How Technology can Save the Luxury Re-Sale MarketUsing blockchain technology in high-fashion produc

Imagine spending nearly four thousand dollars on a necessary, in-season Dior bag only to realize it’s…fake? Yikes! This unfortunately true story is brought to you by the luxury re-sale market: online consignment stores for high-fashion/luxury goods, built upon the assumption that the products these sites are selling are real. However, cleverly named site The RealReal is one of many luxury re-sale sites recently scrutinized for their faulty product authentication processes.
With both financial and sustainable incentives, the luxury resale market has seen unparalleled growth in the United States within the past three years, with a current $24 billion valuation predicted to more than double by 2023. However, the relationship between luxury brands and these second-hand retailers has been nothing short of turbulent, perhaps most notably with Chanel filing a lawsuit against The RealReal, accusing the retailer of selling counterfeit items.
The authentication processes of such sites, in turn, recently underwent diligent investigations whose results are not entirely comforting. A recent Forbes report states that since these site’s authentication processes are entirely dependent on human conclusions, they are incredibly subject to human errors.
For example. The RealReal determines whether a luxury item is authentic by having so-called “copyrighters” assess the item. The problem? Copyrighters are not experts. Additionally, only around 20% of items undergo a second round of authentication, meaning that when purchasing from their site, you are most likely putting your money in the hands of one, flawed, often-inexperienced employee to tell you that yes, that wonky-looking Louis bag is real.
In turn, if The RealReal wanted their products to be as close to authentic as possible, they would have to expend more money and energy hiring better, more experienced authenticators. Ugh. So much effort.
So, what do we do with a booming, exponentially-growing market built upon the crumbling trust of its consumers?

Why luxury re-sale should be saved.

First, the luxury re-sale market is incredibly important to the sustainable efforts of the high-fashion industry. With carbon emissions greater than those of shipping & aviation combined, pushing consumers to buy second-hand moves high-fashion brands to produce fewer items, thus reduce their carbon footprint.
Second, luxury-resale works towards democratizing high-fashion/luxury. If you can’t afford Alexander McQueen (me, on that student budget), perhaps you could afford it at up to 30% off. Especially when 30% off of a designer label can equal savings in the thousands.

Where does technology come in?

More specifically, how can blockchain technologies save counterfeit items from slipping through the cracks, and aid luxury-resellers in maintaining consumer trust?
To introduce the importance and effect of blockchain in product authentication, let’s take a look at the diamond industry.
The world’s leading diamond company, DeBeer’s, has recently declared their launch of Tracr, an initiative which essentially creates a “tamper-proof and permanent digital record” for every diamond produced and sold. To achieve this authenticity and transparency with its consumers, Tracr uses blockchain technologies.
DeBeer’s is not only utilizing Blockchain to ensure the authenticity of a diamond, but also to ensure consumers its diamonds do not originate from “conflict zones where gems could be used to finance violence.” In high-fashion, an industry commonly criticized for its usage of sweatshop labor, utilizing blockchain technologies to trace the origin of a product would demonstrate to consumers a positive step in securing more ethical production practices.
Technology-wise, blockchain is perfect with regards to product authentication due to its ability to store transaction-based, immutable, cryptographically-linked information. So, it’s like a chain of records for a product — who bought which diamond and when — that cannot be changed or altered once that transaction is performed. Additionally, the “cryptographically-linked” bit ensures that each transaction is given a specific ID which no other diamond purchase, past or future, could possess or even find.
High-fashion’s closest approach to ensure product authentication has been brands issuing serial-numbered cards. For example, every product from Chanel arrives with an authentication card; a physical piece of paper with a serial number specific to that product claiming it was truly born & raised by Chanel. The issue here? These business-card-sized papers can be lost, stolen, and fairly easily copied. You can’t trust paper, but you can trust blockchain!

Barriers to Blockchain.

Blockchain technologies are difficult to set up and use, especially so in an industry where obtaining top engineering talent is already a significant barrier. In fact, one third of fashion firms stated it has become “difficult” to “impossible” to employ digital talent such as technical directors or e-commerce web managers. Hey tech bros — have you ever considered working for Dior?
Blockchain is also consistently changing, making utilizing the technology a much more complicated, effort-requiring process than, say, printing authentication cards in bulk. In fact, one of the first Blockchain For Dummies books was outdated before it was even printed.
It looks like high-fashion has a decision to make: spending more time and resources on technological investments, or sacrificing the potential to increase transparency and trust with its consumers.

I’m a computer science student at Harvard interested in the intersection between fashion & technology. Read more on my publication, and if you’re interested in/working on something similar, I’d love to hear from you!