Luxury

Luxury resale on the blockchain may be closer than you think

Some high-end brands are betting on the blockchain and resale
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Cameron Abbas

· 4 min read

From designer handbags to limited-edition shoes, the aftermarket for high-end goods is growing much faster than the luxury market itself. While resale is already worth $30+ billion, thanks in part to the rise of secondhand shopping platforms like Poshmark, issues of authenticity and traceability have made luxury a particularly tricky arena.

Most of retail isn’t heavily engaged with Web3 yet, but some luxury brands and investors are betting that a future where high-end resale is conducted on a blockchain is just a few months away.

In April 2021, LVMH, Prada, and Cartier formed the Aura Blockchain Consortium, a nonprofit organization that operates a private blockchain and creates “digital twins”—virtual representations of a physical good—for luxury brands.

Daniela Ott, Aura’s general secretary, said blockchain technology benefits both consumers and brands. Use of a digital twin can help prevent the sale of fakes, enable recycling and repairs, and provide brands with an immense amount of data and an additional revenue stream, she explained.

“I’m totally convinced every luxury product will have a digital twin,” she told Retail Brew.

The future is here

Aura’s goal of providing a single blockchain solution for the luxury world is already in motion, Ott explained. Aura’s digital authentication product is live and being used by brands like Cartier and Louis Vuitton. And a transfer-of-ownership product is on the way, with brands being onboarded now, Ott said. There are already 17 million items logged on the Aura blockchain, she added.

  • A digital certificate of ownership that can be transferred on the blockchain will enable peer-to-peer resale, Ott said. And a certificate of authenticity increases trust for brands and buyers.
  • Blockchain can also facilitate brand aftersale services, like upcycling or recycling, she added.

On the move: Brands aren’t the only ones pursuing blockchain-enabled resale.

In September 2022, Silicon Valley investors poured $6 million into seed funding for Myna Swap, a trading platform for luxury goods built on the Avalanche blockchain that is set to launch at the end of the year.

“There’s no platform out there right now where you can trade a digital NFT for a Rolex, or a pair of Jordans that cost $4,000,” Myna Swap founder Adeel Shams told Retail Brew. “We're creating a technology we've built on the blockchain [that] allows you to do that.”

  • Every listing on Myna Swap is connected to a digital twin, and can either be traded or sold.
  • Buyers can either take delivery of the physical item (in which case the NFT is destroyed) or sell the NFT on the platform without ever getting their hot little hands on it.
  • Myna says it will conduct a two-layer process to determine the authenticity of a product before storing items in guarded, temperature-controlled vaults, whose location it declined to share.
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Opening doors: As brands move away from using NFTs as one-off projects or as digital art, authentication is a huge area of opportunity, Insider Analyst Sky Canaves told Retail Brew.

It’s also a good point of entry for brands, because the authenticity of secondhand purchases is one of consumers’ biggest concerns, Canaves said.

  • There’s also an overlap between digital art and the fashion world, which may make NFT holders a natural market for luxury brands, she added.

Not so fast: Luxury brands want to be involved with the sale of their own products, and potentially profit on the aftermarket, Matt Moorut, a director analyst at Gartner, told Morning Brew.

“But at the same time, most enterprises are still hesitant to get too heavily involved because they’re worried about what it would mean in terms of the way that they’re perceived,” he explained.

Andy Ruben, founder and executive chairman of resale solutions platform Trove, says there may be other technologies better suited for resale.

  • “[Blockchain] is an incredibly important technology now for digital goods and information,” Ruben told Retail Brew. “Over the long term, it might be for physical goods. But over the near term, I think there are other ways that will be easier to address the core issue for luxury, which for me is authentication.”

A whole new world: Luxury is currently a linear business model, because there’s no way for brands to stay connected with those who purchase through a third party, or receive an item as a gift, Ott explained.

But she thinks that’s changing. In the future, circular revenue—resale, repairs, or recycling—will become a significant source of income for luxury brands, and the blockchain makes that possible. “I think blockchain is ready, not necessarily tomorrow, but in a few months,” she said. “Circular revenue is much more efficient, much more profitable, much more convenient, much easier with a digital twin.”—MA

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