Digital Passport pushes the second hand: doubling the value of the product in its life cycle

The digital passport could double the value in the lifecycle of fashion products, with consumers benefiting the most, 'cashing in' the equivalent of 65% of the earnings.

This is the main evidence of the new report that Bain & Company realised with eBay analysing the effects that the European regulation could have on the value of products, especially in resale. The Digital Product Passport (DPP) is one of the obligations introduced by the Ecodesign Regulation (Espr) that came into force last year, the effects of which will unfold in a concrete way as of 2027 and will enable consumers, companies and regulators to track and evaluate products throughout their life cycle. According to the study, DPP will double the value of the product throughout its life cycle with the consumer collecting the most significant share (65%) of the gains. The remainder (35%) will be collected by brands through, for example, maintenance and repair services.

"We did this study to try to understand how something that is born out of a need for compliance actually has the potential to create value. The DPP, in particular, will be a driver for the second hand market," explains Matteo Capellini, partner at Bain&Company among the authors of the study.

According to Capellini, however, 'brands have not yet realised the business opportunity and consumers will be the real "winners"'. Many brands - around 90 per cent of those surveyed by Bain - currently see DPPs primarily as a regulatory burden and not as a strategic investment that can generate ongoing revenues, promote sustainability and strengthen consumer relations. "Companies are approaching the process of adopting this tool from an emergency perspective, in consultation with their legal and sustainability teams. They are missing an important opportunity for value creation: when all apparel products have a digital passport, one can imagine that some of the barriers that still limit access to the second-hand market - such as material information or a certificate of authenticity - will be automatically knocked down".

According to Capellini, 'second hand could bring brands a range of new consumers, for example those who cannot afford full-price products, but also bring them closer to their decarbonisation goals'.