The trend of counterfeit products being returned by consumers is having a major impact on big brands. This is becoming especially pronounced in the case of the fashion business with apparel, shoes and accessories. One recent estimate said that of the US$369 billion worth of return products in the apparel business in 2018, almost $18 to $24 billion could be attributed to the returns fraud economyⁱ. Manufacturers are at their wits end trying to solve the problem even as the number of distribution channels they must rely on grows and adds to the challenge.

The problem has its origins in the number of nodes in the supply chain – logistics partners, online and offline distributors, warehouses, customs control, refurbishers, wholesalers and retailers. It is difficult for the manufacturer to say where, between these nodes, the fraud could have occurred. Blockchain technology with its shared data source capability provides a transparent view to all the stakeholders, which will empower each of the users to trace back any suspicious activities during the product lifecycle.

Imagine this common scenario for a moment: A consumer sends a complaint and wants a faulty product to be returned. A company executive visits the customer, picks up the faulty product and examines it before accepting the return. The product is then sent back to the distributor or retailer before the customer can be refunded the cost of the product. This is not the happiest situation to be in for the customer as it means money is blocked (worse, the credit card company may be charging interest on the amount) and a replacement product, especially if it is a big ticket fashion item, cannot be bought until the refund is complete. Add to this the fact that the company executive who began the return process has no way of examining the returned product for counterfeits. What if the product had a unique identification number on it to help track authenticity?

Wipro has created a process that uses blockchain to generate a unique encrypted identification number (WPIN) for any product. This number gets into the manufacture, assembly and distribution of the product, preventing counterfeits from entering the supply chain.

During the product returns by consumer, WPIN is scanned which helps to verify the authenticity of the product. If the product is authentic, it sets off blockchain-based processes of SAP Intelligent Technologies services and backend SAP S/4HANA Fashion system that trigger a mail to the customer recording the details of the product being returned along with an apology and an instant refund.

The product then goes for examination and reprocessing. When the reprocessed product goes back on sale, with its WPIN carrying the complete history of the product, from manufacture to return and reprocessing. Customers can examine the entire history of the product before buying it.

The advantages of a blockchain-based solution would help simplify reduction of fraud in returns/ reverse logistics as well as ensure that end-customers are not impacted by slow and inefficient returns processes. Instead, customers have access to the complete product history while the manufacturer has insights related to required improvements in the supply chain.

Reference

ⁱ https://www.thefashionlaw.com/home/counterfeit-jeans-and-the-rise-of-the-24-billion-return-frauds-economy