Recently, Nike received a patent from the US Patent and Trademark Office to tokenize shoe ownership on Ethereum.
The patent will presumably allow users to exert more control over their shoe and shoe design. Owners will get exclusive rights to control the number of copies of their proprietary shoes that can be cloned and produced. Owners can also grant rights to third parties to mix shoe design.
The Token will be unlocked with the purchase of a corresponding physical shoe by linking a 10-digit shoe identification code with the owner identification code. The system apparently aims to provide a way to ensure authenticity of the goods. The move to tokenize the shoe comes after Nike reported a 22% rise in its quarterly revenue from China in September 2019.
In August 2019, Chinese news site Xinhua.net reported that secondary shoe trading platforms are gaining traction in China, where buyers can buy and resell these limited-edition shoes to pocket the difference.
“For global consumers, trustworthiness is must with authenticity, honesty and loyalty ranking in their top 10 values.”, as observed in Gartner’s Consumer Values and Lifestyle Survey 2018.
Counterfeit is a big challenge for all brands. In October 2019, U.S. Customs and Border Protection Agency seized 14,806 pairs of fake Nike and Jordon sneakers including Off-WhiteTM x Air Jordon 1, Air Jordon 12, Air Jordon 1, Air Jordon 11 and Air Max 97. If the shoes had been genuine, they would have had a combined retail price of $2.3M.
This is not the first time Nike has gone the extra mile to ensure that consumers received authentic Nike products. One of the reasons to end the pilot with Amazon was also the presence of counterfeit products being sold on the platform.
The activewear industry is advancing at the speed of light as compared to the traditional fashion industry. The industry has witnessed many collaborations between fashion and activewear brands like Adidas-Prada and Nike-Dior. Tokenization initiative will help Nike ensure that its limited-edition products are not cloned, while the added authenticity would also help in strengthening brand loyalty.