Digital Product Passports: Transforming Retail and eCommerce.

A Digital Product Passport (DPP) is “a digital record that provides information about a product and its value chain from its inception to landing on local shelves. This includes everything from the origin of the product, materials used, environmental impact and disposal recommendations.”¹

They were introduced by the EU as part of the European Green Deal² - to enhance product transparency, sustainability, and circularity.

This post provides an overview of Digital Product Passports, their benefits, challenges and is particularly relevant to business and technical professionals working within retail, supply chain and eCommerce.

Content Headings

• Context

• The Technology Behind Digital Product Passports

• Key Benefits

• Implementation Challenges in the Supply Chain

  • What IT infrastructure changes will be needed?

  • How to balance transparency with protecting trade …

• Preparing Your Business for DPPs

• Conclusion

• Additional Resources

Context

GlobalData value the EU Apparel market at €482 billion³ .

Research by the European Research Executive Agency⁴ found that 5.8 million tonnes of clothing (11.3kg per person) is discarded within the EU each year.

Only 1% of this figure is recycled. What’s unsold is either landfilled or exported.

DPPs are the result of this environmental chaos; driven by consumer awareness and the willingness of regulators, to address and enforce.

A DPP must be created for any product that enters the EU market. It’s anticipated that over 62.5 billion global digital product passports will be created by 2030⁵ .

There’ll be gradual implementation over a range of product categories. Apparel, Batteries and Toys are 3 key industries where DPP’s will be deployed⁶ .

The "economic operator" (normally the manufacturer), creates the DPP.

The Technology Behind Digital Product Passports

IBM define a digital twin as a “virtual representation of an object or system designed to reflect a physical object accurately. It spans the object's lifecycle, is updated from real-time data and uses simulation, machine learning and reasoning to help make decisions.”⁷  

DPPs are digital twins. They represent physical (and chemical) products, the data they store aids stakeholder decision-making.

To create a DPP digital twin, a mix of technologies is required, they fit broadly into the following categories:

• Data Collection and Storage: QR codes, NFC chips/tags, RFID, Blockchain

• Digital Representation: Cloud Platforms, APIs

• User Interfaces: Mobile apps, web interfaces, business dashboards

• Data Security and Authentication: Watermarking, encryption, access control

• Operations and Retail Systems: ERP, CRM, Supply Chain and PIM systems

The table shows general DPP data requirements with illustrative technologies.

General Data Requirements Source: The EU’s new Digital Product Passport (DPP): everything you need to know

Examples of the technologies behind DPP’s and a video specification can be seen in the videos from PicoNext and Dooper.

Key Benefits

The infographic outlines the benefits of implementing digital product passports.

As discussed, transparency, sustainability and circularity are key implementation drivers.

Dior and Lacoste are two examples of retailers using DPPs for brand differentiation and to combat counterfeit products:

• The Web3 Approach Behind Dior’s NFC-Based B33 Sneakers 

• Lacoste: Digital product passports  

Implementation Challenges in the Supply Chain

What IT infrastructure changes will be needed?

Blockchain's decentralised ledger makes it an ideal technology for implementing DPPs. It's likely the only technology that the majority of retailers / eCommerce platforms haven't implemented from the above table.

Even if retailers have implemented Blockchain or similar, their IT infrastructure will require integration in order to maintain / manage DPP solutions.

How to balance transparency with protecting trade secrets?

The sustainability arguments for implementing DPPs are logical and reasonable.

But at what cost?

For brands, juggling consumer retention, margins and competitors, detailing the "secret sauce" isn't an option.

To illustrate, Nike Air Max, famous for it's cushioned footwear⁸ , will need to submit DPPs. How much information is enough to fulfil DPP compliance and safeguard their technology?

Stakeholder Perspectives

Digital Product Passports impact various stakeholders in the retail, supply chain and eCommerce ecosystem.

Below are perspectives from four stakeholder groups within this ecosystem - Consumers, Brands, Retailers and eCommerce Platforms, and EU Governance.

Consumers

• Expectations for accurate product information

• Utilise DPPs for purchase decisions

• Will having access to DPP data affect returns and warranties?

Brands

• How will DPPs affect our pricing strategy and profit margins?

• How can we use DPPs to enhance customer engagement and loyalty?

• What are the legal implications of incorrect DPP information?

Retailers and eCommerce Platforms

• Opportunities as DPP management service providers

• Ensuring compliance and standardisation

• What new services or business models might emerge from DPP adoption?

EU Governance and Compliance

• Regulatory goals and enforcement mechanisms

• Support for business implementation

Understanding these diverse perspectives is crucial for successful DPP implementation and adoption across the retail and eCommerce landscape.

Preparing Your Business for DPPs

Source: EU Digital Product Passport: What it means for the textile industry 

DPPs are part of the Ecodesign for Sustainable Products Regulation (ESPR).

The regulation is enforceable now, however, organisations have until 2026 to ensure compliance:

• Adopt rules on the destruction of unsold consumer products goods

• Implemented Digital Product Passports

• Access to DPP information and

• Upload to a DPP registry

Enforcement measures include fines and audits.

Conclusion

The statistic that 5.8 million tonnes of clothing is discarded every year in the EU is staggering.

To put this into perspective, let's revisit the famous Friends scene where Joey wears all of Chandler's clothes. Ironically, he might not have been far off from the average EU clothing waste - 11.3 kg per person.

Based on average men's clothing weights, 11.3 kg equates to approximately 34 items:

This visual approximation of how many clothes are either landfilled or exported per person is alarming, particularly if only Chandler’s tie is recycled back into the circular economy!

The implementation of Digital Product Passports (DPPs) aims to address these sustainability issues. However, it presents several challenges:

1. Balancing Transparency and Trade Secrets: Brands must navigate how much proprietary information to disclose in their DPPs without compromising their competitive edge.

2. Cost Implications: Implementing ESPR regulations introduces additional costs for brands. The question remains whether consumers will accept potentially higher product prices in exchange for sustainability.

3. Infrastructure for Recycling: There's a significant gap between the EU's recycling goals and current capabilities. Can the EU effectively increase its recycling rate from the current 1%?

4. Stakeholder Alignment: Meeting the diverse needs of consumers, brands, retailers, and regulators simultaneously presents a complex challenge.

While full ESPR compliance isn't required until 2026, businesses need to start preparing now. The transition to DPPs will require significant changes in IT infrastructure, supply chain management, and business strategies.

As we move forward, it's clear that the fashion industry needs to find innovative solutions to balance consumer demands, regulatory requirements, and sustainability goals.

The journey may be complex, but it's a necessary one to address the growing issue of fashion waste and move towards a more sustainable future.

Additional Resources

Consumers

• Consumers want more from digital product passports, new survey says 

• The Trends: Will Digital Product Passport help reduce greenwashing? 

Brands

• How to Prepare for Digital Product Passport Implementation 

• Digital Product Passport: What is it? (2024) 

Retailers and eCommerce Platforms

• Navigating Sustainability with The Morphbag by GSK's Digital Product Passport Initiative

• How Save The Duck and Certilogo launch Digital Product Passport 

EU Governance and Compliance 

• Ecodesign for Sustainable Products Regulation

• EU Adopts New Product Sustainability Rules, Ban on Destruction of Unsold Clothing and Footwear 

1  Everything you need to know about Digital Product Passports

2  DPP and the EU Green Deal

3  Europe Apparel Market Overview and Trend Analysis by Category and Forecasts to 2027

4  Slow down, our planet can’t keep up!

5  Over 62.5 billion global Digital Product Passports expected to be created by 2030

6  Digital Product Passport (DPP): The Complete Guide

7  What is a digital twin

8  Nike debuts groundbreaking technology with launch of Air Max Dn shoe