Three European rivals are joining forces in an “unprecedented collaboration” to help consumers trace the provenance and authenticity of luxury goods.
LVMH Moët Hennessy Louis Vuitton, which in 2019 initiated the Aura platform, will be joined by Prada Group and Compagnie Financière Richemont in the Aura Blockchain Consortium, which will promote the use of a single blockchain solution open to all luxury brands worldwide.
Bulgari, Cartier, Hublot, Louis Vuitton and Prada are already keyed into the platform, which will give consumers direct access to a product’s history, proof of ownership, warranty and maintenance record.
According to a joint release revealing the creation of the consortium, it is in “advanced” discussions with several independent brands, and “brands within founder groups” to join soon since the blockchain “offers flexibility to support companies of various sizes and to adapt to individual needs.”
LVMH, Prada and Richemont worked together to create a “single solution to address the shared challenges of communicating authenticity, responsible sourcing and sustainability in a secure digital format.”
Known as a “multinodal private blockchain,” the platform records information in a secure and non-reproducible manner and generates a certificate for its owner, “enhancing the desire for beautiful objects made with savoir-faire and high-quality sustainable materials,” the consortium said.
It stressed that “luxury brands have a unique story to tell on the quality of their materials, craftsmanship and creativity” and that the blockchain would “increase customer trust in the brands’ sustainable practices and product sourcing.”
The Aura platform was developed in partnership with Microsoft and New York-based blockchain software technology company ConsenSys, and the consortium will operate out of Geneva.
In an interview, Toni Belloni, group managing director of LVMH, said consumer demand to know more about what they buy — from authenticity to traceability along the supply chain — is growing and has not been fully satisfied, until now. The blockchain will allow a jewelry purchaser to have information on ethical sources of diamonds, for example.
What’s more, luxury clients will be better served by “an industry standard rather than having to deal with the complexity of each brand having its own approach. The customer will have one known and trusted platform,” Belloni said.
Lorenzo Bertelli, head of marketing and corporate social responsibility at Prada Group, agreed, mentioning the confusion engendered by having various operating systems for mobile telephones.
“It was a common-sense decision,” he said when asked about joining forces with rivals. “It’s easier for everyone to build something together, instead of everybody investing by himself only to find out that is better to find a common platform, a common language.”
He noted Prada has yet to launch its consumer-facing app and online “environment,” but has been readying for the Aura blockchain by embedding radio-frequency identification chips, or RFID, into “millions” of products, which began reaching stores in the second half of 2020. Consumers can register their products retroactively as soon as its app goes live.
“In our eyes, it’s a service,” he said, speaking over Zoom, noting that the “hardest part” is deciding how to best leverage the blockchain as another differentiator for makers of luxury goods. “Every brand will have his own strategy.”
Louis Vuitton was the first to leverage the Aura platform and has already issued a “very significant” number of certificates, Belloni said, characterizing the blockchain as a tech-enhanced update on guarantee certificates sold with products such as high-end watches. “This is another way of protecting the brand and the purchaser.”
For brand marketers, the blockchain also offers a weapon against counterfeiters and gray-market distribution, he added.
“This is a clever and appropriate initiative,” said Luca Solca, senior research analyst at Bernstein. “The whole industry will benefit from having common systems and standards that consumers can use to check product history and authenticity. I would indeed expect more brands to converge on a common platform – neutral and flexible for each brand to use it as appropriate.”
Belloni said LVMH invested “a few millions” to establish the initial Aura blockchain, and there is a mechanism so the shared investments of the consortium founders are refunded over time, while ensuring that monies be invested to continue improving the technological platform for future needs. Participating luxury brands pay an annual licensing fee and a volume fee, he said, noting that the consortium is not-for-profit.
Belloni said the platform will be dedicated to all manner of luxury goods, even potentially cars, and any brand where “high standards of quality, traceability, transparency and authenticity” are a given.
“To be sure, the industry is very competitive and will stay very competitive. But this is one area where we have decided that an industry approach would be beneficial,” he said.
Bertelli agreed, calling the consortium a “deep collaboration” between major luxury groups, and one that opened the door to future possibilities.
“I see a lot of potential for collaboration with key players in the sector,” he said. “I don’t set limits. It’s something that never happened before. I really believe that we would be surprised how much [potential] we can unlock if we work together instead of independently.”
The executives also stressed a desire to have brands of all scales join the consortium. Belloni confirmed French conglomerate Kering has had discussions with the consortium.
“We want a platform that is really an open-source platform, open to everybody, consumer brands, smaller brands. We’re going to be more than happy to welcome niche brands in the luxury sector,” Bertelli said.
The emergence of secure digital identities for luxury goods comes at a time when the commerce of online counterfeit and knockoff products is accelerating along with online fraud and the sale of stolen luxury goods. A blockchain provides clarity on where an item was originally purchased and when it is offered for resale, which will cast a spotlight on gray-market trading, such as China’s thriving daigou networks.
Resale site The RealReal applauded the Aura development: “We believe that commitment to authenticity is fundamental to expanding the luxury resale market. We welcome and support the efforts of all brands to develop and implement tools to ensure authenticity in the secondary market and extend the life cycle of luxury goods.”
“The luxury industry creates timeless pieces, and must ensure that these rigorous standards will endure and remain in trustworthy hands,” said Cyrille Vigneron, president and chief executive officer of Cartier and a member of Richemont’s senior executive committee and board. “Blockchain is a key technology to enhance customer service, relationship with partners and traceability…We therefore invite the entire profession to join this consortium to design a new luxury era enabled by blockchain technology.”
Richemont also uses Arianee solutions for some of its watch brands.
“Although the ambition is to attract as many brands as possible on Aura, the group’s brands are free to choose, the idea being that competition will further raise the standards,” said a spokeswoman for the consortium.