Lars Rensing, CEO of enterprise blockchain and Web3 solutions company Protokol, give his thoughts on how luxury brands are joining the resale race:
Thrifting, upcycling, reselling; the global luxury resale market is currently predicted to reach US$51.77 billion by 2026, having been valued at US$32.61 billion in 2021, and with growth rates outpacing the wider luxury market.
In fact, a recent study from Bain predicted that by 2030, resale could provide 20% of a modern luxury brand’s revenue. This is no exception in the luxury watch space: the second-hand watch market is expected to grow to $30 billion (£22 billion) by 2025.
Luxury brands are already beginning to explore the resale market to find new ways of expanding their offerings, open up new revenue streams, and reach untapped demographics.
For instance, Cartier launched its Vintage initiative in 2021 to restore and sell classic Cartier watches. With resale on the rise, luxury watch brands are racing to provide solutions which cater to changes in consumer perceptions and buying habits, without compromising on product authenticity and brand values.
Understanding customer concerns
The growth in resale markets is largely due to four main perceptions amongst increasingly conscious consumers. These customers see resale as: a convenient, sustainable replacement for fast fashion; an opportunity to acquire luxury goods at more affordable prices; a means to feed their interest in vintage style; and a new form of investment.
Any new solutions from brands, then, need to address these consumer concerns, and allow buyers to verify the history and legitimacy of their timepieces.
One of the main ways that some proactive luxury goods and watch brands are addressing these concerns and taking advantage of resale markets is through the use of digital ‘product passports’.
These passports both track a product’s sustainable credentials and tackle counterfeiting by proving authenticity of an item by creating a ‘digital twin’ – a completely digital version of a real-life item that holds real-time data relating to each individual product.
By underpinning these passports with technology like blockchain, watch brands are providing tamper-proof records of a product’s journey, ensuring full traceability and transparency of an item as well as a quick and easy way to validate items’ legitimacy and details of ownership.
As blockchain is transparent by nature – all parties authorised to view the information stored on the blockchain, from suppliers, to manufacturers to customers, can see the transactions and history on it.
What this means is that Digital Product Passports can allow customers to access data related to the origins of the product they’re buying, such as raw material origin, component sourcing and supplier networks, all of which is captured on the blockchain.
This verifies that sustainability criteria and ethical standards were met in both sourcing and manufacturing, meaning environmentally conscious consumers can be sure they are buying a sustainable product. For brands, this is an extremely important tool to help build trust with their customers.
Not only this, but digital product passports can record all timepiece lifecycle events, such as repairs, services, and upgrades. This is what Breitling are doing with their product passport solution. Even original warranty information or manufacturer guarantees could be stored and easily accessed via a mobile application for product passports, giving customers further proof of the product’s origins and condition.
This means that customers verify that the product they’re buying is an authentic item, preventing fraud or counterfeits, protecting both customers and brand reputation. When it comes to the ability to resell these items, this verified audit trail of both source and condition is an invaluable addition — not to mention that ownership data is both viewable and transferable quickly and easily via blockchain technology.
Taking resale to the next level
Luxury watch brands are also taking their offerings in the resale market one step further by using NFTs – unique tokens stored on the blockchain – to offer customers exclusive rewards, experiences and collectibles that can be traded or resold.
Millennials and Gen-Z’s are becoming increasingly influential customers within the luxury space, and as a result many brands are seeking to engage these customers in areas where they are already showing interest and utilise innovative concepts such as NFTs and the metaverse to shape their customer experience; these younger audiences are digital natives, and often expect these kinds of online opportunities from brands.
For instance, Bulgari announced that it is launching an exclusive watch that will have a QR code engraved in it. This code, when scanned, gives the purchaser access to a unique NFT. Attaching NFTs to products in this way can give luxury brands a new way to engage younger audiences, as well as potential new customers who also wish to resell NFTs or see them as a form of investment.
At the same time, luxury brands can use NFT technology as a gateway to engage new customers in the metaverse, a type of digital universe. By pairing experiences in the metaverse with exclusive NFTs and digital collectibles, the luxury industry can further harness their digital native audience.
These NFTs also give brands an opportunity to engage with resale markets within the metaverse, such as gamers who might sell on ‘wearable’ NFTs from luxury brands, which their avatars within popular games can wear. This gives brands access to even wider-ranging audiences and potential customers.
Not only does the NFT resale market benefit customers’ pockets, but luxury brands can set up their NFT offerings so that they can get a cut of the future sales of NFTs. For example, when Gucci launched Gucci Garden, a virtual exhibit where customers could buy exclusive digital collectibles, once the exhibition ran out of NFTs, buyers began to put them up for auction again.
This meant that prices rose; one of the NFTs even resold for $4,100, $700 higher than the retail price of the real-life version. Brands could take advantage of this new audience of NFT resellers by building in a percentage cut on any further NFT sales following the original purchase by the customer, opening up a new resale market for brands while simultaneously engaging digital native audiences.
Resale markets are only going to continue expanding, and brands can look to harness this opportunity. The attitudes and priorities of consumers will always change. By tapping into available technology to meet customer demands, luxury watch companies will not only successfully engage their customers, but open up new revenue streams to continue growth in the years to come.