Blockchain in the Fashion Industry: opportunities & challenges

1. Challenges in the Fashion Industry
2. Blockchain Relevance
3. Blockchain Applications and Opportunities for the Fashion Industry

This research was founded in the context of TCBL project: https://medium.com/overtheblock/opportunities-for-blockchain-in-the-fashion-industry-120b8857a1be

Transcript

1. STRATEGIC INSIGHTS ON BLOCKCHAIN INNOVATION BLOCKCHAIN IN THE FASHION INDUSTRY OPPORTUNITIES & CHALLENGES Enrico Ferro, Elisa Pautasso, Michele Osella
2. STRATEGIC INSIGHTS ON BLOCKCHAIN INNOVATION Overtheblock is a LINKS Foundation’s initiative aimed at promoting a wider awareness of the opportunities offered by the advent of exponential technologies in reshaping the way business is conducted and society is governed.
3. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 1. Challenges in the Fashion Industry 2. Blockchain Relevance 3. Applications and Opportunities for the Fashion Industry CONTENTS
4. 1. Challenges in the Fashion Industry
5. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 Challenges in the Fashion Industry • One of the biggest threats to the global fashion industry • Need to control over the supply chain COUNTERFEITING • Need to control over global supply chains • Clothes production and purchases increase • Long-term environmental and social damages GLOBALIZATION AND FAST-FASHION • Consumption of non-renewable resources • Increase of waste • Greenhouse gas emissions • Overworked, underpaid, and underage employees in developing countries SUSTAINABILITY ISSUES • High impact of smaller companies in the sector • “Challenger SMEs”* are emerging: higher attention to customers needs TRADITIONAL VS “CHALLENGER” SME • More aware of sustainability matters • Increased attention and usage of technologies (e- commerce, social networks) • Key role of Millenials CUSTOMER SHIFT Technologies can help to tackle these challenges … ...but many fashion companies have still to discover and incorporate such new technological trends. DIGITALIZATION TRANSPARENCY * Defined by McKinsey, “The state of the fashion report, 2019”
6. 2. Blockchain Relevance
7. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 Blockchain WHAT IS BLOCKCHAIN? Blockchain represents a distributed ledger and a consensus algorithm leveraging cryptography to run trustless systems without the need of a centralized authority allowing the exchange of value by eliminating the double spending problem. Bitcoin probably represents the most well- known example of blockchain. Blockchain: one of the five technological emerging trends in 2018 (Gartner Hype Curve Emerging Technologies, 2019)
8. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 Bitcoin is only one application of this great innovation in computer science. The blockchain can hold any legal document, from deeds and marriage licenses to educational degrees and birth certificates. It enables smart contracts, decentralized autonomous organizations, decentralized government services, and transactions among things. Tapscott D. and Tapscott A., “Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World”, Penguin, 2016 “
9. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 Blockchain Relevance The significance of financial resources flowing into fueling DLT- based innovation. 1. Fundraising from ICOs and Venture Capitalists from 2017 to 2018 (Q3) has been in total about $ 25 billion (source: CoinDesk, 2018) Its global effort and exponential pace of change. 2. Blockchain started as a global phenomenon to which all continents are contributing to. The impact of blockchain: from Internet of information to Internet of value. 3. Blockchain is expected to have a massive economic impact that, in hindsight, may dwarf the one the Internet had over the past few decades.
10. 3. Applications and Opportunities for the Fashion Industry
11. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 Methodology Cases analysis • Phase of product development: (2) operative; (1) concept; (0) announcement. • Company characteristics (size, products quality, position along the value chain,...) Association to blockchain application areas / categories articles, reports, blog-posts, thematic websites, etc. Literature review Maturity level: (3) Currently applied in the fashion industry (2) Potentially relevant for the fashion industry (1) Emerging area of application Blockchain application areas evaluation • already taking place in the fashion sector • transferable from other sectors • cross-sectorial 35 cases selection • 3 macro-areas of (possible) applications of blockchain in the fashion sector • 13 sub-categories Definition of blockchain application areas
12. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 Value Chain Management Application Area Category Short description Relevant cases Maturity Anti - counterfeiting Products authenticity is certified (brand protection). VeChain & BabyGhost; Brandzledger 3 Traceability Provision of complete information about all the actors and sources involved in production and commercialization of a textile product. Increased awareness of the customers about the environmental and social impacts of their purchases. Provenance & Martine Jarlgaard; Chronicled 3 Lean administration and control Companies can control and monitor all the actors involved in their supply chains. This practice aims at ensuring the best use of global resources, reduce costs by optimizing transport routes, and minimize the risks to companies through forecasting and better planning. Faizod; Block Verify 3 IPR protection Protection and ownership certification of original designs and concepts. Possibility to have an unalterable proof of creation in case of a dispute. Bernstein 1 Blockchain can be applied to guarantee traceability and transparency along the entire value chain. In this case the main value drivers of the technology is related to security and trust.
13. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 Access to the Market Application Area Blockchain can facilitate interactions and commercial exchanges between companies (B2B) and customers (B2C). It favors disintermediation, allows to verify the reliability of all involved actors and to simplify reputation management and marketing / advertising procedures. Trust / security and decentralized management represent the main value drivers. Category Short description Relevant cases Maturity Decentralized on-line marketplaces On-line marketplace, based on a peer-to-peer network that directly connects buyers and customers. Allows to avoid intermediaries and platform fees and guarantees faster transaction times and enhanced security. Openbazaar; Listia marketplace & Ink protocol 2 Decentralized reputation management A decentralized reputation management system that facilitates the exchanges between buyers and customers inside existing marketplaces. Subjects that want to sell or buy a product can verify the reliability of the other actors interacting with them. Monetha 2 Decentralized influencers marketplace Possibility to promote influencer-marketing campaigns through a decentralized network that directly connects companies with influencers, thus obtaining benefits in terms of costs reduction (payments automation and check) and higher access to influencers worldwide. SocialMedia.Market Patron 2 Decentralized digital advertising Possibility to promote digital advertising campaigns through a decentralized network that allows the digital advertising supply chain to coordinate in a scalable, trustworthy and secure way. AdChain 1 Loyalty programs management Management of loyalty programs allowing to keep track of multiple loyalty programs and to redeem points before they expire. End-users can access to a unique platform for sharing / use fidelity points gained in different programs. Quibee 1
14. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 User Engagement Application Area Blockchain can be adopted as a tool for incentivizing users to adopt specific behaviors (through incentives) and involve them in the company governance and operational processes. In this case, the main value drivers are represented by the possibility to leverage the mechanisms of crowdsourcing as well as to align the incentives of shareholders, employees and clients towards the success of a given business venture. Category Short description Relevant cases Maturity Users involvement in product development Users are involved in the products development processes (from the concept creation to the commercialization), expressing preferences or proposing personal ideas. Socios 1 Users data sharing Users are encouraged to share personal data with fashion companies. Their involvement can be incentivized and rewarded with tokens. Currently the main applications are related to the use of specific textile products / devices integrated with blockchain. A potential future application is the possibility to use blockchain for better managing data provided by users on on-line marketplaces / fashion brands websites. Loomia; 1 TrueID & Alessandro Gherardi 2 Consumers becoming "prosumers" Users involvement in company's fundraising. Possibility for everyone to buy company's shares (in the form of tokens) and potentially being rewarded. Neufund; AmaZix & timeless Luxury Group 1
15. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 Blockchain applications for the fashion industry The Big Picture
16. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 Blockchain applications for the fashion industry By Company Category Multinational companies diffused worldwide offering high quality textile products at high prices. They over the entire value chain. Multinational companies diffused worldwide, offering big quantities of clothes at low prices and changing models very frequently. They over the entire value chain. Small brands, often with a local territorial coverage, that offer textile products and services more aligned with new customers’ needs and expectations, especially in terms of sustainability and services personalization. They very frequently operate as retailers. LARGE “HISTORICAL” LUXURY OR PREMIUM BRANDS FAST-FASHION COMPANIES SME “CHALLENGER”
17. overtheblock.io COPYRIGHT ©2019 LINKS TORINO | 14 SET 2019 CONTACTS Over The Block STRATEGIC INSIGHTS ON BLOCKCHAIN INNOVATION overtheblock@linksfoundation.com overtheblock.io COPYRIGHT ©2019 LINKS POWERED BY Via Pier Carlo Boggio 61 | 10138 Torino (Italia)