March 4, 2024
A.I

How luxury brands are leveraging Blockchain and AI for business impact

When it comes to blockchain, luxury watch, jewelry and leather brands are doubling down on utility, leveraging the technology to make a real impact on their businesses.

One provider of this type of solution is the luxury fintech Vaultik. The platform combines digital product passports with ownership certificates and on-chain insurance (typically against theft, loss and damage), uniting ownership and authenticity through ownership. triple factor authentication.

It operates both directly and through blockchain protocols, including Switzerland-based Hedera. In collaboration with insurtech company Avata, it provides ownership certificates and integrated insurance protection at both the B2B and B2C levels. Premiums are paid by the partner brand rather than the buyer, with more cost-effective store credit or “like for like” replacing traditional payment. This amounts to “a new revenue stream for brands,” says Vaultik co-founder and Meta alum Pietro Novelli of the closed-loop setup.

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This chain correlation between ownership and insurance creates “increased customer loyalty and increased customer retention along with new customer acquisition,” Novelli says. “When ownership is transferred in the secondary market, the insurance policy travels with it.”

Following proofs of concept with luxury companies such as Burberry, Vaultik has announced its first wave of client partnerships spanning verticals of luxury watches, gemstones and fine jewellery, leather goods and even furniture, with a focus on both primary markets as secondary; the latter taking advantage of artificial intelligence (AI)

While 2024 will bring the announcement of at least one major global fashion player, the first projects to come to fruition are those with small and medium concerns.

“They are more agile when it comes to implementing,” Novelli told me. “They are the ones who convert super fast because I can talk directly to the CEO of the company.” He added that these also represent a good way to demonstrate that the technology can scale.

Maximizing business impact and addressing some of the industry’s biggest challenges are key areas of focus along with theft, counterfeit traceability and sustainability.

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Luxury watches

A major use case for Vaultik’s technology is the luxury watch market. It is partnering with London-based startup NIX Time, which customizes watches from established luxury brands like Rolex, removing details on the dials or skeletonizing the mechanics inside.

For NIX, Vaultik is pushing digital product passports with built-in insurance. The passports also include the original serial number of each watch along with authentication through the London-based distributors from which they came, plus an additional guarantee.

The technology addresses a major challenge facing customers: the luxury watch theft epidemic sweeping major cities, according to NIX founder Jess O’Brien. Novelli himself was a victim last year and revealed on Ashley McDonnell’s Tech Powered Luxury podcast that the experience prompted him to incorporate the insurance element into his product.

BBC journalist Tir Dhondy recently made the documentary. Hunting Rolex Rippers exposing the modus operandi of organized gangs in London where, according to data collected by The Watch Register and shared with Dhondy, watches worth more than $63 million were stolen in 2022 and 3,190 thefts were reported in the first six months of 2023 .

Dhondy hopes his film will raise awareness about the issue. “There will always be a risk if you wear an expensive watch and walk down the street,” he told me, “so if you have an expensive watch, you can be a little more vigilant.”

O’Brien agrees. “Often people are too afraid to wear their most expensive pieces and end up leaving with an Apple Watch,” he told me. “The processes involved with traditional insurance policies can be quite archaic, but as they can be supported and enhanced by technologies such as blockchain, this gives our customers the opportunity to use and enjoy their pieces.”

Going forward, O’Brien looks to evolve the partnership with Vaultik, improving the customer experience through NFT to make it “more exciting.”

The secondary market

Blockchain has major implications when it comes to the secondary market and Vaultik has created an AI-powered algorithm that affects real-time valuations of luxury assets for resale.

It is entering the secondary market by pushing certificates of ownership and authenticity for luxury consignment store Luxe Dressing, in central London. They have integrated insurance against damage and repairs carried out by specialized partners.

“We believe luxury is timeless,” French entrepreneur and Luxe Dressing founder Leina Kaddouri told me, adding that the partnership represents “the evolution of luxury where elegance meets innovation.”

By integrating technology into its business model, it can offer an “unparalleled experience in the shipping space,” it says, “founding every unique find in our collection on a digital promise of authenticity.”

fine jewelry

Transparency of provenance is important when it comes to fine jewelry.

Veteran jeweler Amedeo Scognamiglio launched a sold-out NFT collection with Exclusible in 2022, transforming his eponymous brand’s quirky cameos into digital collectibles. He is now also partnering with Vaultik for digital and secure product passports for both his eponymous brand Amedeo and fine jewelry brand Faraone Mennella. Rihanna and Jennifer Lopez are fans respectively.

The association addresses the need to ensure the provenance and quality of its pieces, he told me: “the ability to monitor the entire life cycle of our jewelry so that its integrity and originality can never be questioned.” For him, the insurance element built into digital product passports represents “the real game changer.”

As for the blockchain element, this offers a new guarantee of security for the rich international clientele of its brands, he added. “It immutably records the authenticity of our products for both the primary market and resale.”

Furniture and leather goods

The Italian designer furniture and custom upholstery brand Superevo works with the patented Polimex material, developed in-house. Superevo is using Vaultik technology to document the lifecycle of its products on blockchain, to improve transparency and assure its customers of its provenance and uniqueness.

Information will be accessible through NFC chips, while electronic certificates will also include insurance for certain products. Ghisò leather goods are also committed to sustainability. The direct-to-consumer boutique brand sources all of its materials within an 8km radius of its factory in the Italian region of Tuscany.

The broader ecosystem

Of course, other more established blockchain platforms already operate in the space; the most prolific are Aura Blockchain Consortium and Arianee Protocol.

However, as Novelli argues, Vaultik’s integrated insurance component is a significant differentiator, which is why he views such platforms as potential partners rather than competitors. “We can all play our part in the broader ecosystem,” she says.

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