IoT-Connected Collectibles and Consumables (S1:E14)

April 21, 2022

Worldwide annual sales of counterfeit goods are expected to total a staggering $4.2 trillion this year. Fear of fake products undermines confidence in brands. Lukasz Bulawski, Head of Product at collectID, joins us to talk about how brands can use NFC technology to transform authentication, anti-counterfeiting, and consumer experiences, and touches on what is next for the metaverse and NFTs.

Full Transcript

Speaker 1 (00:00): You are listening to Humans in Tech. Our podcast explores today's most transformative technology and the trends of tomorrow, bringing together the brightest minds in and outside of our industry. We unpack what's new in physical access, identity verification, cybersecurity, and IoT ecosystems. We reach beyond the physical world, discuss our digital transformation as a species, and dive into the emerging digital experience. Join us on our journey as we discover just how connected the future will be, and how we will fit into that picture. Your host is Leigh Dow, VP of global marketing at Identiv. Leigh Dow (00:43): Thanks for tuning in. I'm joined by Lukasz Bulawski, head of product at collectID. So glad to connect with you, Lukasz. Lukasz Bulawski (00:50): Thanks for having me today, Leigh. Leigh Dow (00:51): Absolutely. Today, we're talking about anti-counterfeiting technology. According to OECD data, 2022 worldwide annual sales of counterfeit goods is expected to total a staggering $4.2 trillion. Fear of fake products really undermines consumer confidence in brands. It makes it really difficult to sell items on a secondary market. And collectID really solves for this problem by combining blockchain with the Identiv NFC technologies, and providing a complete product authentication ecosystem. So Lukasz, can you tell us how the collectID ecosystem works? Lukasz Bulawski (01:29): Sure. CollectID solves the problems you describe, exactly as you said, by combining blockchain and the IoT to provide what we call a secure product authentication ecosystem. The way it works is that products get equipped with secure NFC tags supplied by Identiv, which provide a unique message that changes with each interaction, which effectively makes it impossible to duplicate the tag. This creates a dynamically encrypted and unique identity for each product. This identity is then tokenized, assigned to its owner, installed immutably on the blockchain. And thanks to the immutability of the blockchain, our ecosystem is a truly tamper-proof solution that removes the financial incentives and scalability of selling counterfeit products. Once product is equipped with our tag, users can check the authenticity with a simple tap of their smartphone, and then register the ownership of a product via our mobile app. Products then appear in users' personal blockchain back wallets, where they can build their own collections. This makes also aspects like test prevention and insurance processing cost efficient and easy. On the other hand, brands can also place their messages directly on the product and increase customer engagement by extending the shopping experience. Additionally, for the first time in the history brands can also earn money from the secondary trading, as our system enables for a share of the profits to be split between the users trading the products and the brands itself. Brands also receive detailed data and analytics about the resale markets and their customers. So in other words, and in summary, brands can turn their product into a communication and sales channel, all while guaranteeing the authenticity of the product. Leigh Dow (03:25): I love the marketing data and analytics. As a marketer myself, we're always trying to get better insight into the customer experience, what they're interested in, and giving them a more authentic brand experience. Lukasz Bulawski (03:39): Glad to. Leigh Dow (03:40): Yeah. Identiv recently expanded the partnership to enable product authentication, verification, and a connected consumer experience to collectable football, aka soccer, jerseys via embeddable NFC life-of-garment tags. One use case is Atletico Mineiro. Can you tell us a little bit more about that and what makes it so unique? Lukasz Bulawski (04:00): Atletico Mineiro, the current Brazilian football champion, created a one-of-a-kind fun engagement with collectID and Identiv technology. The club equipped their 114th anniversary jersey with our tags. And while the new jersey was internationally recognized as the most significant sports-related release in 2021 in Latin America, there were 120,000 jerseys and they were sold in the matter of days. Because of our technology, every jersey became truly unique and is safe against any form of counterfeiting. And fans receive not only a physical product, but also a digital version as an NFT directly onto their smartphone. In addition, Atletico Mineiro can communicate directly with fans via the jersey and provide them with additional content, such as match highlights or visuals. For the purchases of the jersey, that means that the jersey becomes even more valuable as its uniqueness and authenticity are immediately guaranteed. So Atletico Mineiro even calls it, they don't even call it a digital jersey, they call it a living jersey, because the NFC technology allows them to always add a new feature, new content, new coupons in the special areas. So the jersey that fan received in 2021 will be actually a different jersey in 2022, when you look from combined physical and digital experience. Leigh Dow (05:33): That's really interesting. I didn't know that. I didn't know that it was continuously updating the content and the experience. These particular embedded NFC tags feature the highest security level based on NXP NTAG 424 DNA chips. The design of that really makes it easy for integration into jerseys and other clothing, and it can really withstand a rigorous wash and dry cycle. So obviously, they're great for anti-counterfeiting and verifying proof of ownership. They really provide that personalized experience that you were talking about with each interaction, and really draws the brand and the consumer much closer through each of those unique digital experiences. Are you seeing that more brands are lining up to build that type of authentication and experience ecosystem? Lukasz Bulawski (06:18): Definitely, yes. We've been always strong at sports, but after the success of the Atletico Mineiro project, there has been a number of additional clubs and organizations from different sport industries that got even more interested in our technology. In football, we have just launched projects with a few Bundesliga clubs. They are especially interested in using our technology for communication with fans, and to turn the physical jersey into a digital living jersey, just as Atletico did. We are currently also in discussions with a few larger names in the football industries which are in interested in doing just the same. But this is not only fan communication, not only marketing, there are actually physical, I would say physical, use cases for that. We are just testing a solution with one German football club where the owner of the jersey will be able to connect their season pass with the jersey. So just by walking through the entry gate to the stadium, they will be able to enter it without the need to scan any additional ticket. Just recently, we have also started working with our first client from NHL, Nashville Predators, on the launch of their limited addition jersey that marks the retirement of their goalie, Pekka Rinne. Their e-jersey also contains our tag, allowing fans to register the ownership, with a key highlight being to unlock exclusive content from Pekka's career and get further updates from the franchise later on. In addition to that, the history of the jersey, including a video of Pekka Rinne's number retirement ceremony, is stored immutably on the blockchain, making the jersey even more unique. But it's not only sports. We work with sneakers producers, fashion brands, and together with Identiv, we are currently working on a new solution for wine producers. Leigh Dow (08:22): So at Identiv, we're definitely seeing the demand for IoT-connected consumables and collectables. They're continuously increasing, especially in product authentication, and the personalized customer and consumer engagement. What new markets are you seeing open up in 2022, and where do you really see the most growth? Lukasz Bulawski (08:41): So as for the new markets that are still in the opening up phase, I think there are definitely watches and wine. In both of these markets, there are a lot of fakes, and a lot of business to win from providing authenticity for consumers, and for providing a stronger protection to brands. Both markets are also rather traditional. That means that on one hand, there is even more work required to build a suitable technology solution. But on the other hand, there is a lot to win for both collectID and Identiv. As for my growth predictions, I would say it's still sports and fashion. Here, especially, the popularity of metaverse will play a significant role. Imagine that you buy a jersey of your favorite sports club or a part of limited edition sneaker. You scan the Identiv-provided tag on the product. This launches a collectID experience. You register the ownership by adding the product to your collectID collection, and that enables you to wear it digitally in any metaverse you like, be it the one from Facebook, be it the one that Google will definitely build, or anything else. There's basically no limit to possibilities here. Leigh Dow (09:53): So when you're talking about the metaverse, when you talk about the metaverse and that convergence of having the physical, tangible jersey or whatever that item might be, let's say maybe it's a Chanel bag or something like that, you've bought that bag. And now what you're saying is that you'll be able to blend that over into your digital presence in the metaverse, and also have that bag in the metaverse? Lukasz Bulawski (10:22): That's exactly what I mean. And we are not even starting today. Actually together, Identiv and collectID, we've started it over two years ago. So we actually worked in the NFT business before anybody was talking about the NFTs, as every product equipped with collectID tag and then registered on the collectID platform is effectively also an NFT. So we are trying to look past the hype. The hype will wear on when it's only about the digital aspects, but I think there is really, really a business into merging the tools, where buying something physical will allow you to wear it on, also, digitally. And this go also other way around. There are some projects already on the market where, after buying and then burning the NFT, you can exchange it for a physical product. But there's still no link. By using our technology, the Identiv tags and collectID system, we can then ensure that once a customer gets this physical version of their digital product, there is still a link between the two. And let's say that the physical item gets resold. So then a new owner can claim the ownership of the token in the metaverses. Leigh Dow (11:49): I could talk to you all day about NFTs. I find this space really fascinating, and mostly because I love when you see a technology that's sort of been a little bit in the shadows and a niche group of people that are really invested in that early adoption, and now it's really starting to become more prevalent in our day-to-day society and for consumers. I just think it's really, really fascinating. Identiv and collectID have really been working together for a few years now. How do you envision our technologies evolving over the next five, or even the next decade? Lukasz Bulawski (12:21): I would say that we will definitely be working together on further in-product integration of our technologies. So currently, we equip products with secure tag. Let's say we put our newest tag, the wine tag, on the bottle of wine. It is a very good solution, but I can imagine something even better. In principle, there is nothing preventing us from working directly, for example, in this case with the bottle producer, to integrate the security component even more into the product at the moment when it is produced. This will especially be important when couple of years, our authenticity solution will not only be something special, but actually will be a part of every product from every trustworthy brand. It will be critical that all of this, and especially hardware, is seamlessly integrated into any kind of product. So there is still a lot of work ahead of us into bringing the hardware so that it fits any kind of the product that anybody wants to bring into collectID ecosystem. Leigh Dow (13:27): So that wine use case is really interesting to me. I didn't know, until I started researching what collectID does and how it works, that wine counterfeiting is such a huge problem. Lukasz Bulawski (13:43): It's a major problem. And it's also a little bit different than other problems of counterfeiting. So if you buy, let's say, a football jersey of Manchester United. You most likely know if you are buying a fake, because it costs a fraction of the price. It has poor quality. And quite, there are also a number of people that would willingly take this action. However, with wine, it's different. There is a huge percentage of counterfeit wine. And it's not necessarily even a situation that a person selling this, a bottle of wine, to the end consumer is aware that the bottle that they are selling is fake. And because wine market is very fragmented, to this day there is no good solution to this, even setting the technology aside. So we are now currently launching a new project with a new wine tag that we've developed together with Identiv to work directly with the wine producers, on one side to enable them to protect their brands, to connect to the consumers, but also to allow them for, I would say, a direct connection to the consumer, because historically, somebody would produce a wine, but then they would sell it to the retailers, and the retailers would deliver it to the end consumer. And at the end, the producer would not know who is drinking it and enjoying the wine. So we are imaging the world where there is really a direct connection, which on one hand benefits the producer, or they have more data and they can market their products better to the end consumers, but also benefits the end consumers. Because I can imagine that in few years, I will have of my digital wine cellar in our app. And when my wine age properly, I will get a direct message from a producer telling me, "By the way, Lukasz, you should drink this wine within the next year. And this is a good kind of cheese that you can enjoy it with." Leigh Dow (15:46): Well, you are definitely championing the digital world. Any closing thoughts on how humans can continue to fit into our technology-centric, and more and more hyperconnected world? Lukasz Bulawski (16:00): I think that we humans fit very well in any kind of world and will continue to do so. But it is mine, yours, and our colleagues' jobs to make sure that the technology fits well into the human-centric worlds, which will leave topics like authenticity, customer engagement, they are seamless, and people don't even know they are using any technology for that. And I think we are very good at this, so the future is bright. Leigh Dow (16:26): Thank you again for taking the time today, Lukasz. I really appreciated you calling in and sharing your thoughts on this connected world. Lukasz Bulawski (16:33): Thank you very much, Leigh. I enjoyed very much. Thank you. Speaker 1 (16:36): Smart, simple, single use technology can put valuable time back in the hands of healthcare workers and around the world. Identiv's capacitive fill level sensing tags are the first passive, NFC-enabled sensing solution to monitor fill levels. Simply attach the tag to any cartridge, bottle, or liquid-filled container to sense the fill level, no external sensors or special equipment required. The tags can also sense if syringes or auto-injectors have been properly administered, empowering clinical trials, patient compliance, and telemedicine applications. Learn more at identiv.com. Physical security, identity verification, the IoT. The hyperconnectivity of our lives will only grow more pervasive. As technology becomes more automated and experiences more augmented, it's up to us to preserve our humanity and use new tools and trends for good. The only question is, are we up for the challenge?