How Blockchain helped a sneaker company to overcome counterfeits

Hello, Steemitians,

From last few days, I am very much into reading and discussing stuff about the blockchain technology and came to know about a very simple and interesting application of blockchain in the sneaker industry. Although it is centralized. But, it has been used beautifully to stop counterfeits.

Problem statement:

There is a parallel grey market industry of counterfeit products across the globe and a major chunk of these counterfeits belongs to sneakers(a type of shoe).

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How big this problem is?

Every year, counterfeit sneakers of worth almost $100 million were seized by U.S. customs alone. And this counterfeit is just like a bucket of water from a sea. Worldwide, fashion industry estimated to have ~ $600 billion industry of counterfeit products.

And as per US customs, about 40% of all counterfeit goods are sneakers which is about $240 billion loss to original sneaker producers like Nike, Adidas, Converse, and more.

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How it adds to losses of a company:

A company like "Nike" allocates a hefty amount for the R&D of a new type of shoe(product). Within few days of their launch of the new product, counterfeit also enters into the market which in turns make it. difficult for a company like Nike to churn out the kind of benefit they projected of. And sometimes, it takes years to compensate for the cost of R&D itself.

Traditional anti-counterfeiting technology:

It relied on two things

Manufacturing process:

The more complex the manufacturing process is, it makes it harder to counterfeit. And the process to counterfeit is also expensive. But, with the time, counterfeit also evolve and get to the position to make the counterfeit of these products. The mass production of these counterfeits then leads to the more and more revenue loss for the original company.

Material science:

To come up with altogether new kind of material with use of different types of machinery, so that it's difficult to counterfeit and even if people try to counterfeit, experts can easily tell about the counterfeits. But, it does not solve the problem as all individual shoppers cannot be an expert in identifying counterfeits.

Due to the counterfeit issues, sneaker industry was facing a big damage in terms of

Difficulty in getting back the money spent on R&D
And maintaining the trust of buyers that they are buying real things, not fake ones.

Yet another solution:

Sneaker industry came up with seals and authenticity certificates, but these can also be faked. So, this challenge still stays.

How blockchain solved this counterfeit issues?

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Satoshi Nakamoto's blockchain technology and bitcoin which can never be counterfeited gave a small company "Brooklyn-born Greats" a new idea to leverage this technology to stop counterfeits.

This company collaborated with two companies:
Chronicled: A fashion software authentication company and
Origin: a 3-D printing manufacturer company to design the smart tags for their new "Beast Mode" sneakers

In this, each pair of shoes was linked to 3-D printed smart tags that has a unique identifying code. Inside the smart tag, there is a small encrypted NFC chip which can be scanned by using your mobile phone.

This chip in the smart tag was baked into the shoes while 3-D printing, so it is impossible to detach this chip from shoes without destroying this.

What benefits Great got by implementing this:

A system in place by which they can track the status of every pair of the shoes, whether the specific pair of shoes has been sold out or not.
They maintain the encrypted sequence of codes which can never be cracked.
When a counterfeit product comes to the market, a simple phone scan can tell about its authenticity.

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And Yes, they defeated counterfeit for this product at a cost of few dollars/pair of shoes which was very less as compared to the damage made by counterfeit products.

How Blockchain helped a sneaker company to overcome counterfeits

Problem statement:

How big this problem is?

How it adds to losses of a company:

Traditional anti-counterfeiting technology:

Manufacturing process:

Material science:

Yet another solution:

How blockchain solved this counterfeit issues?