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Fashion, Luxury and Logistics Made Big Blockchain Bets in 2019

Blockchain still hasn’t taken off like wildfire—but it isn’t exactly dead in the water, either.

Throughout the course of 2019, startups and established firms alike continued experimenting with blockchain platforms, and use cases in the apparel supply chain are drawing the greatest interest.

Blockchain is a decentralized database, meaning it doesn’t live on any one computer. The digital ledger technology is designed to be immutable, rendering it nearly impossible to tamper with without leaving a trace.

Two of the biggest names in luxury and fashion joined forces to pilot a fiber traceability program based on blockchain last month. In November, Kering and PVH—along with Fashion for Good, C&A Foundation, the Organic Cotton Accelerator, C&A, Zalando—detailed their use of on-product markers to track organically produced cotton from field to retail. The effort “gathered sufficient insights and evidence to support the case, in terms of technical as well as operational viability, for the wider implementation of the process in the organic cotton industry,” Fashion for Good managing director Katrin Ley said.

Consumers demanding greater transparency into the products they wear are driving fashion brands to focus on assuring shoppers of an item’s ethical origin. Cellulose fiber producer Lenzing undertook a similar blockchain-based traceability pilot with startup TextileGenesis that monitored the journey of the Austrian firm’s tree-based raw materials from source to store.

TextileGenesis CEO Amit Gautum, who launched the 10-person startup in 2018, hailed the pilot as a critical “milestone” in the movement toward verifying where raw materials come from and how they are produced. “Our focus is to drive meaningful step-change in an indus2try where less than 5 percent of [the] top 250 apparel brands can track their garments back to the fiber origin,” he said.

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Blockchain, and its supply chain applications within the fashion sector, is bringing new voices into the fray. German blockchain startup Retraced reported this summer that a small group of apparel and footwear customers have successfully been tracing their goods with its “transparency-as-a-service” platform, which earlier in December won the National German Sustainability Award for the top startup in digitization. Founded in 2008 and endorsed by non-government organizations like UNICEF and UNESCO, the award is designed to promote the “acceptance of social and ecological responsibility.”

Retraced will continue to push “the agenda for more transparent supply chains, and for a fairer, more honest, and more socially responsible fashion industry,” co-founder Philipp Mayer said in a statement.

A Brazilian group that plays matchmaker between small, ethical apparel producers and “brands that value labor relations in the supply chain” also sees blockchain as the right tool to assure consumers that their purchases are responsibly made. Tags issued by Instituto Alinha and affixed to garments produced for participating brands are tied to a blockchain-based website that gives end consumers a glimpse into the people and factories from whence their clothes originate.

Coinciding with the most recent Climate Week in New York City, public benefit corporation Noble Profit bowed a blockchain-based platform that it said will report, track and verify the sustainability claims companies make. With $23 trillion shifting into sustainable and socially responsible funds, investors and other decision-makers require an evidence-based way to ensure the causes and companies they’re backing aren’t indulging in greenwashing but operating for the greater good.

And though many companies are tracing their raw materials from their roots in field and forest, one company is proving its fibers really are trash.

Shanghai-based Waste2Wear launched a line of clothing manufactured from reclaimed ocean plastic pollution, and employed blockchain to verify the origins of its recycled raw materials. “We believe there should be no doubt about the origin of our fabrics, and we wanted to ensure that our Ocean Fabrics are traceable to its source,” Monique Maissan, founder and CEO of Waste2Wear, told Sourcing Journal of the estimated 8 million tons of plastic waste sullying the oceans each year.

Authentication

Numerous companies are betting on blockchain as the next big thing in authentication.

LVMH is said to be building a blockchain platform in partnership with Consensys that will give consumers some assurance that their purchase is the real deal, an increasingly important value proposition as counterfeiting skyrockets out of control, both online and off.

This year, bona fide buzzword blockchain collided with another hot topic in retail—resale—as the technology could deal a crushing blow to fraud, among the most pervasive problems in the scorching sneaker-flipping market. Given that 81 percent of these resale transactions occur online, a solution is needed to ensure the continued successful of digital secondhand sales.

The vIRL WAX blockchin platform takes the digital twin approach as a means to addressing this problem, allowing users to store a virtual, high-res, 3D representation of their physical sneakers and streetwear on the decentralized database so that sneakerheads on the prowl for their next grail can shop without worrying about trading their hard-earned cash for a clumsy counterfeit. vIRL gathered some compelling stats to support its blockchain launch; 82 percent of surveyed shoppers would be more willing to purchase if their shoes or other goods bore a certificate of authenticity, while 37 percent distrust online resellers in general.

Further proving the utility of blockchain in the world of recommerce, a Chinese sneaker resale site in March revealed plans to introduce blockchain-based traceability tech that verifies the peer-to-peer transactions on its platform.

Streetwear brand YOHO!, which created the Unique Fashion Object resale platform, established an independent appraisal team of experienced appraisal experts to authenticate individual sneakers that are marked with an anti-counterfeiting tag upon verification. From origin to chain of custody to authenticity, all sneaker-specific data is recorded by the tag and registered on a public blockchain, UFO said.

Logistics

Shipping, logistics and transportation continued to expand its blockchain activity this year. One of the biggest names in blockchain for global supply chains, TradeLens drew even more partners onto its platform. Global Container Terminals recently joined the Maersk-IBM joint venture to “increase cargo velocity.”

Hapag-Lloyd and Ocean Network Express (ONE), the world’s fifth and sixth largest carriers, respectively, announced plans to adopt TradeLens in their operations, following on the heels of CMA CGM and MSC Mediterranean Shipping Company. With the additions, TradeLens now counts more than half of the world’s ocean carriers as members, a significant develop in an industry that still relies on paper and pen to documents complex international processes and procedures.

Some of retail and tech’s biggest names are trying to figure out how blockchain can get their supply chains under control. Alibaba is looking into how blockchain can work with other technologies, like cloud and Internet of Things, to create an “industrial brain” and facilitate the flow of cross-border goods, while Target is also investigating distributed ledger technology for use in its sprawling supply networks.

One area to watch: blockchain’s utility in trade finance. One Chinese shipper is already developing creative shipping financing solution that incorporates blockchain, and global companies see the technology as a way to accelerate payments that get goods flowing across borders more quickly.

Arianee

The founder of 2018’s Remode conference—where Levi’s dished on sustainability, experts praised kelp and coral for eco-fashion and Veja, Greats and Birkenstock revealed the path to brand fandom—Pierre Nicolas Hurstel also sees a world in the not-to-distant future in which consumers will own things in the real world and keep a digital representation in their virtual ones.

Launched in March, the Arianee consortium is designed to give luxury, fashion and consumer valuables a digital identity that lives within the privacy of a blockchain platform. With all of data on their clothes, shoes, handbags and more stored inside their wallet—the virtual equivalent of their wardrobe—consumers can better interact with and utilize what they own, co-founder and CEO Hurstel said at September’s Fashinnovation conference.

With all of the information about their wearables and valuables at their fingertips, consumers can receive advice not only on how to style their apparel, footwear and accessories but also learn about trending styles that would complement with they already own. And the blockchain platform could also inform users if they stand to gain by flipping a high-value, in-demand they own on the resale market.

To hear Hurstel tell it, and as others firmly believe, individual brands will take a larger stake in resale, where platforms like ThredUp, The RealReal, Vestiaire Collective and Vinted have carved out a rapidly growing niche that could overtake fast fashion’s dominance by the mid-2020s. With just a few clicks, consumers could easily put the digital twin of their product for sale on a brand’s digital store or any online resale site, Hurstel noted.

But building off what others have said about digital’s growing importance in fashion, Hurstel said consumers could even incorporate their virtual goods into their favorite digital games, for example. Consumers have already shown an interest in paying for fashion looks that live exclusively in the esports and gaming realm. It stands to reason then that a Fortnite fan might want his character to don the digital Balenciaga Triple S sneakers he already owns in his Arianee closet, Hurstel added.

Despite the many steps forward in blockchain this year, some of the research into exactly how decision-makers feel about the technology has been less than encouraging. A Gartner survey published in the spring found that just 19 percent of executives describe blockchain as “important” and even fewer—9 percent—have a budget earmarked for investments into blockchain projects.