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Aura Blockchain’s Daniela Ott on Persuading Luxury Rivals to Join Forces on Product Passports

The leader of the Aura Blockchain Consortium is tasked with persuading big brands such as LVMH, Prada and Richemont-owned Cartier to work together on the shared digital platform that creates ‘product passports’ for luxury goods.
Daniela Ott.
Daniela Ott. (Aura Blockchain Consortium)

This article first appeared in The State of Fashion 2022, an in-depth report on the global fashion industry, co-published by BoF and McKinsey & Company. To learn more and download a copy of the report, click here.

Three competitors joined hands in 2021 to create an unusual partnership in the form of the Aura Blockchain Consortium. LVMH, Prada and Richemont-owned Cartier united behind Aura, a blockchain originally developed by LVMH and technology partners ConsenSys and Microsoft, to solve critical challenges around the traceability of luxury goods by giving each product a digital identity that provides customers with a secure, verified means to see its entire life, from the raw materials through to second-hand sales.

Aura’s general secretary is Daniela Ott, a luxury veteran who spent more than a decade with Kering. Expanding this groundbreaking but tricky alliance is not without challenges. For one, the emergence of competing blockchain technologies could fragment the burgeoning product passport ecosystem. Aura’s effectiveness against counterfeiting is also unclear, and it has not yet persuaded some prominent brands to sign up. Ott is nonetheless determined to create a “digital twin” featuring theoretically tamper-proof digital certificates of authenticity for every product sold in the luxury industry — and to use Aura to do so.

BoF: Aura has been signing new companies up, but others remain hesitant to join. Two big names that remain absent are Kering and Chanel. Why is that? Are brands concerned about revealing sensitive information, such as their suppliers, to competitors, or do they see creating their own product passports as a competitive advantage if their system is somehow better?

Daniela Ott: Actually, it’s an advantage to use one solution, especially if you have the same issues, you have the same suppliers, you have the same distributors, and you have the same needs. Having one system makes it easier for everybody. I think it’s more that we just launched in April [2021], and blockchain in itself is hard. It’s not just that you need to have your use case ready. You need to link it up internally in your organisation, to make sure you have the data you actually put on the blockchain. Your marketing teams have to know the message you want to pass [on]. We make it easy but still you must define what you want to do with your passport. [So] I think it’s a journey.

BoF: Luxury companies are not known for jumping on emerging technologies. What gives the companies leading this charge confidence in blockchain?

DO: I think doing it together as a consortium helps. I would say also I think they learned the lesson of being too late in the e-commerce space. I think it helps that we have a private permission-based blockchain where they can decide which information to give access to or not. In a public blockchain, it’s very easy to see that you had a drop in production. But it’s the brand who decides whether, “I’m giving access to the consumer this information,” or “I don’t give access to how many units I put on the blockchain today.” I think that also gives some reassurance.

BoF: Aura’s member brands are at different stages in putting their goods on the blockchain. Customers can see the history of products from Bulgari and Hublot, for instance. But if I were to check the information on the products currently available, what sorts of details will I see?

DO: There are brands who are showing basic information: when it was produced, the serial number, the price point, all the fabric which is involved, where the fabric is coming from — I would say classic information about traceability. In terms of a watch brand, they would add a guarantee, a certificate of authenticity, and they would be adding a specific certificate for watches that the watch actually keeps time. We are working right now on a diamond traceability certificate — this is the Aura diamond traceability committee we are putting together with our jewellery brands. Once we go live with that over the next few months, you will be sure where the diamond has actually come from, and also the grading of the diamond.

BoF: What share of goods made by Aura’s members are already on the blockchain?

DO: What I can say is that we have double-digit millions of products on the blockchain.

BoF: Is the ambition to eventually reach 100 percent of products?

DO: That’s my end ambition, yes. I think every physical product needs a digital twin. I’m absolutely convinced about that.

BoF: Do these digital twins enable a new type of relationship with customers, or is it more about enhancing the methods brands were already using?

DO: It’s definitely a new relationship. It’s on a different level, that kind of traceability which you can actually have from the beginning of the value chain down to resale. Having an authenticity certificate is new, having all these certificates in one place, being able to directly communicate, this is a whole new level of touchpoint. Especially for young consumers, authenticity and traceability are a must, so if [they’re] a must, how do you get that in a cost-effective way to a large number of products? We couldn’t do that before.

BoF: For the product passport ecosystem to work well for consumers, it’s important to maintain a certain degree of compatibility, but what about the actual interface? Will there be any sort of standardised interface for all goods on Aura, or will individual brands each launch their own app or site?

DO: Aura will be a non-profit, so our aim is always to be agnostic. If you want to show the information via an app or a website, this is really up to the brand to decide. I think most brands will integrate it into their own storytelling. It’s important that it’s the voice of the brand.

BoF: Could that storytelling be enhanced through blockchain, particularly around raw materials or production, by adding photos or video for instance?

DO: What’s really nice about blockchain is that you can put really high [quality], rich data on it in terms of videos. I have this dream that you can actually see the person who manufactured the watch or the person who manufactured the bag. The nice thing about it is this is not just for the first 10 customers. If I pass it down to my daughter, maybe she will be able to see that as well, or in resale.

BoF: What about the transparency aspect? Are luxury brands ready for the level of scrutiny into the environmental and social impact of their products that comes with showing a product’s history at a very granular level, going back to the raw materials?

DO: In luxury, I think this is less of a question than in premium or other sectors. One of the limitations is if you don’t have a good relationship with your suppliers, or if you don’t have the information, it doesn’t help you to have a blockchain. It’s not a magic wand which just makes it all good. You must know your suppliers down the line and then you can ask them to put the information on the blockchain. If they put false information on the blockchain, it’s still going to be false and the blockchain doesn’t help you anyway. It’s garbage in and garbage out.

BoF: A customer of Hublot can see their watch’s information and e-warranty simply by taking a photo through an app. Is that going to be the model for most goods, or will some require physical markers like QR codes or NFC chips?

DO: We are agnostic. AI image recognition, which we are a big believer in, I think will work for perfumes. How are you actually going to recognise each perfume bottle? Because that’s quite tricky, and it’s really about the light when you take this picture of that bottle. This is the same for buying spirits. For watches, it’s AI image recognition. For clothing, I think it’s more QR code. For accessories like a bag, it’s easier to put a chip in. For precious carpets, we are looking at an NFC tag. There are these different tagging solutions, and it depends on the product itself.

BoF: One of the main advantages of using blockchain — and indeed one of the main motivations for competitors to unite around this technology in the first place — is that it can give shoppers an easy way to verify authenticity. But some consumers knowingly buy fakes for their lower cost and counterfeiters continue to get more sophisticated in the ways they dupe shoppers, like some who have sold fake bags complete with fake NFC tags. Is the arms race between counterfeiters and luxury companies just going to continue, no matter what Aura does?

DO: I would say especially QR codes, that’s probably the easiest, because you literally can cut it out. For a tag in a handbag, you literally would need to destroy the handbag. The beauty of having a consortium is that we have the time to vet these different solutions or actually invest in some of the solutions, advance them further and try them out at separate brands. I think the technology which we are investing in will always be more advanced, but definitely there are things to take account of.

BoF: What new developments are there around the corner?

DO: We are going live very soon with Aura Light. We signed on a few members, which we will also announce over the next few months. We are also working on our NFT platform, which we hope will go live in a few months.

BoF: What is Aura Light?

DO: Aura Light is sort of our plug-and-play. The [membership] fee is much lower. Our standard [version] you can actually customise much more, so that is more for larger brands. The APIs and the [software development kits] are pretty much the same, but for Aura Light we have, for instance, landing pages which are available and the whole process is much easier. We actually manage the cloud for you.

BoF: Aura has been signing new companies up, but others remain hesitant to join. Two big names that remain absent are Kering and Chanel. Why is that? Are brands concerned about revealing sensitive information, such as their suppliers, to competitors, or do they see creating their own product passports as a competitive advantage if their system is somehow better?

DO: Given that blockchain is so new, we don’t have ROI figures as such yet. If you want to have a quick ROI, it’s definitely a digital product, because that gives you additional revenue. When I say digital product, that can go either from digital collectibles like NFTs or virtual products. In terms of how much more you’re selling because you can provide a certificate of authenticity, ownership, a diamond traceability certificate, I think that will still take a little bit of time to have an ROI.

This interview has been edited and condensed.

The sixth annual State of Fashion report forecasts that global fashion sales will surpass their pre-pandemic levels in 2022 thanks to outperforming categories, value segments and geographies, while supply chain headwinds will pose a risk to growth prospects. Download the report to understand the 10 themes that will define the state of the fashion industry in 2022 and the strategies to deploy to safeguard recovery and maintain sustainable growth.

BoF Professionals are invited to join us on Dec. 8, 2021 for a special live event in which we'll unpack findings from the report. Register now to reserve your spot. If you are not a member, you can take advantage of our 30-day trial to experience all of the benefits of a BoF Professionals membership.

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