With the Ecodesign for Sustainable Product Regulation regulatory framework set to be implemented within the European Union this year, digital product passports will soon be necessary for brands. The regulations aim to reduce environmental impact by establishing sustainability criteria for the design and production of various consumer products.
Initially introduced to meet those E.U. regulations, DPPs are designed to provide a transparent record of a product’s origin, materials and craftsmanship, effectively acting as digital birth certificates for luxury goods. The Aura Blockchain Consortium, which was established in 2021 by leading luxury brands including LVMH, Prada and Cartier, has been pivotal in promoting their adoption.
Notable projects from Aura include Cartier’s implementation of blockchain to verify product authenticity and origin, Prada’s adoption of digital passports to promote transparency and sustainability in its supply chain, and Louis Vuitton’s use of the technology to combat counterfeiting and ensure customer assurance in product authenticity.
According to Romain Carrere, CEO of the Aura Blockchain Consortium, the cost to implement a DPP per item is small, but the investment can be significant if the number of items requiring the DPP is large. A DPP’s records can be accessed in several ways, including by scanning a QR code.
“Tagging a product and enabling digital storytelling can be a conversation starter for the sales assistants in our boutiques,” said Lorenzo Bertelli, head of marketing and CSR at the Prada Group in a May press release statement. “It increases the conversion rates and ensures that the customer verifies the ownership of their product, creating a new channel for direct engagement that never existed before.” In a DPP pilot, Prada found that products augmented by digital storytelling triggered a higher average spend in customers under 35 years old.
Apart from regulation, the rise of DPPs is also being driven by a need for greater transparency and sustainability in the luxury sector. “There is huge traction today with brands needing to do a DPP because of regulation … but it is now impacting brands around the world that are selling in the E.U.,” said Carrere. There are broad implications of the regulation for global brands, like fines for failing to adopt DPPs.
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.
“Once you bought it, you can claim the ownership,” said Carrere. “We want brands to use the DPP to elevate the experience of the customer around product ownership.” This level of interaction not only enhances the customer experience, but it also provides brands with data that can be used to tailor marketing efforts and improve customer service, he said.
“Some people want [only the essential product] information, but others want this information and much more. … For the brand, it’s an opportunity to put across the message that it wants to convey,” said Carrere. In some stores, customers can scan products to access information typically provided by a salesperson.
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.
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.
The Company, which declined do share its revenue and staff numbers, has 40 luxury brands as members. It exclusively focuses on luxury based on the market’s unique customer experience challenges.
As luxury brands navigate this new digital landscape, Aura Consortium is working to create a standardized use of DPPs to ensure a consistent customer experience across products and brands. “There’s a standard flow we recommend. Based on this flow, brands can customize their customer experience,” said Carrere.
