#42 - LVMH in Web3: Bringing Your Handbag to the Metaverse

A Case Study of Digital Collectibles for the Everyday Consumer

Jun 10, 2024

Stanford Blockchain Review
Volume 5, Article No. 2

📚 Author: Jay Yu - Stanford Blockchain Club
🌟Technical Prerequisite: Low

This article focuses on LVMH’s projects as a case study for Digital Luxury. To understand more about the overarching trends in the Digital Luxury space, please view my sister article here.

Many thanks to Nelly Mensah, Global VP of Digital Innovation at LVMH and Stanford alumna, for our conversation in March 2024, and for her insights and feedback on this piece.

Introduction

Cover Image: NFTiff Pendant. Source [1].

In the summer of 2022, LVMH made a splash with the NFTiff Pendant, a first-of-its-kind limited edition pendant featuring the iconography of Cryptopunk NFTs. Tiffany & Co. minted a collection of 250 digital passes as part of the NFTiff collection, which were able to be purchased and redeemed by CryptoPunks holders for a custom pendant crafted by Tiffany & Co. with the iconography of the holder’s CryptoPunk [2]. Within each crafted pendant, there are at least 30 gemstones used, including Sapphires, Amethyst, and Spinel, and made with 18k rose or yellow gold, depending on the specific color of each CryptoPunk [2]. With its custom-built design and exclusive offering to Cryptopunk holders, the NFTiff was a daring step towards a whole new world, where luxury fashion intersected with an icon of crypto culture.

Yet, the shiny announcement of the NFTiff is only the tip of the iceberg when it comes to LVMH’s experimentation and innovation in the web3 sphere; behind the scenes, the luxury conglomerate has taken huge strides to reinvent the concept of “digital luxury.” In this article, we will explore a wide range of LVMH’s web3 projects, from the development of Digital Product Passports on the luxury-focused Aura blockchain, to 3D “Digital Twins”, to co-creation communities and beyond. In this process, we will discuss how the conglomerate has expanded their luxury empire into the metaverse, and what this might look like for the consumer of the future.

Digital Product Passports and Aura Blockchain

One of the biggest trends in the digital luxury space is the rise of “Digital Product Passports.” As part of a new sustainability law, the European Union has introduced a Digital Product Passport mandate for all durable consumer goods, with the aim to improve supply-chain traceability, enhance product authenticity, and create a more sustainable consumer economy [3].

Essentially, a “Digital Product Passport” is a digital “identity card” for a given consumer product, created as an NFC chip or QR code embedded in each consumer product that can link to online information about the product’s supply chain details, provenance, and attest to its authenticity. And blockchains, both general-purpose public blockchains such as Ethereum or Polygon, and enterprise-focused permissioned blockchains, have emerged as a major way to implement this Digital Product Passport mandate.

In 2021, LVMH co-founded the Aura Blockchain Consortium with brands such as Mercedes-Benz, Prada Group, and Cartier to create the luxury-specific Aura blockchain. One of Aura’s missions is to create Digital Product Passport NFTs for its member brands and other well-known luxury retailers [5].

“Here’s how [Digital Product Passports] work in practice. A designer handbag is fitted with a QR code as it leaves the warehouse destined for the store. As well as a QR code, any other type of authentication technology could be used, such as an NFC chip.
When someone buys the bag, they scan the QR code on the item, claim its ownership, easily certify its authenticity and access all of the product information. The certificate of authenticity lasts forever and will always be available digitally. The owner has full control of their data. If they later want to take it back to the store for maintenance, they can prove that the bag hasn’t been found or stolen by demonstrating ownership via the Aura Blockchain Consortium platform. Similarly, bags sold on the secondary market are instantly verified as genuine, obviating the need for checks, and enabling simple transfers to the new owner to ensure they have the same access as the previous owner to the information about the product.”
–– Aura Blockchain Consortium, cofounded by LVMH. Source [5].

On the backend, the Aura Consortium maintains the Aura Multi-Token Minter (MTM), which is a platform that allows brands to mint and distribute tokens across multiple blockchains. These tokens include Ethereum ERC-721 standard Non-Fungible Tokens (NFTs), Soul-Bound Tokens (SBTs), Proof of Attendance NFTs, and more. Moreover, since the MTM uses Ethereum ERC-721 and ERC-1155 standards in its minting process, Digital Product Passports and other token assets can be minted across multiple blockchains, from permissioned blockchains such as Aura to public blockchains such as Etheruem and Polygon, with all of the metadata of the Digital Product Passport stored on IPFS [6].

Dior B33 Digital Product Passport. Source [7]

An example of Aura’s Digital Product Passports in action is Dior’s B33 Sneakers. Each pair of these sneakers comes with a DPP that acts as the shoe’s certificate of authenticity, allows the user to gain insights into the shoe’s manufacturing process, and enables the user to receive exclusive updates about Dior’s upcoming sneaker releases. Aura’s Multi-Token Minter implements the B33 Digital Product Passport as an ERC-721 token on Ethereum [8].

Digital Twins as a Medium for “Savoir Faire”

LVMH’s vision for web3, however, doesn’t just stop at Aura Blockchain’s Digital Product Passports. One of LVMH’s goals in the space is to use “digital twins” as a medium of “savoir faire” to convey the historic craftsmanship for each of their luxury brands. This digital storytelling is increasingly important in the context of younger generations, as their first point of contact with a brand is often through digital venues, such as on social media or on a brand’s website.

This is part of the rationale why in June 2023, LVMH announced a partnership with Epic Games, the creator of Fortnite and Unreal Engine, to transform the maison’s creative pipeline with cutting edge rendering technology [9]. From digital twins to virtual fashion shows and 360 product carousels, this strategic partnership will allow LVMH to continue to apply their brands’ storytelling expertise with this new medium of digital collectibles.

Bulgari’s “Beyond Wonder” Digital Jewel

One pioneering example of a “digital twin” is Bulgari’s 2022 NFT jewel series. This series contained two multi-million euro necklaces, the “Magnifica Ruby Metamorphosis” and “Emerald Glory” necklace, both of which give the buyer a physical product and a NFT “digital twin” [10]. In addition, this collection also featured a third not-for-sale jewel called “beyond wonder” which Bulgari claims to be the first pure NFT jewel [10].

Bulgari 2022 NFT Jewel Series. Source [11].

Curated by Japanese artist Azuma Makoto, who is known for his experimental floral and botanical art, the immaculate creative setup of this jewelry collection shows how Bulgari seeks to convey the idea of high luxury within the digital sphere while embracing a spirit of innovation. One of the core ideas behind “Beyond Wonder” is to create an intangible form of art that transcends material boundaries. Thus, this collection powerfully conveys Bulgari’s brand as a bold innovator in high-end luxury that seamlessly blends together heritage with innovation.

Louis Vuitton’s VIA Program

Another more extensive experiment of “digital twins” is Louis Vuitton’s VIA program. In June 2023, Louis Vuitton introduced its VIA program with the debut of its “VIA Treasure Trunk” [12]. Collectors were invited to purchase a $42,000 non-transferrable digital collectible of the iconic LV treasure trunk, which served as a soul-bound token recording membership in the VIA program [12].

Louis Vuitton VIA Treasure Trunk Website and OpenSea page. Sources [13] [14]

Owners of the VIA Treasure Trunk could then participate in exclusive VIP events, for which they also received Proof of Attendance NFTs. This membership token also enabled them to purchase transferable “digital twins” of subsequent physical products in the program, with all of these collectibles being available to sell on secondary markets [12].

Louis Vuitton VIA Products. Source [12] [15] [16]

Over the past year, there have been several products released in the VIA program. First, in July 2023, LV released an exclusive Pharell Williams’ orange monogram “Speedy 40” bag, where the orange colorway was only available to VIA Trunk holders [15]. Next, in November 2023, the maison released a mini-trunk designed by Nicolas Ghesquière for the Spring/Summer 2024 runway, the “VIA Tile Trunk” [16]. Most recently, in April 2024, the program released a third item, a Western-style varsity jacket that appeared on LV’s Fall/Winter 2024 runway [12]. This jacket also marks the VIA program’s first ready-to-wear garment, reimagined as an NFT from the brand. Thus, through the VIA program, Louis Vuitton is reimagining the digital luxury experience, using token-gating as a mechanism to convey a sense of digital exclusivity and brand loyalty.

Hennessy Café 11

Another exploration of brand loyalty is in Hennessy’s Café 11 project, which has sought to create an exclusive community-curated loyalty program. Inspired by the freethinking Parisian cafe culture of the 1920s, Café 11 seeks to curate novel cultural experiences for a digital-first community. This includes communing with artists and cultural icons, attending exclusive in-person events, and a novel culinary experience [17].

Partnering with the Friends with Benefits DAO, Henessy allowed members of this online community to participate in its creative process, working with New York artist Johnsville to reimagine the iconic Hennessy V.S.O.P. Bottle. Participants in Café 11 were also invited to curated events, such as at Miami Basel 2022 [17]. Thus, Hennessy’s Café 11 may be considered an early experiment of a “Cultural DAO,” where the token-gated community itself becomes a collective of cultural change-makers that take part in shaping a brand’s future.

The Vision of Digital Twins

So, what is the overarching purpose for LVMH’s introduction of digital twins and these web3 community programs? Because there are a wide variety of brands, with everything from handbags to shoes to beverages, there does not really exist a one-size-fits-all method to implement “digital twins” and other metaverse ideas across the board. But there are a few general principles that hold, which provide the rationale for LVMH’s move into the metaverse [18].

For many of LVMH’s products, their value greatly depends on their social symbolism as items of prestige and luxury. This is why there is a consistent emphasis on using these digital tools, such as Unreal Engine, to convey a sense of artisanship and “savoir faire”.

But more importantly, these digital collectibles augment the physical experience of a brand. Many of these experiments, such as LV’s VIA Treasure Trunk or Hennessy’s Café 11, enhance the social experience of luxury for these brands; they connect end users with both the world-class designers and artists behind these brands, as well as with each other. While becoming digital is key to innovating the client journey, we as humans are always naturally drawn towards the fully-immersive nature of physical products, particularly for inherently social luxury products. Thus, what these digital collectibles ultimately seek to do is to bring the client back to the physical, back to the social and experiential nature of these products.

Conclusion: Bringing Your Handbag to Web3

Throughout history, one of fashion’s core traits is that it is a trendsetter and distribution channel, one that can integrate once-fringe products and subcultures into the mainstream – sometimes without even consumers realizing. It is very plausible that in the near future, blockchain technology, such as NFTs and crypto wallets, will be so seamlessly integrated into retail applications that consumers will barely notice the innovation in the backend tech.

So what might the future of “digital luxury” look like, to the everyday consumer of the future?

Louis Vuitton App Screenshots on Google Play Store. Source [19].

Take the Louis Vuitton app, for example. Imagine that in the future, all the handbags displayed here on the digital store are actually represented as NFTs on the backend. When you go and select a bag to buy on the app, you actually connect to a digital wallet in the app. After the purchase, you automatically purchase the product’s “Digital Twin,” an AR-animated digital collectible that you can display, perhaps even show off in a metaverse game or social media platform. When you go to a retail store, showing this digital collectible will allow you to redeem the physical item, as well as be eligible for customer care and other loyalty experiences – such as product shows or co-creation programs.

To take things even further, the “myLV” panel in the app could be technically realized in the future as a noncustodial crypto wallet, where the private keys are stored on your local device and protected by FaceID and other biometrics. Your purchase collection in the “myLV” panel consists of all the “Digital Twin” NFTs to your previous purchases. You can click to view the Digital Product Passport to each one, as well as transact them on second-hand markets with any user that has a crypto wallet through a QR code.

Crucially, all of this integrated wallet UX is possible with current blockchain infrastructure through Wallet-as-a-Service providers. And as these technologies gain greater adoption, perhaps most end-users may not even realize that NFTs and blockchain technology are being used on the backend. One day, at a family dinner, a distant aunt or cousin may just say, “Hey look, my LV handbag is on my phone!” without any idea that what they’re holding up is an NFT.

And perhaps that is the instant when blockchain technology breaks into the mainstream.

About the Authors

Jay Yu
Jay, or 0xFishylosopher, is an undergrad at Stanford pursuing a double major in Computer Science and Philosophy. He is President of the Stanford Blockchain Club and founder of the Stanford Blockchain Review. He is currently researching designs for Decentralized Autonomous Organizations (DAOs) and blockchain governance with Stanford Law School faculty. Previously, he worked on research and investments at Pantera Capital.