Business

Family-owned conglomerate LVMH on how to innovate using the blockchain

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The fact that luxury brand conglomerate LVMH is about to come out of stealth with a proof of authenticity blockchain is interesting news in and of itself.

But it also shows how the Arnault family-owned business is choosing to engineer its own technology and innovate, rather than allow any third-party blockchain networks to court its brands in this respect (although this may have been a strategy early on).

Turns out LVMH has enlisted its own team of blockchain builders who for over a year have been working closely with the Paris-based hub of global Ethereum workshop Consensys and Microsoft.

According to a source involved in the project, LVMH questioned why it would allow third parties to position themselves between its brands and their partners – especially since blockchain is supposed to be a technology for eliminating intermediaries.

“This should be done in the form of an industry consortium rather than a third party actor coming into the marketplace,” says the source.

LVMH, which booked revenues of $53 billion in 2018 and owns household names like Dior, Dom Pérignon and Hublot, is not alone in looking at blockchain to track provenance and ownership of high-value goods – and the business has certainly been courted by blockchain technology providers looking at this use case in the past few years.

In terms of other luxury blockchain consortia, French startup Arianee is building something similar to LVMH’s AURA platform and boasts former employees and advisors from luxury brands such as Tiffany’s, Omega, Balenciaga and the Richemont group.

Arianee, which uses the same sui generis token standard — the ERC-721 which Ethereum core developers released — pointed to its own consortia building prowess with regards to the startup’s advisors at Richemont: a Switzerland-based family-owned holding company that owns Cartier, Dunhill, Jaeger-LeCoultre, Montblanc, Purdey, Vacheron Constantin, and Van Cleef & Arpels.

Given that LVMH intends to white label an industry solution and share the blockchain IP equally among competitors, one might expect some strategic collaborations further down the road with likes of Arianee.

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