Blockchain for the Fashion Industry

Fashion companies are clamoring for ways to trace their products, whether to protect their reputation, to inform their customers, or to ensure the quality and authenticity of goods.

Supply chain and inventory management are among the most promising blockchain applications for fashion and apparel companies. Their companies are increasingly interested in mapping their supply chain to gain business control: costs, risks and the impact of everything that happens from obtaining the raw material to the discarding of the old-fashioned product.

The advantages for this industry are not limited to increased efficiency. With blockchain technology, you can track shipments of raw materials from source to factory, and track the finished product through the distribution chain all the way to the buyer.

Customers have no way to check the authenticity of a product, especially when they are purchasing the items online; and will have no idea that they are buying fakes. The only thing they know is that they are on a website that offers to sell expensive items of branded products at affordable prices. On the other hand, buyers pay close attention on how their favorite brands take measures to put an end to counterfeiting, although it seems that not all the brands are interested in controlling counterfeit of their products.

The use of garments with “smart labels” that could be scanned by the shoppers, allows them to see every step in the production process, from raw material to finished product, complete with time stamps and location mapping for every step. This transparency will likely be a selling point for consumers who increasingly want to know how and where their clothes are made.

The distributed nature of this technology means that the records cannot be altered, lost or destroyed. Based on the information stored in the blockchain, the sustainability of the processes and compliance can be tracked, both in the raw materials used and in the manufacturing processes.

Another aspect to consider of counterfeits in the fashion industry is its impact on the economy. The OECD and the EU’s Intellectual Property Office estimated imports of counterfeit products in 2013 at $461 billion, a 2.5 percent of global imports. When companies manufacture these fake products, they hurt the economy by putting jobs at risk. It is estimated that by 2022 counterfeits and pirated goods will endanger more than 5.4 million jobs.

The Blockchain technology also has the potential to enhance intellectual property protection for designers and owners of well-known brands. The authenticity of branded products can easily be verified by their owners, retailers and buyers, thus reducing counterfeiting and fraud.

Blockchain applications will also enable designers to document every step in the design process, providing unalterable proof of their authorship. Brand owners who license their designs or trademarks can use blockchain technology to track sales and royalty payments.

Making blockchain information immediately available to buyers lets the fashion garment itself to tell the story of its origin and show the complexity of the process of bringing the product to market. In doing so, it responds to the demand for this detail from a market increasingly sensitive to the ecological and ethical aspects of trade.

Finally, the current debate within the fashion industry focuses on deciding whether each developer should provide its own independent blockchain solution or should be a common platform on top of which different companies could develop their applications. The defenders of this second option believe that it would make those projects interoperable, leading to a wider and viable network as proof of trust.

However, unlike in other fields, there is no a standard technological body for the fashion industry. Given the usual way of behaving, where everyone seeks to have their own empire, makes a unified blockchain standard unlikely for the foreseeable future.