The 4 factors that are accelerating adoption of digital IDs
Why more and more brands are connecting their products?
Fashion, luxury, sports, and casualwear companies are rapidly adopting smart tagging solutions for their products. Leading brands, including Armani, Versace, Nike, Diesel, and Zara, have already implemented this technology. Many are deploying solutions across their entire product portfolios, driven by consumer demand for product transparency, the growing resale market that requires aftersale connectivity to scale, and upcoming regulations that will make digital IDs mandatory in Europe within the next 5 years.
According to a 2020 study¹ conducted by SDA Bocconi in collaboration with Certilogo and BeSight, 36% of companies have already explored tagging solutions to connect their products and exchange information with their customers. The smart connected clothing market is expected to grow by €2.7B at a CAGR of 14.84% from 2021 to 2026.
Certilogo has witnessed an increase in the number of products connected of 39% between 2019 to 2021, while engagement with connected products over the same period has increased 169%².
What is a connected product?
Connected products are physical objects that are linked to the internet, allowing them to communicate information about themselves, their environment and users. They have a unique digital identifier that can be read by digital devices via digital markers such as NFC tags or QR codes. This allows the product to be identified, authenticated and traced while providing access to its digital ID for information and services.
By connecting analog products to the internet, they become smart digital assets that can be integrated throughout the entire omnichannel consumer journey and circular product lifecycle. Connected products represent the final piece of fashion and luxury's digital transformation puzzle. The digitisation of the product itself.
Four factors driving connected product adoption
1) Expanding applications
Connected products have come a long way since their initial use in preventing counterfeit products. Today, brands leverage also digital IDs to trace products, optimise supply chains, improve sustainability, and enhance customer engagement. By combining various connected product strategies, brands are increasing their return on investment in digital IDs. As a result, the greater the number of brands that are recognising the relevance and benefits of connected products to their business needs, the more rapidly the ecosystem of connected products expands.
2) Consumer expectations
Connected products meet the rising expectations of modern consumers by providing instant access to information and services when they need it the most. With the advancements in smartphone technology and the widespread use of QR codes, consumers are more likely to connect to their products.
Authenticity is highly valued by consumers who are mindful of the risk of counterfeit products, especially when purchasing online. By offering authentication, consumers feel more secure in protecting their economic investment in luxury items and ensuring sustainability, performance, health, and safety. A new generation of consumers expects brands to be transparent about a product's origins and value the support they provide in reselling the product.
One important thing to note is that the growth of connected products is mainly due to Gen Zs. These are, in fact, the consumers who, more than anyone else, expect products to give them access to information, personalized content, and phygital experiences.
According to Verizon, 95 percent of Gen Z owns a mobile device. This is therefore the first generation to live from birth in a world of mobile devices and social media. It is the most connected generation ever. Adding to this is what McKinsey reports, that for Gen Z "products become services and services connect consumers." Gen Z expects personalised products and omnichannel sales and marketing. They also want transparency and traceability to make sure that what they buy is in line with their values. These are all needs that companies can meet through connected products.
3) Digital Innovation
New technologies such as Blockchain, NFTs and the Metaverse are driving experimentation with online experiences and even the sale of intangible digital fashion products. Adidas’ recent partnership with Bored Ape Yacht Club, a collection of illustrated monkeys sold as NFTs, gave owners access to both physical and digital experiences. Similarly, Forever 21 has created a game that enables players to open a Forever 21 store in the metaverse. In the gaming world, Fortnite, with an almost €6B average annual revenue is effectively one of the world's largest fashion retailers, with all of the products sold being digital.
Connected products represent an exciting opportunity for brands to use their products as an exclusive access key to the growing field of digital fashion, enabling value to flow between the digital and physical worlds.
4) Regulatory pressure
Leading fashion brands are proactively adopting connected products as they anticipate future regulations that will mandate their use. The EU’s circular textile strategy places the Digital Product Passport (DPP) at the centre of its initiatives. The DPP is a digital certificate that provides comprehensive information about a product, including its supply chain and lifecycle, from raw materials to disposal. The fashion industry is identified as one of the next product categories that will require Digital Product Passports, with guidelines expected in 2023 and legislation shortly after. Other regulations such as the INFORM Consumers Act and The SHOP Safe Act in the USA will hold brands liable for protecting consumers and the environment by limiting the sales of counterfeit and stolen products in online marketplaces. As a result, authentication will become a standard feature and essential to meet these measures.
If you want your company to adopt connected products, all you have to do is contact us. Here at Certilogo we have everything you need to unlock the true value of your products.
