Luxury Goods

Blockchain Technology Solutions to resolve the issue of Counterfeiting in the Luxury Industry

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Luxury Goods

Luxury Goods

The Luxury goods industry has witnessed several changes in the past two decades. Given the rapid increase in globalization and other economic trends, this business segment is facing several challenges including complex supply chain issues. These issues are further compounded by higher customer expectations and economic and demographic shifts, which is making it difficult to anticipate customer behavior and plan appropriately. Apart from this, lack of adequate demand planning and failure to maintain sufficient inventory to ensure optimum on-shelf availability for fulfilling demand in a cost-efficient and sustainable way creates a lot of uncertainty. This happens due to lack of collaboration between various links (stakeholders) of the supply chain.

To ensure supply chain improvement, businesses should invest and balance their inventories judiciously while integrating a robust IT system that could provide end-to-end supply chain visibility while drawing insights from humongous amount of available big data. By leveraging Blockchain for luxury brands, companies can aptly resolve the pain points of the Luxury goods supply chain ecosystem by bringing collaboration between the different actors of the supply chain thereby ensuring better transparency.

How Can Blockchain Help?

Counterfeiting of Luxury Goods: The provenance of a product is of utmost importance in the luxury goods industry. This is because customers are very particular about the authenticity of a product as they consider ownership of original products to be a matter of prestige and value. However, the luxury industry is plagued by counterfeiting, which have resulted in severe losses both financially, as well as in terms of trust (lost consumer confidence). Since, Blockchain can track the entire life cycle of a product from sourcing to end customer, it can clamp down counterfeiting issues by intimating stakeholders regarding the replacement of original product with counterfeit ones.

Superior Customer Service: Since, products in the luxury industry are delicate and of high value, it’s important to ensure high service quality. As a result, businesses require trustworthy providers for ensuring safe delivery of products. By integrating a Blockchain in the luxury industry stringent security demands related to products at every point within the distribution chain can be met. Apart from this, Blockchain provides for an efficient real-time tracking system that can provide stakeholders with reliable information along with optimum transport condition.

Increased Product Security: One of the major issues that concerns the luxury goods sector is the security of products. Since, product changes several hands, secure conditions are required at every point within the supply chain. Blockchain with its tamper proof ledger records all the product related transactions and also traces the status of a product while in transit. This provides an additional layer of security, which besides offering product transparency also augments customer confidence. For instance, Blockchain in diamond industry provides additional layer of assurance to the customers that the diamonds sourced are conflict-free.

Fair Pricing Mechanism: Another factor that plagues the luxury industry is the absence of pricing transparency or in other words standardized fair-pricing index. However, the current valuation system fails to offer an objective measure of value. This calls the need for a robust system that can streamline the pricing mechanism. Blockchain – a tamper proof ledger can be utilized by vendors, as well as customers to help authenticate these luxury goods.

Why Sofocle?

As leading players in the Blockchain space, Sofocle offers Blockchain solutions to businesses looking for secure and transparent solutions for optimizing their supply chain. For the luxury goods industry, Sofocle offers its’ market ready product ‘sofoChain’ that can manage the pain points of luxury goods supply chain while providing operational excellence.

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