Louis Vuitton (LVMH) Partners With Microsoft and ConsenSys to Create a Blockchain Solution
Louis Vuitton and Moet Hennessy (LVMH) has announced that they are stepping into the blockchain industry by creating a blockchain-based platform known as “AURA” which is a solution that gives consumers access to the history of luxury goods they want to purchases so that they can verify their authenticity. The solution makes it possible for consumers to verify information about the product from the manufacture to the point of sale as well as in second-hand markets.
In the process of manufacturing, all products are entered on a shared ledger with each having unique information that cannot be duplicated. When buying the product, the customer will use the solution to get the AURA certificate that will have all the information about the product. The objective of the blockchain platform is to offer transparency through a single source of truth for consumers who can ascertain that they are buying legit products. Information provided includes the product’s origin and other components such as environmental and ethical information, after sale warranty for the products and product care instructions.
Who Created AURA?
AURA is a blockchain solution of LVMH that has been developed in partnership with tech giant Microsoft and blockchain technology ConsenSys. Various LVHM Group brands such as Parfums Christian Dior and Louis Vuitton are part of the project. For Louis Vuitton, AURA is the realization of Track and Trace program that began over three years ago. Currently, there is more discussion to incorporate other brands to the platform before adding other brands from other luxury companies.
The developers of the platform chose a consortium model which ensures that any luxury firm can join as a member. The model makes the technology available to all while at the same time upholding flexibility to offer solutions to customer needs. The technology is built on Quorum, which is a version of Ethereum blockchain that is developed by JPMorgan, and it exploits the capabilities of Microsoft Azure. AURA is explicitly designed for luxury firms, and it provides a variety of industry-specific services that cater for the needs of the companies that will want to emphasize on raw material sourcing, provision of customized services and strengthening of customer loyalty.
Blockchain software technology, ConsenSys, is among the partners of AURA and they are behind the development and design of the Traceability Smart Contracts that employs ERC-721 protocol for non-fungible tokens. The brand API and infrastructure of AURA blockchain permit interfacing of brands with the blockchain solution on a white-label basis.
Why was AURA created?
AURA was created to offer customers proof of authenticity of the luxury products they buy by tracing their origin from manufacture up to when they get to the market. According to LVMH, the blockchain solution could also be employed in safeguarding creative intellectual property as well as put an end to advertising fraud. The technology will make it easier for customers to get access to care instructions for their luxury products and also receive after-sale service through the platform. Available Warranties for the products shall also be available through the platform for the customer.
With the resale site increasingly growing especially for luxury products having a means of establishing the authenticity of a product will be something amazing. However, it is still early to say that the technology will completely do away with counterfeit products, but one assurance is the use of Ethereum technology could mean that other brands will be on board so that they can protect their product and thus appeal to a large number of customers. Despite being created for a high-end brand, the technology will also be available for other retailers. According to ConsenSys any brand that wants to employ the platform in management of their merchandise can do so, and they have a choice of tailoring the platform to fit the features they won’t disclose to the customers thus strengthening the relationship with their client base.
AURA revolutionizing the luxury industry
AURA is a revolutionary innovation that will transform the luxury industry as the technology will not only benefit LVMH but the whole industry by protecting the integrity, privacy, and interests of each luxury brand. Luxury brands have been a target of knock-offs and counterfeit products across the globe. For instance, in 2017, an estimated $323 billion in losses were generated in online counterfeit markets with luxury firms incurring losses of about $30.3 billion. However, LVMH is not the first luxury brand to come up with the idea of having a blockchain that can track the authenticity of products. Arianee and vechain have already tried the idea before.
LVMH has indicated that the platform will be shared with other luxury brands, which make you wonder why it will allow competitors to use the technology when blockchain should eliminate intermediaries. Access by other brands will be in the form of a consortium instead of having a third party entering the market place. LVMH will offer the technology as in the form of a white label even to its competitors. Instead of AURA coming as an app, it will be operated behind the brands on board and customers should not expect to see AURA but it will run in a Louis Vuitton App or an app of the luxury brand they have chosen.
There might be concerns as to how LVMH will get other companies on board, especially competitors considering its level of influence. To avoid such concerns, LVMH plans to donate all of the AURA’s intellectual property rights to a different entity which shall be owned by all the brands using the technology. For instance, if let’s say Gucci wants to use the platform, they will join as shareholders and similarly claim the intellectual property as Louis Vuitton would have. The system uses data privacy tools of Quorum, which will protect the information, ensuring there is no breach between companies and customers.
The next phase of AURA will involve exploring the possibility of protecting creative intellectual property, exclusive offers of the different brands and also anti-advertisement fraud.