The digital transformation of watchmaking


Tomorrow, a digital twin for watches

BLOCKCHAIN

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May 2020


Tomorrow, a digital twin for watches

The pandemic crisis that the watch industry is going through is also accelerating its digital transition. Among the most promising elements of this is the possibility of using blockchain technology to maintain control over a watch’s lifecycle. The watchmaking brand Czapek & Cie has joined forces with Zurich-based startup Adresta to implement digital monitoring of its watches, from the workshop to after-sales service, including transactions from one owner to another. It’s a system that will only prove its worth if the watch industry succeeds in imposing trust where, all too often, there is mistrust between brands, retailers and customers.

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major and ever-increasing challenge for the watch industry is that of the traceability of timepieces. Once they leave the workshops and are passed on to representatives on international markets, a large proportion of them also leave the brands’ field of vision. And once sold, they generally also leave the radar of retailers. The explosion of the parallel market, lack of authentication, poor after-sales service, communication mismatch – all these problems and more stem largely from this lack of traceability.

In recent years, blockchain technology has made an appearance in watchmaking circles, initially in the form of digital certificates, in an attempt to meet this challenge. Two years ago, we wrote an article about this issue, which stirs up all sorts of fantasies as it is pretty complex. The Masterblock was the first certified watch in the blockchain. Since then, brands as prestigious as Vacheron Constantin have proposed digital authentification.

The explosion of the parallel market, lack of authentication, poor after-sales service, communication mismatch – these problems stem largely from a lack of traceability.

The co-founders of Adresta: Mathew Chittazhathu, Leonie Flückiger and Nicolas Borgeaud. The start-up, which specialises in digital certification for the watchmaking industry, was born as part of the Kickbox programme by insurer Helvetia.
The co-founders of Adresta: Mathew Chittazhathu, Leonie Flückiger and Nicolas Borgeaud. The start-up, which specialises in digital certification for the watchmaking industry, was born as part of the Kickbox programme by insurer Helvetia.

“Blockchain technology is in fact just a tool at the service of a much broader concept, that of traceability. It is about restoring confidence by keeping track of the lifecycle of watches,” explains Mathew Chittazhathu, co-founder of Adresta, a spin-off of insurance company Helvetia, which specialises in blockchain solutions for the watch industry. His main idea is to bring together all the players in the watch supply chain around this technology, from the brand to the retailer and the end customer.

To do this, a “digital twin” of the watch is created. This avatar will follow the timepiece throughout its life, from sale and authentication, to change of ownership or repairs. Adresta has joined forces with watch brand Czapek & Cie to create an initial platform using the resources of blockchain. We interviewed Mathew Chittazhathu to try to understand the implications of this technological and industrial breakthrough.

A “digital twin” of the watch is created. This avatar will follow the timepiece throughout its life, from sale and authentication, to change of ownership or repairs. Ultimately, it provides a direct communication channel between the brand and each person who owns one of its models, anywhere in the world.

Europa Star: How does your solution differ from existing digital certificates?

Mathew Chittazhathu: We track the entire lifecycle of watches. It is not a simple authentication certificate but a “digital duplicate” that truly traces all the stages of a watch’s life cycle. We have made a comparative analysis of what already exists: these are pioneering solutions, but until now no one has brought together the advantages it can provide for each stakeholder in the watchmaking chain. We want to go further by including brands, retailers and customers around the same solution.

What are these advantages?

On the manufacturers’ side, we have developed various different modules, but the most important is certainly the digital twin of their watches. This allows brands to keep track of their products, after they have delivered them to the retailer or the end customer. This ultimately provides a direct communication channel between the brand and each person who owns one of its models, anywhere in the world – a link that is sought after by all brands today. And of course, by knowing what happens to their watches, they can also react in a more appropriate way – be it in terms of service, prices, popularity of models or technical challenges.

“We have seen a huge problem of confidence, especially in the face of a rapidly growing second-hand market. But the watch industry is really lagging behind in terms of the technological tools that can meet this challenge.”

Retailers, who already feel they’ve been bypassed by the brands for years, won’t necessarily be happy about this!

The only way out for the watch industry in these difficult times is to restore trust between all its stakeholders, each with its own added value. Our strategy is to provide a tool that can be useful to all. In fact, we have studied a large number of players to refine our solution.

A key theme is after-sales service, often the “moment of truth” in the relationship between a customer and a brand. Most of the time, it is the retailer who is the interface between the two, because he benefits from the proximity of the customers. Service, which is based on the traceability of models, must become the cornerstone of the customer experience. The retailer therefore has a huge role to play. And this personalised experience can be enhanced by involving the customer: for example, in this period of confinement, why not film their watch as it is being worked on, in an immersive way?

“The certified pre-owned business is becoming increasingly important for retailers. Our solution is for them as well.”

Another key point is the authenticity of watch models, which is reinforced by a blockchain solution. After all, many Asian customers buy watches in Switzerland to ensure they are not counterfeit. The aim is therefore to add an extra experience to the retailers’ toolbox, in terms of both sales and service. Moreover, the certified pre-owned business is becoming increasingly important for retailers.

Czapek & Cie is the first watch brand to adopt the platform created by Adresta. The system will be launched in the summer of 2020.
Czapek & Cie is the first watch brand to adopt the platform created by Adresta. The system will be launched in the summer of 2020.

What’s in it for the customers, in terms of sharing information? Many collectors value the aura of secrecy that surrounds their watches.

The client is not forced to participate. But we really believe that there are many benefits for them. For example, if he wants to sell his watch one day, he has a complete authenticated history which will give his model a higher value. Another advantage is having reliable information that can be passed on directly to an insurance company in case of loss or theft, for example. Contact with retailers and brands is also facilitated. And the emotional bond between a customer and his watch is strengthened if he is sure that he knows its story well. Everything is directly accessible. With some brands, you already get extended warranties by registering online. This greater transparency brings more clarity to everyone. And coming from the insurance world, I can tell you that people are willing to share data if they get added value in return.

“Coming from the insurance world, I can tell you that people are willing to share data if they get value for money in return.”

The lifecycle of a model is tracked by its “digital twin”.
The lifecycle of a model is tracked by its “digital twin”.

Why did you choose the watch industry to get your technology solution off the ground?

At Helvetia, I was already part of a team helping different industries with the technological transition of their production units. We first focused on the pharmaceutical industry, then the watch industry. And we saw a huge problem of confidence, especially in the face of a rapidly growing second-hand market. But the watch industry is really lagging behind in terms of the technological tools that can meet this challenge. After having sold their models to retailers, watch brands do not really know the fate of their products. Helvetia believed in our solution and helped us get started by financing our new structure as a spin-off. We developed our solution together with the Swiss Federal Institute of Technology in Zurich, where one of the co-founders was working. Adresta was finally established in December 2019.

“After selling their models to retailers, watch brands do not really know the fate of their products.”

A certificate of authenticity protected by blockchain.
A certificate of authenticity protected by blockchain.

You came into the watch industry as it was entering the worst crisis in fifty years, due to the coronavirus. How did the pandemic affect your launch?

It’s a double-edged sword. On the one hand, the commercial results are not as good as we might have expected. On top of that, we had planned a presence at Baselworld. But on the other hand, it will accelerate the industry’s transition to digital. Perhaps the best example is Patek Philippe, which now allows its retailers to do e-commerce. Awareness of the digital challenge is growing everywhere. Even my mother has started to order everything online! Once this crisis is over, we hope to see companies investing in the “next big thing” in the long term, rather than cancelling all development.

However, given the volatility of Bitcoin, the most famous avatar of blockchain, the technology doesn’t have a very reliable reputation.

We see blockchain as a tool for shaping our solution. It is not blockchain as such that poses a problem, but its use. In fact, when we talk to potential customers, we don’t focus on the technology itself, but on what we want to do with it. And it is about restoring trust.

“When we talk to potential customers, we don’t focus on the technology itself, but on what we want to do with it.”

What form does your partnership with Czapek & Cie take?

We are really happy that we were able to bring a brand with so much know-how onboard. At our first meeting, we immediately clicked with their team, and they saw right away the benefits that we could bring. Coincidentally, the CEO Xavier de Roquemaurel was helping a customer whose watch had been stolen in a robbery. As Czapek watches feature many personalised components, he managed to identify the watch on the site of an online reseller on the other side of the globe... and the customer got his watch back.

This is an illustration of how the watch collecting market is evolving towards globalisation and transparency. With our solution, in the future Czapek will be able to provide help to their customers even more quickly and with less effort.

“When we met the CEO of Czapek & Cie, Xavier de Roquemaurel, he was helping a customer whose watch had been stolen. Our solution makes it easier to solve these kinds of cases.”

We plan to launch our solution next summer. We are ready, from a technological point of view, to incorporate their models into a digital portfolio, and they will now offer a “digital twin” watch made by Adresta to each of their customers. We are working in parallel to bring retailers into the system. The tool can be adapted to the use the brand wants to make of it, in agreement with its partners and customers.

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