We’ve already discussed the fascinating possibilities and applications of blockchain technology within the fashion industry. Blockchain will not only help make the industry more transparent and sustainable but rather, will do wonders in the elimination of the multi billion dollar industry that is the counterfeit business.
One of the main perks of decentralized and open ledger technology is more transparency in supply chain processes and decisions for both brands and consumers. However that may not be all blockchain can do for fashion!
This technology might just use it to police the elusive gray market, which in all honesty might not be such a bad thing for many brands and ever since the idea was first discussed in an article by The Fashion Law, we set out to do a little digging of our own!
A gray market can be defined where products from one market are bought in bulk and sold in another geographical or economic location with no permission from the owner of the trademarked brand. This is still a serious issue in the fashion industry as not even legislation has been of much help to manufacturers like Levis who fought a case against UK wholesale giant, Tesco way back in the late 1990’s.
Levis filed a legal notice against Tesco on the grounds that not only was this an obvious violation of European Trademark laws but also undermined the reputation of the brand. However, soon after, the ET stated that this was completely legal and it wasn’t until 2016 that gray markets were made illegal in the EU.
In America however, brands like Dermalogica have had much less luck in this fight as no concrete legislation has been produced but cases such as these have opened up some room for discussion and these prolific examples have encouraged quite a few brands to be more proactive and at least put up a real fight against gray marketing.
That’s where the wonders of blockchain technology come in! The efficient monitoring of supply and distribution-chains is perhaps the best examples of why the fashion industry needs blockchains. However, it would be naive to think that everyone will hop on aboard the blockchain express, as many might be working on quite the opposite side of things.
Not every brand might have a problem with the gray market.
The other side of the argument is completely ignored at times. As per a report by The Fashion Law, many brands are ignoring the idea of a gray market when their authorized dealers and retailers sell products at skimmed prices for stock that would have to be destroyed if not sold because well, it’s good business. Or even the fact that some businesses are even secretly selling their own products to gray market sellers and reaping in the millions and millions of dollars that come with it.
All in all, the idea of a gray market is actually quite ingenious as it benefits brands that ‘secretly’ engage in this act. So, the question remains. Why does no one own up to it?
The easiest answer to this might be because this way, brands not only continue making profits based on legal goods but also have an increased sense of control over a sort of black market side business without actually showing any support for it.