Digital Product Passports (DPPs, Web3) in Luxury, Pt. 1
Sizing the market opportunity: Authenticity, Craftsmanship, History, Personalization
This is Part 1, a high-level overview of the most salient use cases for DPPs and their functionality in the luxury sector to-date.
It will set up the foundation for Part 2, which will focus on exploring how DPPs can create delight and emotional connection for customers, which I believe to be a much more interesting and greater opportunity. Specifically with Generative Art and making lasting memories on the blockchain. (Because any Tech innovation is an opportunity to not just solve a problem, but to create joy & beauty in the process.)
This Part 1 will cover:
Luxury Brands with DPPs. Sizing the Market
Most Salient Use Cases in Industry To-Date
Data Insights Opportunity, Community, & Long-Term Relationship
Luxury Brands with DPPs: Sizing the Market
This section covers:
Participating Luxury Brands
Tech Requirements
Sales Volume
Customer Expectations
There’s been a lot of buzz around Digital Product Passports in luxury fashion lately, with brands from Rimowa to Prada and Gucci adopting them.
Problem Space
Of course, rather than start with any technology as the solution, let’s first look at the problem space it inhabits: item authenticity, uniqueness, provenance & history. Luxury goods are a prime candidate for this special treatment.
Authenticity
Craftsmanship
After-Care
Ownership & Resale
Luxury brands are the first in the fashion space with the resources to adopt and roll out this novel technology. Most of the buzz has been around provenance, sustainability, and after-care. It’s no doubt exciting to highlight craftsmanship using technology.
Once DPPs’ most compelling customer use cases have emerged and the benefits to brands become clear, we can expect to see DPPs become more accessible to the wider fashion & art communities (specifically with an eye to digital fashion).
Tech Provider
The market leader in luxury DPPs is Aura Blockchain Consortium, founded by LVMH Group in 2021.
Since then, they’ve recorded over 40 million products on our private blockchain for 40+ member brands.
Starting with the FW 24/25 collections, OTB Group (Jil Sander, Maison Margiela and Marni) will be the first brand to fully integrate NFC technology and blockchain registration into the production processes, for every item and accessory.
To date, approximately 1.2 million products of Maison Margiela, Marni and Jil Sander have already been registered and fitted with an NFC chip on the blockchain platform provided by the Aura Blockchain Consortium. With the process now standardized, the aim is to reach 1.5 million products annually.
The Consortium is seeing growing interest from luxury brands. The company generates revenue through a model based on service licensing and transaction fees. “Every time you create a digital identity of a product or put information on the blockchain, we take a small fee. This variable part depends on the number of products you register,” said Carrere. This funding model supports the consortium’s operations and development.
Stefano Rosso, member of the Aura Blockchain Consortium board and CEO of Marni, stated: “This moment marks an important step forward in the innovation process for OTB, because it enables us to guarantee greater transparency, new ways of interaction and an increasingly high-profile experience for our luxury brands’ clients." Source: https://www.otb.net/en/news/otb-certifies-authenticity-jil-sander-maison-margiela-marni
Cost & Benefits
Integrating NFCs requires production and Tech changes for brands, which Aura has now standardized.
Brands that have moved early to adopt DPPs are already seeing benefits. Aura Consortium member and luggage brand Rimowa, for example, tagged all its products with DPPs starting in January 2023, allowing customers to access a detailed history of their purchases. This transparency enhances customer trust and strengthens brand loyalty. It also provides the brand with information on the product, including when it is resold through third-party channels.
Sustainability
DPPs are becoming a regulatory requirement, largely from a sustainability angle. (Source: EON) There are broad implications of the regulation for global brands, like fines for failing to adopt DPPs.
They also allow customers greater insight into supply chain and brands will be able to take advantage of decentralized data storage.
(Source: https://auraconsortium.com/insight/the-digital-product-passport-a-new-era-of-luxury-unveiled)
Participating Brands
That now offer DPPs with their products and some of the accompanying feature set (not limited to):
Rimowa - has tagged all products since Jan 2023, offering customers purchase history (Glossy)
Jil Sander
Maison Margiela
Marni
Louis Vuitton - craftsmanship (Glossy)
Bulgari
Miu Miu - personalized content (Vogue Business)
Chanel
Audemars Piguet
Vacheron Constantin - warranty, personalized content
Hermès
Richemont (owner of Vacheron Constantin and IWC)
Moncler
Cartier - authenticity
Chloe - product lifecycle, after-care & resale options (B2B Market)
Coach - Coachtopia, circular digital community popular with Gen Z (webinar, PR)
Most Salient Use Cases To-Date
In a DPP pilot, Prada found that products augmented by digital storytelling triggered a higher average spend in customers under 35 years old.
In just 3 short years, luxury customers now expect DPPs:
Enhanced Customer Experience
Personalized Content: DPPs can store detailed information about each product, including care instructions, warranty details, and personalized maintenance tips, enriching the customer experience. Customers can scan products to access information typically provided by a salesperson.
Exclusive Access: Provide customers with access to exclusive content, events, or offers based on the ownership of specific products.
After-Sales Services
Efficient Repairs and Maintenance: DPPs can streamline repair services by providing technicians with detailed product histories, ensuring more efficient and accurate service.
Resale & Ownership Transfers: Facilitate the resale and ownership transfer of luxury items by maintaining a digital record that can be easily updated, enhancing the secondary market’s reliability.
Customer Loyalty and Engagement
Loyalty Programs: Track customer purchases and engagement through DPPs, allowing brands to offer tailored loyalty rewards and promotions.
Interactive Experiences: Use augmented reality (AR) or virtual reality (VR) features accessible through DPPs to create interactive and immersive brand experiences.
Product Life Cycle Management
End-of-Life Management: Track the entire life cycle of products and provide options for recycling or upcycling, aligning with circular economy principles.
Customer Insights: Gather data on product use and longevity, helping brands improve product design and durability based on real-world feedback.
Brands are still curious to explore other use cases for DPPs, and consumers want more from them. (Source: Vogue Business)
Data Insights Opportunity & Long-Term Engagement
Initial consumer insights will be:
Purchase (sales channel, geography)
Resale
After-care
Personalized content, in-store and marketing
In addition, DPPs allow brands to track data in wholesale channels. “Currently we don’t get back any data from wholesalers, but now we can engage directly with those customers. DPP is very interesting from an omnichannel perspective,” said Stefano Rosso, chairman at Maison Margiela in a press release statement from May.
However, expect deeper insights around the customer journey to become available as more significant touchpoints worth recording on the blockchain are identified.
A notable example of community-building is Coachtopia. Customers can connect the product’s digital passport to their Coach account and access a range of circular services that will help prolong the lifespan of their product, anywhere.
“What’s nice about Digital Product Passports is that even when we’re selling in wholesalers with third party partners, we can develop that direct connection to consumers. It allows consumers to connect to our products and begin a richer dialog with us. In so many ways, we’ve become so disconnected from the people and processes behind the products, and it’s exciting to tell more human storytelling around each of our products and the journey we’re on together.”
- Joon Silverstein
SVP Global Marketing, Creative and Sustainability and Head of Coachtopia, Coach
Source: EON
Coachtopia has gone so far as to take deadstock collected from its program to be upcycled by Chinese designers into a chair (LinkedIn):
What other community remixes will DPPs enable between brands and customers?
More on how they empower a richer dialog in Part 2!
Since DPPs are like an NFT for ownership, similar opportunities to create a connection with customers via art also emerge.
Conclusion
This concludes Part 1 on DPPs in Luxury, an overview of their functionality, market opportunity, and current community engagement!
In short, DPPs put authenticity back into luxury fashion pieces as objects of art, and as such, subject to remixing and collaborating by the community.
Part 2 will examines a related long-term opportunity to build a relationship with the luxury customer and their garment via storytelling, that impacts brand growth and Marketing. It will explore how DPPs can create delight and emotional connection for customers, which I believe to be a much more interesting and greater opportunity. Specifically with Generative Art and making lasting memories on the blockchain. (Because any Tech innovation is an opportunity to not just solve a problem, but to create joy & beauty in the process.)
It puts the focus back on the heroine customer’s journey.
What are you most excited about with DPPs? Let me know in comments!
And stay tuned!