How Digital IDs could revolutionize the fashion industry
Years ago, the idea of incorporating technology into fashion seemed farfetched. Prior to the infamous dotcom boom, the fashion industry had advanced little since its inception. Shopping was still relegated to storefronts, supply chains remained relatively static, and the biggest revolution up until that point had been the advent of the mail-order catalogue.
The fashion industry has come a long way since then. In the past few years, fashion has become more high-tech than ever before, embracing a plethora of new technologies and swiftly venturing into emerging digital landscapes like the metaverse in order to keep up with the modern consumer and the increasingly digital global economy. Now, supply chains run on data analytics, online shopping has superseded in-person purchasing, and AI has become a central marketing tool, being used in everything from virtual try-ons to color-matching cosmetics.
However, this is only the tip of the iceberg.
Enter: Digital IDs. Though they’re currently being adopted slowly, it’s only a matter of time until these cloud-based trackers are ubiquitous inside garments, bags, shoes, and more, revolutionizing the fashion industry from the top, down—from initial production to the final point of sale.
So, what is a Digital ID? According to Vogue Business, a Digital ID is composed of two parts: a physical data carrier and a cloud-based profile. Small and largely unrecognizable, they are physically attached to an item in the form of a QR code, microchip, or digital fingerprint. Once attached, this data carrier essentially charts a given product throughout its lifetime, recording data on everything from where the item was originally produced, to its material makeup, and even to its most recent purchaser. This data is automatically uploaded to the item’s “cloud profile,” a virtual history that can be accessed by scanning the data carrier attached to the item. This allows consumers to review the entire history of their purchase by simply scanning the data carrier and accessing an item’s profile.
To many, this may seem like the proverbial toy-in-the-cereal-box; something fun you get with purchase. However, these digital IDs are more than just a party favor. From improving traceability across marketplaces to monitoring manufacturing and sustainability practices, these technological wonders will change the fashion business forever.
First, Digital IDs will change the traceability of goods. For most brands, once a product is sold, it is no longer considered an asset. Basically, in the current fashion business model, an item ceases to exist for a company when it is sold because that brand only sees revenues from the initial sale of an item. After that, the item is untraceable. It could stay in the original purchaser’s closet for forty years, it could be sold on eBay the next day, it could be sent in to The RealReal in a month when the customer tires of it, or it could end up in a garbage can on the street in Brooklyn. Essentially, brands currently have no way of tracking the life of their products post-initial purchase.
Digital IDs, however, would allow brands to continue tracking their items long after sale. For example, Louis Vuitton could monitor how many and which type of their handbags end up on the second-hand market, versus how many are kept by their original buyer. This would allow Louis Vuitton to adjust its business model such that it discontinues bags that frequently end up in resale shops.
Second, digital IDs could improve a brand’s transparency, especially as it relates to its manufacturing and sustainability practices. Stitching in a Digital ID would allow both regulatory agencies and consumers to trace an item’s origins, from textile makeup to which factory and which worker produced the item. Essentially, Digital IDs would help lift the curtain on brands’ production practices in a way that forces them to be more accountable and keep them from falling prey to greenwashing accusations.
Third, digital IDs could help crack down on the production and sale of counterfeit luxury goods. Since they were first introduced, serial numbers have been used as the central factor in determining the authenticity of luxury goods. However, as counterfeiters have gotten craftier, forging serial numbers that, in many cases, appear legitimate, ousting fake goods from the market has become increasingly difficult. By attaching the serial number to a Digital ID or doing away with serial numbers altogether in favor of a Digital ID, brands would be able to add an extra layer of protection to authentic goods that would be more difficult for counterfeiters to forge, and easier for customers to recognize.
Finally, Digital IDs have the capacity to be connected to the blockchain, providing added authenticity and revenue possibilities for luxury brands. Essentially, if an item is connected to the blockchain through a Digital ID, it has the capacity to be sold as both a physical good and as an NFT. As such, while a company like Louis Vuitton currently only sees revenues from the initial sale of a bag, the addition of a Digital ID would allow Louis Vuitton to to receive a cut any time the item resells on the secondhand market, too. Essentially, because the given bag—for example, a Louis Vuitton Speedy—is being sold both physically and in the digital world with the addition of a blockchain-backed Digital ID, luxury brands like Louis Vuitton would receive royalties from their bags selling on the secondhand market for the first time ever. This could increase luxury brand revenues more than four-fold, especially as the resale market continues to grow thanks to the sustainability-conscious, baseline-luxury Gen-Z consumer.
Ultimately, though they may seem like another frivolous piece of technology, Digital IDs are one of the most exciting advancements to be introduced to the fashion industry to date. And with companies like Another Tomorrow, Arianee, and Aura Blockchain Consortium already partnering with brands like Prada and Hugo Boss, it's only a matter of time until Digital IDs become commonplace on clothing racks and handbag shelves alike. Not only will these information powerhouses dramatically increase transparency within the industry, but they will provide new streams of revenue for brands as well as increased measures to counter authenticity issues in a way no piece of technology has before.