Counterfeiting is a challenge many brands encounter. Digital advances have enabled businesses to streamline loads of interactions between customers and value chain partners. Many companies have information-heavy processes, which still require multiple entities to exchange private documents. The technologies to do so are unsecure, error prone and fraud ridden.
Blockchains, however, create decentralized, distributed and digital records of transactions that are anonymous, tamper-proof and unchangeable. This technology establishes trust among unfamiliar or unknown partners by ensuring that every successful transaction is recorded and stored in multiple locations across the entire distributed network.
The challenge is, however, how to unlock business value. This post will cover how it can be done from a counterfeiting perspective.
Counterfeiting is a dilemma for many brands
Many large brands have a need to protect their products from counterfeiting. At the same time, they desire a direct customer relationship instead of having one via the retailer or the ecommerce site.
Retailers are trying to find ways to provide an in-store experience that gets the consumer out of the couch, but not necessarily off-line. High fashion, luxury goods, and quality toys are still bought in the store. We want to touch, feel, try on, test and experience the premium goods before we decide to buy, and we want it to be a great experience.
However, these products can very often be found on ecommerce sites at a discounted price – but can the site and the product be trusted? Do they sell authentic items?
Blockchain can help brands build trust
Premium goods have a high secondhand value and are therefore also sold over the internet. How can a buyer be sure that they are not buying a counterfeit product? High value brands have an excellent opportunity to use blockchain to protect their goods from counterfeiting while building a direct relationship with their fans. Customers buying these products very often want to be recognized and associated with the brands.
Use already existing technologies
Using an already existing technology, such as a unique identifier, could be a way forward. It can be placed as part of the product or packaging and can be scanned as the last step of the manufacturing process. The identifier will be registered in the blockchain so that the product can be identified at any point in the consumer space, the secondhand market and for many other use cases. This could of course be achieved by a secure database. But using a blockchain solution, allows the brand owner to gradually integrate their production line and supply chain upstream, over time adding a higher degree of integrity and visibility to their supply chain.
Unique identifiers such as QR codes and NFC chips would allow the consumer to validate the items authenticity using a regular smart phone and at the same time opt in to be registered as the owner of the product. The brand owner would have the choice to provide product information, receipts, warranties and service records via the blockchain.
Knowledge about the consumer
At the same time a very real “link” is established directly from the brand to the consumer. When the item is sold second hand the seller can transfer the ownership to the new owner, who then gets access to remaining warranty, service record history etc.
The value of the blockchain will be the possibility to follow an item as it changes custody from manufacturer to purchaser. This value will increase more and more with increased counterfeiting (which is increasing at an ever-faster pace).
We demand secure products, and products that can demonstrate that they have been manufactured in an environmentally responsible manner. As the millennials are getting more and more purchasing power, and influence the value of solutions, securing the integrity of the supply chain will grow immensely and blockchain fits into that category of solutions.
Mikael Ahlström has spent over 25 years in the technology space. His experience ranges from industries such as telecom, utilities, supply chain and finance. During the last years there has been an intensified focus working on technologies for tracking and tracing of provenance using technologies such as blockchain for purposes such as anti-counterfeiting, supply chain visibility/integrity and optimization. Learn more about Mikael Ahlström here.