In this post my aim is to help pick out and categorize some of the startups using blockchain technology to develop solutions that are either aimed at or will be beneficial for the fashion industry. I do not however, go into what exactly blockchain as a technology is — in case you want to learn more about it though, below is a video providing a pretty good basic explanation.

The biggest areas which blockchain startups are working in, that are relevant for the fashion (and also retail) industry, are the following:

• Payments
• Marketplaces
• Supply chain
• Data

I’ll be going through each of these categories, picking out a few projects, and highlighting how they can be relevant for fashion brands — both big and small.

Payments

Arguably the area where blockchain technology has found greatest traction is the financial services industry — with payments solutions a prime area of focus. Currently we rely on intermediary services such as Mastercard, Visa or banks in order to clear our payments, whether its online or offline. These can come with fees of 2–3%, and in the case of bank transfers, can take anywhere from a few days to even weeks.

Projects such as OmiseGO and Request aim to create payment systems powered by the blockchain, which promise instant and low to no-cost transfers and payments. Aside from transaction speed and costs, they also aim to give users more control over their payments. While Bitcoin was originally intended to also do similar things, it has been left behind in terms of scalability, leading to high transaction costs (mainly arising from governance issues and diverging interests).

Use of blockchain technology matters for the fashion industry in that it will allow brands with ecommerce stores to make purchasing on their sites easier and more accessible. Users of the services mentioned above wouldn’t even need to have a bank account to be able to make payments online — opening up a vast section of the population, especially in emerging markets.

‍

Marketplaces

Similar to startups removing the need for middlemen in the payments area, blockchain-based projects are also making peer-to-peer selling more efficient. An example here is of OpenBazaar, which enables anyone to open up a shop and start selling. There are zero listing or platform fees, your payment is done directly with whoever buys your product, and you can accept over 50 different cryptocurrencies.

This could be particularly relevant for the used-clothes industry, which has rocketed in popularity recently and is now worth more than $16 billion. Companies such as Grailed and Depop are part of what’s driving this growth. But, they currently charge substantial commissions on sales through their platform. For Grailed its 6% platform fees + 2.9%-4.4% paypal fees. Projects like OpenBazaar could provide an interesting alternative for sellers and buyers to save costs.

‍

Supply Chain

Problems of tracking, transparency, efficiency, and interoperability that have long plagued fashion supply chains are also likely to benefit from the distributed ledger technology of blockchcain.

One of the most prominent examples in this space is of VeChain — a Chinese company tackling a host of use cases. One of its first collaborations has been with a luxury brand, with whom they want to solve the problem of counterfeit products (a $450 billion industry worldwide). By inserting NFC chips into their leather products, they can create unique identifiers for them, which are tamper and anti-counterfeiting proof.

Similarly, Waltonchain also wants to tackle some of these issues. However, they plan to use RFID technology, which they will embed within clothing and other items, and will be connected to the Waltonchain blockchain. This again allows for tamper-proof records to be created, all the way from the production of the item through to shipping and even in store tracking. This could serve as useful not only for manufacturers, but also retailers and consumers — due to the high level of transparency that will be created.

Provenance focuses especially on empowering brands to tell the stories behind their products. The idea is that by showcasing the whole journey that the products go through, combined with the ability to verify that journey using immutable records, brands can generate more customer trust and loyalty (and perhaps justify a higher price tag). At the same time, it also acts as a way for brands to collaborate with their supply chain partners, and tackle issues like counterfeiting.

‍

Data

The final category that I’ve come up with for now is a very interesting one on many fronts. As we’ve heard plenty of times by now, “data is the new oil” (the accuracy of the analogy begs another discussion altogether). But while we’re producing more data than we ever have in the past, not all industries are collecting and using it as well as they could — especially the fashion industry. And some of the current projects using blockchain in this space could be incredibly useful for both providing better insights to brands, and increasing the voice of consumers in the industry.

One such project is Datum, which aims to give the control of data back to its creators (us) and be a decentralized marketplace for social and IoT data. Users connect different services to their Datum account, which saves their data on the Datum network. On the other hand, buyers can purchase this data by paying the owners of it. This could be interesting because it could replace the need for having a trend scouter, since you could get direct insights as to what people are buying or looking for in the market (for example through analysing users’ social media data), which could help brands inform their production and design decisions. At the same time, consumers also get paid for making their data available to these brands.

Streamr also has similar ambitions, but they want to take it a step further and process the data creation, analysis and purchasing in real-time using smart contracts and the Ethereum blockchain. An interesting use for this could be in the case of apparel brands which fit their clothes with sensors for tracking vital signs of the wearer — the user generating the data from this could then be selling it back to the manufacturer in real-time so they can better understand how their customer’s use their clothes (e.g. how often, what time of day etc.).

‍

Conclusion

There are many interesting projects being developed right now within the blockchain space, but a lot of them are still at early stage of testing. Time will tell how many survive and go on to achieve the lofty goals that they have set out to accomplish. Apart from the ones mentioned here, there are also very interesting initiatives and ideas related to governance, insurance, content ownership and many other areas which might become relevant for the fashion industry . I will be posting more on these in days to come. If you know of, or run, any interesting services and projects that target the fashion industry, I look forward to your responses.

‍