Today’s global supply chain is more far-reaching and complex than ever. To make it even more challenging today has come into play also the Metaverse. In fact, brands have started to use it as an additional sales channel. Undoubtedly, recent developments come with many benefits, including the immediate availability of international products and supplies all year round.
But, such a tangled network also gives fraudsters more than one opportunity to replicate, redirect, or tamper with goods. In turn, today’s luxury brands need to find new solutions to protect their luxury products from counterfeit, defend their reputation, and boost their customers’ experience.
Luckily, emerging technologies like NFTs represent powerful tools to fight counterfeiting. Learn how in this guide by the product authentication experts at Authena.
According to the 2018 Global Brand Counterfeiting Report, counterfeited goods account for over $30 billion in cumulative sales losses for luxury brands. And, fuelled by the rise of eCommerce, the international trade of fake goods continues to grow, and in 2020, it accounted for an estimated sales volume of $1.82 trillion.
For luxury brands, counterfeiting is a major problem that goes far beyond the financial losses it causes. Depending on what products are counterfeited, they can cause a significant public health risk, damage the brand’s reputation, and compromise the company’s ability to develop by curbing the resources directed to Research and Development.
A counterfeit luxury product comes in many shapes and forms. For example, adulterated luxury wines and spirits are manipulated. Fast Moving Consumer Goods that can damage both the consumer’s health and the brand’s reputation.
Other examples include fake fashion goods, which are often imitations of originals diverted into alternative market channels.
Some of the characteristics of fake luxury products include poorer quality, inferior materials, reduced durability, and lack of authentic certifications.
There is a range of luxury products that are vulnerable to counterfeiting. However, some of the most counterfeited brands include luxury manufacturers like Chanel, Gucci, Dior, and Louis Vuitton.
Some of the items that are commonly manipulated and diverted include luxury fashion items (i.e.: bags, garments, and shoes), fragrances, and cosmetics. In the world of FMCG, some of the items most at risk of counterfeiting include wines, spirits, and items with a designation of origin (i.e.: cheeses, cured meats, etc).
Protecting your luxury products from counterfeit is paramount – especially as the global supply chain grows more layered and complex. But how can you efficiently avoid counterfeited goods from affecting your profits and reputation?
The best way to do so is to work with a specialized product authentication company that can help you find a tailored solution for your needs.
From implementing new technologies like NFC and RFID tags to adapting your supply chain to minimize diversion and adulteration incidents, a product authentication expert can help you understand how to efficiently invest your resources.
While luxury brands have a larger profit margin to play with compared to budget alternatives, it is still important to understand how to boost the value of the luxury products your brand releases into the market.
While product authentication might seem like an unnecessary expense at first, recent surveys show that nearly 80% of buyers are willing to pay up to 5% more for a luxury product that is certified authentic.
But, in practice, how can a brand provide its customers with a zero-fraud certification? Here are some of the techniques and technologies that are revolutionizing the world of product authentication.
One of the most used techniques used to combat counterfeiting is smart packaging – or packaging solutions that are enhanced by technology.
Smart packaging solutions leverage a range of emerging technologies, like NFTs, blockchain, NFC, QR codes, and RFID tags to boost a product’s unit-level traceability and deliver information about the product’s journey through the supply chain to customers and manufacturers. What makes these technologies different from one to another is their level of security.
As the world of technology continues to evolve, so does the product authentication industry. Some of the new technologies applied to smart packaging include:
While the technologies above are essential to improve the security of your products through the supply chain and track their journey to the end-user, they cannot work efficiently without underlying systems.
The simplest definition of the metaverse describes it as a “virtual-reality space where users can interact with the computer-generated environment and other users”. However, this emerging technology is still in its infancy, and its potential is yet to unfold.
The metaverse is set to create a parallel space for social interaction. While it has the potential of taking social media platforms to the next level, it can also be efficiently used by businesses and organizations to build important relationships and open new sales channels and revenue streams.
In the case of product authentication, the metaverse uses NFTs as a digital twin of a physical asset to trace each transaction.
Currently, the metaverse represents an immersive 3D experience for users. Some of the most common uses today include touring real estate and hotel rooms, gaming, and visualizing digital assets.
However, this emerging technology is quickly developing to become prevalent in a range of industries, including real estate transactions, finance, and commerce.
Just like other technologies, the metaverse – and associated NFTs – come with risks that cannot be overlooked. However, there is one important feature of metaverse that makes it particularly appealing for product authentication, supply chain management, and transaction recording: it runs on blockchain technologies.
In turn, every transaction, sale, and acquisition that happens on the metaverse is securely and immutably recorded on the blockchain.
If you are wondering “what is an NFT?” you are not alone. The NFT meaning is complex, but it can be simplified. NFTs are an encrypted series of numbers and letters – or a piece of code written in the blockchain. They can be linked to a real-life underlying physical asset and efficiently describe the transactions that take place.
NFT stands for “Non Fungible Tokens” – or items with different intrinsic values that cannot be evenly interchanged. For example, two $5 bills are interchangeable because they hold the same value. However, two real estate products or luxury items will have different values that make them unique.
NFT is a vital concept used in the creation of the Metaverse. In the Metaverse, NFTs are used as a virtual certificate of authenticity and can record each transaction. Don’t forget that each NFT is unique and can only have one owner at a time.
Ultimately, they can be a virtual representation of a physical item or luxury product. While NFTs are today mostly used to govern digital art transactions, much of how this technology will be used in the future is still unknown. Product authentication companies, such as Authena, through its innovative product, Authena M3TA, are now leveraging this innovation as part of tailored authentication solutions. Purchasing NFTs as digital assets underlying physical products could increase the risk of scams and frauds. Authena can help brands to safely sell augmented products (both physical and digital) in the Metaverse, authenticating and creating an immutable bridge between the two worlds to safeguard brand image and final users.
So, owning a physical-digital NFT secured by Authena M3TA is not the same as owning a physical asset only. This technology allows both luxury brands and users to count on a safer and more transparent track and trace system.