“Luxury Products” as an industry is under tremendous pressure to achieve projected growth even though real disposable income has improved in between ~ 2%- 7% globally. Industry has failed to engineer the “Wish- Desire-Pride” path of owning a luxury product. True competition is not coming from within but they are facing existential challenge from Consumer tech companies and innovative business models.

1. Point of View: Improving Luxury Product Value chain using
Blockchain & Disruptive Digital Technologies
Sandipan Sen
“Luxury Products” as an industry is under tremendous pressure to achieve projected growth even though real disposable income has
improved in between ~ 2%- 7% globally. Industry has failed to engineer the “Wish- Desire-Pride” path of owning a luxury product.
True competition is not coming from within but they are facing existential challenge from Consumer tech companies and innovative
business models.

2. INDUSTRY CONTEXT
The diamond market’s 2030 outlook remains positive. Demand of rough diamonds to grow 1% to 4% annually.*
 Priority growth markets are: US, China, India. Mechanisation, economic growth and real disposable income in China
& India will offset structural declines in USA, Europe & Japan.
 For midstream segment Value capture will depend on the interplay between rough and polished prices and ability to
reduce Rough to polish yields through operational improvements.
 Decline in diamond jewellery demand in mature markets (US & EU) mainly because of sub-optimum promotional
effort in creating the “Wish” factor within millennials segment.
 Ringfencing and enforcing detect-disclose-differentiate mechanism through adoption of advanced technologies can
arrest infiltration of Illegal Lab grown diamonds and control value corrosion of Natural diamond market.
 Complicated financing process and dependency on disjointed trade finance infrastructure is a significant delimiter to
achieve projected growth, specially for the midstream players.
 Establishing Diamond as tradable Asset/Investment instrument will improve demand and consumer sentiments.
COMPETITION: Global Diamond market share is already consolidated, top four companies (Alrosa, De Beers, Rio
Tinto, DDC) accounting for ~70% production.
But, Big 4 not only loosing their competitive advantage to new entrants with more nimble and flexible supply
chains, but their incumbency advantage is also being challenged and tested by Consumer Tech companies (Apple,
Samsung) and Ecommerce giants (Amazon, Alibaba, Flipkart).
Short term trends: Incumbents will get involved in
acquiring smaller companies to expand their global
reach towards regional markets and increase their
overall share.
Longer term projection: Industry will drift towards a
consortium initiative to fightback and simulate the
“Wish” factor through Targeting, Transparency, Trust
through trustlessness.
*Global Diamond Industry 2017 Report- AWDC, Bain & Company

3. Smart Contract
 KYC
 Identity
Management
 Contract type
 Longterm
 Onetime
Sales/Bidding
 Auction
 EBOL
Smart Contract
 KYC
 Identity
Management
 Contract type
 Longterm
 Onetime
Sales/Bidding
 Auction
 EBOL
Rough Diamond
 Time
 Date
 Digital Fingerprint
 Weight
 Colour
 Measurement
 Mining details
 Supplier Details
 Time
 Date
 Time
 Date
 Time
 Date
Certificate
 Digital Certificate
 Time
 Date
Polished Diamond
 Date
 Time
 Digital Fingerprint
 Facets & Crowns
 Cut
 Colour- D to Z/ Fancy
 Clarity: F, VVS1-VVS2
 Carat
Exploration Cutting & Polishing
 Planning
 Cleaving/Sawing
 Bruting/Gridling
 Polishing
 Blocking
 Brillianteering
Inspection
Upstream Midstream Downstream
Inventory Retail ConsumerTrading
Financing
Block Content
Blockchain Provenance Platform
Capture Record Record Record Record
Dashboard
Trading
Financing
VerifyRecordRecord
3PL (Date & Time)
 Provenance: Forward Tracking, backward Traceability
 New Market Development: Access to new Markets, through
Digital Path 2 Purchase
 Efficiency through Process Simplification-Consolidation-
Automation
 Cost Advantage/Liquidity with quicker days to market (Rough
to Polish Yield)
 Better governance & control from illegal infiltration of Lab
grown synthetic Diamonds.
 Other platform benefits
PotentialBenefits
 Blockchain nodes Maintenance Cost- Long-term
 Performance/ Throughput
 Change management and adoption - System
integration/compatibility/interoperability
 Expectation Management (Partners, Retailers, 3PL) - Acceptability &
Disintermediation
 Security & Privacy
 Setting standards and ability to control
 Availability and sustainability of skills
OEMs
Platform
Architecture
KeyConsiderations
Kimberley
proccess
Mobile App
Consumer
Machine Learning/Image Recognition Layer
Dashboard
Catalogue management/ Virtual reality layer Demand Planning/Legacy integration Layer
Dashboard Dashboard Dashboard Dashboard Dashboard
Achieving true provenance itself is a great success, but design for customer experience is an even bigger story…
AI/VR LayerPromotion/Loyalty Mgmt Fintech/Insurtech

4. Players
Doblin’s Business Model Innovation
Agility & PrioritisationValue Engineering
Banks
3 PL
Producers
Diamond
Office
Traders
Kimberley
Process
Graders
Retailers
End Consumer/ OEMs
Bridal & Married*
A Single Woman
Women’s Self Purchase
Married Woman heavy Owner
Design Innovation
Millennials
Husbands, Boy friends
Remembering & Missing
Anniversaries
Channel not
activated/Unutilised
because of Trust deficits
Value
Capture
Resource
Cost
Willing
toPay
Value
Capture
RC/W
TS
WTP
Strategic Consideration
 What is the long term strategy to win back/compete/deflect
millennials from consumer tech (Apple, Samsung)?
 What is the current mechanism in place to intercept the latent
signals of Unseen-Unheard VoCs? How it can be Explored and
Exploited?
 How disruptive Tech can rejuvenate the diamond industry?
 What are the deliberate strategies and what are the emerging
strategies to achieve projected 2030 growth of 4-5% CAGR?
 Current initiatives are focused in improving business configuration,
what are the other prerogatives and what are those disruptive
models to light up Offerings and Experience ?
 How industry can embrace fintech/insurtech innovations to offer
more flexibilities to consumers?
 How industry can jointly engineer the “Wish- Desire- Pride” path
of owning a diamond?
 How industry can tap and unlock the B2C Potential and how early
in the value chain? How to tap the potential of design innovation?
 What is the right communication chain to mitigate the pitfall of
perception risk (Information Asymmetry/ Biasness) and avoid
confidence erosion of the participants?
Value
Time
*De Beers Consumers Survey 2016
Platform Consideration
 How does the participants monetise the data that the platform
will generate, equally?
 “Mines to finger” journey of diamonds happens through
geographically distinct touchpoints. How blockchain platform can
bring inclusivity given demographic and cultural mandates?
 How the platform can factor-in right level of technology fungibility
to pivot with future industry initiatives, regulatory demands,
future disruptive technologies?
 What are the key features/functionalities should be considered to
improve product stickiness, interoperability and adoption?
 How can the platform effectively incorporate the “Hook” model
(Trigger- Action- Reward- Experiment) and improve stickiness/app
uninstallation?

5. Solution Approach
ProblemStatement:DetectandpreventLabgrownsyntheticdiamond
enteringthesupplychain.
Reality/ Assumptions/ Hypothesis:
1. Its impossible to stop synthetic diamond (Or any counterfeit Luxury Product) entering the chain. But Digital technologies like blockchain, AI & ML
has the potential to put a control and make the infiltration harder.
2. Counterfeit/synthetic products has way bigger financial incentive compared to genuine products.
3. Presently, Counterfeit/synthetic market has a single digit to mid 10’s impact as revenue leakage. But it has a way bigger unrecoverable brand
impact/reputation loss.
4. This is the biggest industry concern and the golden path metrics. Without proactive collaboration of all players across the value chain its impossible
to achieve the chain of trust, trustless-ly.
5. Human- machine Interaction has inherited vulnerabilities, even machine to machine interaction does, but degree differs.
Short Term Strategy: To meet Tactical Demand platform should have feature/ control mechanism to detect and contain the rogue players
Cultural & Adoption adjustments/solutions through financial penalty or blacklisting. Focus on adoption,
Financial Solution: Change of payment terms from delivery linked to verification based.
Potential Use case : Digital tech
 Depend on proof of stake than proof of work/delivery.
 Chain Rough Diamond Attributes with Cutting & Planning documents before chaining with 4Cs of a polished diamond.
 Possible Block Sequence: Rough Diamond Image -> Rough Diamond Fingerprint-> Rough Attribute -> Cut & Polish Plan (One to many
Mapping with x% induced Error/tolerance) -> Cut & Polish Attributes, Picture, Fingerprint-> Kimberley Certificate (Work towards making it
mandatory for Kimberley certification and industry consensus) -> ->->
 Unsupervised machine learning and image recognition techniques (CNN) for Verification/Classification.
 Supervised techniques for profiling & Prediction.
 IoT Integration for Supplychain visibility and risk mitigation.
 Interactive VR enabled product catalogues.
Dependency & Risk: Specifically for Diamond, it is technically quiet complex to manually achieve integration (1 to many mapping (Rough to Cut)) and
disintegration mapping (Many to 1 - Box containing polished/ retail ready diamond). Cant be achieved with manual handling. If the capturing the
genesis block has human dependencies, achieving the chain of trust is impossible.
Long Term Strategy: Future Proofing Business
People: Constantly Integrate Brand experience to improve “ Wish” factor. Desire and Pride will follow.
Listen to your HEART. Happiness- Engagement- Adoption-Retention- Tasks Completed.
Process: Find a way to change the paradigm from Detect- Contain to Predict- Prevent. As the adoption improves/platform matures and becomes data
rich explore disruptive technologies (Like AI/ML, VR) to improve process efficiency.
Technology: Target Technology modularity. Identify “Jobs to be Done” and develop future tech architecture around it. Not in reverse fashion.
Interaction design, Usability design is important, but usability design is a prerequisite for adoption and platform success
New technology is not intrinsically disruptive; it depends on how it is deployed into the market relative to the business
models for existing products or services