One of the major threats to the progression of the fashion and luxury industry is the prevalence of counterfeit goods. Valued at $450 billion, the counterfeit luxury goods market has made it increasingly difficult for luxury brands and retail chain stores to gain the trust of the consumers across the globe. In earlier times, people could find counterfeit goods such as fake designer handbags, watches, and belts in street markets or from a nearby vendor. But today, the market has become advanced, having reached various social media platforms and even popular e-commerce sites. The fact that the sale of counterfeit goods has become widespread and harder to detect has not helped the situation either.
Popular social media platforms, e.g. Facebook, have become ideal channels for sellers of these counterfeit goods to access mass audiences. Business Insider conducted an investigation that revealed the ease of purchasing a fake Rolex watch, Gucci bag, and Tiffany bracelet for $70 or less. None of the items were marked as fake online.
While policies against the selling or advertising of counterfeit goods are present on these social media platforms, they cannot come into full effect if no one is reporting the offending parties. Major e-commerce platforms such as Amazon and eBay also struggle to combat the sale of fake goods but they have dedicated more time and effort into enforcing their anti-counterfeiting programs.
Another concerning issue is the fact that producers of counterfeit goods are starting to become more sophisticated in their methodology. Designer knockoffs used to be easy to identify. But in recent times, counterfeit luxury goods have become more realistic in appearance. These goods, reportedly known as “super fakes” or “Triple-A fakes” have caused a stir in the luxury goods market. Shoppers have complained of purchasing supposedly genuine products from retail chain stores, only to discover that the product was actually fake.
The absence of transparency and authenticity within the luxury goods market makes it challenging for the industry to propel forward. This is especially true for the second hand luxury goods market. People are not willing to trust sellers — be it through formal or informal channels — because of the fear of being duped. In the last 20 years, more than $3 trillion worth of luxury goods has been sold across the globe. Of this $3 trillion, at least $81 billion of these goods are left unused, lying around in people’s homes. The counterfeit luxury goods market is hindering the second hand luxury goods market, and this needs to change.
Fortunately, blockchain technology and companies such as LUXCHAIN have risen to the challenge of combating the obstacles within the luxury goods market. LUXCHAIN has a business intelligence portal with Luxury Global Price Index technology powered by AI and Blockchain. It tracks live product data and prices from over 600 merchants in 20 countries.
LUXCHAIN’s Decentralized Verification Solution will solve three critical problems in the personal luxury goods industry: unreliable product authenticity, data intransparency, and valuation. Counterfeit goods remain one of the biggest threats to the global luxury industry, most especially in fashion and a major reason for the increase in sales of such goods can be traced to a lack of means of quality product verification and information.
In order to make this solution a reality, LUXCHAIN is incorporating Digital Identities (Digital ID) and Digital Assets — technology that will curb the counterfeit problem indefinitely.
Simply explained, Digital Identities will allow users to have total control over their identity. This means that they have total autonomy over their personal information. This eliminates the need for a central party to identify anyone’s identity. Users will still need to first identify themselves via KYC (Know-Your-Customer) but the whole point is that once a user’s data is verified, they have total control over it. This data is linked to Digital Assets and the history is permanently recorded so fraudsters would be discouraged from cheating people — since we can trace them back via KYC.
A Digital Asset is simply defined as a digital representation of the physical item with detailed information and data about the real product. This information is stored on the blockchain and will be attached to a Digital ID. This is so that the owner can be traced in the event that a malicious act takes place.
This solution created by LUXCHAIN, will allow for a necessary change to occur within the luxury goods market. Consumers will be able to confidently purchase their desired products, without having to worry about authenticity or reliability of the seller. The counterfeit luxury goods market will also be gradually brought to a halt with these advanced verification methods, thus improving the overall reputation of the luxury goods market. Blockchain technology continues to show us its necessity across various industries, proving that its implementation has definitely come at the right time.