplied. Fashion products that are returned due to defects can also be processed through a blockchain network without any alteration.
- It brings innovation through decentralized applications: Blockchain is a new technology that optimizes supply chains across a wide range of industries. For example, New Balance now uses the Cardano blockchain to authenticate its shoes, and users can verify information about a pair of sneakers with the data recorded the blockchain; while Provenance, a blockchain supply chain company, operates on open-source software, which encourages developers across the world to contribute to their project. Blockchain technology has solved a significant number of industry and technological issues by preventing fraud and hacking, removing middlemen and ensuring that the right goods are supplied to consumers as quickly as possible. Blockchain technology will increase the technological advancement of supply chains in the fashion industry. The future we look forward to in the supply chains of the fashion industry is here.
- It serves Marketing and Branding Tool: Not only supporting supply chain information from upstream to downstream, but also by having all of that information, the companies can create relevant branding and marketing strategies that suitable for their target markets.
- It allows Exchange Goods Transaction: Blockchain allows quicker and efficient identity verification process, without third-party support. Each user can closely and securely monitor their personal data. Have you ever heard or probably perform a change ownership process for luxury goods? With this technology, consumers can clearly see the change ownership log of the goods.
- 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 have been added. In addition, while a large amount of useful information will be available throughout the supply chain, the system will not need to store sensitive data. For example, a supplier will not need to disclose the discounts given to various customers. Developers will need to understand those types of issues as they design central systems.
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.
- Intellectual property protection: By using blockchain, manufacturers and designers can protect their brands against counterfeiting. For each fashion item, its origin and ownership can be tracked all the way up to its source. Counterfeit products or replicas will not have an authentic chain of records and can be easily rooted out. These concepts are already starting to be applied in the industry. As mentioned above, Martine Jarlgaard, in 2017 produced the first garments with smart labels that are recorded tracked on a blockchain. Each step in the manufacturing process was recorded, from raw materials to finished product complete with time and location stamps. Similarly, fashion brand Babyghost started integrating NFC chips into their spring/summer 2017 collection. These NFC tags are identifiers on the blockchain, and customers can use an app to find out everything they need to know about a specific product. This idea will not only prevent the diversion of profits away from legitimate brands due to counterfeit products but will also make sure that customers get exactly the products that they paid for without any counterfeiting, thus ensuring the quality of products and protecting the reputation of the concerned brand.
- Origin tracking: Using blockchain along with Internet-of-Things technologies such as RFID, raw materials can be tracked from their source to the production factory all the way up to finished products that are then delivered to retailers through distribution networks. The origin of each item can be tracked, and substandard materials can be rooted out at the source. It can also be useful for increasing the overall quality of products and efficiency in the manufacturing process. Fashion brands can identify weak links in their operations, such as a supplier providing faulty materials or a production department/facility not adhering to defined quality standards.
- Reliable supply chain: Whether it is the supply of raw materials or shipment to the end consumer, the supply chain industry is still rife with inefficiencies and mismanagement. The use of blockchain, however, will make practices more transparent. Suppliers trying to alter any record will be identified immediately.
- Royalty tracking: Blockchain also makes it easy to track royalty payments. Not only can blockchain allow designers to create an unalterable proof of creation, but it can also be used to license designs and trademarks, and any royalty payments and sales originating through the use of these designs can be easily traced.
Recently, it has been analyzed that Sarah Regensburger has joined hands with Vechain to streamline their distribution operations and design processes. Vechain is based in Singapore and offers various ‘distributed ledger technology’ (DLT) solutions to its clients.
According to the announcement, the owner of Sarah Regensburger deploys Vechain after it was mighty impressed with the potential offered by blockchain. Consequently, they decided to implement Vechain’s solutions in their distribution operations to boost transparency in the handmade garments division and ensure that the customers are aware of their cloth designing and supply-chain process.
The blockchain in fashion collaboration will help companies interact more openly with their retail customers and also the supply chain partners and other participants crucial to the final product delivery. The Vechain blockchain protocol has already been applied by Sarah Regensburger in their other process. The brand will give a detailed live demonstration of its latest blockchain features in the upcoming Paris Fashion Week. Interestingly, Paris Fashion Week is known to demonstrate the best handmade fashion work in the industry.
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.
Thus, the technology is still in its infancy, and it will take a few years at the very least to be standardized and become mainstream.