Fashion Builds Trust with Blockchain

fashion BC

The gig economy and millennial are placing experience over just customer service and rewards over loyalty. The expectations are steep rising when it comes to the Apparel and Footwear as the industry leaders are elevating to overall fashion management. Combined with richer experience expectations, consumers are demanding more awareness with granular traceability and sustainability attempting to drive deeper to know more about apparels they buy, including the story behind each garment and how and where they are manufactured. It is high time for fashion brands to prove their trustworthiness necessitating complete transparency across the value chain on ethical sourcing and sustainability. It is more important in current times where many apparel companies lack ethical supply chains, and ~10% of global emissions are produced by the fashion industry alone.

The blockchain beyond cryptocurrencies offers a decentralized structure that provides immutability, transparency, and security making data trustworthy and scalability.  Blockchain technology has the potential to enable creating a fair, safe and more transparent fashion industry.  In this blog post, I will try to articulate how blockchain can bring added value to transforming business model and culture of the apparel industry from a supply chain that prizes consumption to a demand chain that takes pride in sustainability.

By leveraging Blockchain, fashion companies can offer greater transparency in supply chains creating new incentives for companies to change the way they do business and showcase their organizations. As shown in the diagram above, Blockchain helps create a peer-to-peer and decentralized network that connects all stakeholders in the value chain (design houses, farmers, raw material suppliers, manufacturers, transporters, distributors, retail outlets, banks, consumers and other parties of the complete supply chain). Using a decentralized system, all communication between these stakeholders will be direct and will not pass through a specific central entity. Due to its decentralized nature, the blockchain platform will not have any single point of failure and will not rely on any single entity.

The blockchain has demonstrated fashion supply chain transformation improving track-and-trace and inventory management thus far. By a further confluence of Blockchain, 3D printing and AI/ML technologies, the fashion industry may very well see much more dramatic improvements. Blockchain technology empowering fashion business with uniform real-time access to updated product information supplied by brands, a universal pathway for retailers to immediately report back to suppliers on aspects like stock levels and customer feedback, and has potential to add further on to this new building block structure.

Summarizing below how Blockchain technology further augments fashion value chain capabilities that help to deliver better outcomes.

Fashion Value Chain Capability Building with Blockchain:

Blockchain technology can provide consumers visibility into the entire fashion lifecycle of a garment, including materials and vendors used, the labor sources, and even the production, shipping and warehouse locations involved. Everyone from the farmer to the textile mill to the garment factory can communicate directly with the brand that buys from them. As well, consumers can interact directly with the brand/design house for co-creation or customization of the garments, influencing pricing and even co-investing in the concept. I can all out the following to articulate how Blockchain is augmenting fashion industry capabilities,

  • Create new levels of trust among Suppliers, Brands, and Customers
  • Design better PRODUCT, Offer improved SERVICE and Tell a unique STORY
  • Transform Apparel companies to Fashion Conglomerates

Delivering Better Outcomes with Fashion Blockchain:

Global companies like Patagonia and Everlane have been successfully betting on sustainability and supply chain transparency as a distinct selling proposition enabling customers to identify their suppliers. How Blockchain is delivering better fashion outcomes is summarized below.

  1. Enabling sustainability and circular economy: Blockchain is boosting fair trade practices offering consumers’ increasingly demanding transparency and allowing them to know where the fashion product is coming from.
  2. Better Traceability and Transparency: Blockchain enables fashion companies to communicate with the customers the complete product story (DNA) for each and every fashion garment. This includes comprehensive details on all stages of product life cycle starting from design inspiration, raw materials, manufacturing and distribution to the stores and also providing visibility of all stakeholders involved in the value chain to create traceability and transparency in true sense.
  3. Improved Experience & Goodwill: Blockchain applications allow customers to scan the tag and discover the history of every garment and thus help in improving the customer buying experience. Blockchain applications also can help fashion companies who license their trademarks or designs in tracking the sales and working out the royalty payments. As well, it enables design houses to document process steps and thus having the organic evidence of ownership on the designs.
  4. Brand Authenticity:  Fashion products can be verified by both retailers and consumers since branded garments pass through the blockchain steps and hence can be tracked. This could help to reduce the counterfeiting and diverting out of authentic products. Every time a fashion item moves from one place to other, its tag or code gets scanned thus recording its location with the time stamp. Consumers would be able to scan the item and trace its journey from raw material stage to their home and would be able to ascertain if the product is real or a counterfeit. Blockchain applications can help provide protection against the counterfeiting.

Fashion Blockchain Use Cases:

Blockchain is creating enough traction in the Fashion industry and successful use cases are increasing day by day. Here are few use cases of interest,

  • VeChain solution to tackle the fraud and ensure anti-counterfeiting of fashion products.  It provides a company’s product with a QR code or smart chip with its own unique ID. The company embeds the code, or chip, in its products, scans it, and stores it on the blockchain. The company can then track the product along with each phase of its life cycle: from its creation to the consumer. The blockchain is tamper proof. Consumers will know when they purchase that they are purchasing the original, authentic product.
  • Fashion Coin (FSHN) is a peer-2-peer version of electronic cash for Generation Z. Based on creativity, game theory and steganography+cryptography, Fashion Coin provides seamless and effortless online payments  – with maximum speed and limitless scale.
  • LUKSO is an open blockchain ecosystem specifically created for the fashion and lifestyle industry, providing a decentralized innovation and trust infrastructure for fashion brands, start-ups, and customers. The LUKSO architecture encourages its users to design and deploy an infinite number of innovative features for the modern fashion system: it opens up digital wardrobes and sharing economies, secures IP rights and authenticity, enables omnichannel communications and novel ways of funding collections.
  • faizod is currently paving the way in this area, working together with a logistics company to pioneer a prototype of such a Blockchain-based tracking system. The prototype pairs Blockchain with radio frequency identification (RFID), which uses radio waves to transmit information to a reader.
  • Provenance is increasing the transparency in the fashion supply chain by tracking the journey of raw material through the supply chain, this collaboration between fashion designer Martine Jarlgaard and Provenance highlights the role of blockchain technology in increasing transparency and substantiating claims in the fashion industry.

Given all the advantages, blockchain clearly seems to be the future for fashion, however, to speed up the application, a single and comprehensive blockchain standard adopted by the fashion industry has to come in fast.