South Korean online shopping platform SSG.com, which is part of the Shinsegae department store chain, will begin issuing digital guarantees minted as non-fungible tokens (NFTs) for luxury products. The NFTs use the minting platform on the Klaytn blockchain, developed by GroundX, a subsidiary of the largest Korean social network Kakao.
Purchasing luxury items online comes with a series of risks, particularly about whether it’s authentic.
Digital warranties give customers additional peace of mind when purchasing luxury brands. It can also provide the purchasing history, warranty period, and other item information. In the case of SSG.com, the warranty card includes the item’s serial number and is sent to the customer’s smartphone.
For luxury brands, digital warranties help combat counterfeits. If these solutions become the norm in the industry, items without a guarantee as an NFT are likely not authentic, which will enable consumers to choose legitimate items.
SSG provides guarantees on 5000 products across 90 brands and it expects to support another 5000 before the end of the year. The guarantees have been issued to franchises of luxury brands on SSG’s online store and to some parallel import sellers.
According to SSG, parallel import sellers, which import from another country without the direct permission of the brand, are verified. However, it is unclear how that process is managed.
Meanwhile, luxury brands have formed consortiums to adopt digital warranty solutions and address counterfeit challenges in the industry. Arianee, a blockchain alliance that includes Breitling and Vacheron Constantin and creates digital passports for luxury goods, recently raised €8 million in a seed round. In addition, luxury blockchain consortium Aura, founded by LVMH, recently expanded to include Prada and Cartier.
