How Blockchain Technology Can Change the Face of the Retail Industry
There are many businesses and industries that are well positioned to be radically transformed by the adoption of decentralized technologies. While the topic has become increasingly popular over the past year as some industries begin adopting blockchain with astonishing speeds, others have yet to do so.
When it comes to the retail industry, blockchain technology won’t revolutionize the sector immediately, but retailers will need to keep in mind there are enough changes coming down the road that if they don’t pay attention to the coming trends today, they will be swept away in a few years when it’s already too late. Here are a few things that are going to be different in the years to come;
Supply Chain Transparency
The subject of supply chain management is very important for the retail sector. Blockchain technology can make inventory management for retailers a much simpler job. Tracking shipments becomes much simpler with decentralized technology, as every logistical stage in the product’s journey from leaving the warehouse to its final delivery will have information recorded on who handled it and where it is in real time, resulting in less lost and damaged products.
For consumables and food items, being able to track each specific item can allow management to pin down the exact shipment a contamination originated from without having to throw away one’s entire stock. Blockchain also allows companies to track even obscure details such as temperature and air condition of products throughout their journey. Europe’s contaminated egg crisis last year could have been solved if blockchain technology was in place to track the origin of the contaminated eggs. Supermarkets would have quickly found out that the contaminated eggs all originated from a farm in Holland and disposed of them promptly.
Blockchain technology, if extended to apply not only to retailers but throughout suppliers with every participant contributing on the same blockchain, can allow the former to even track down the individual ingredients and components of their final goods. A baker, for example, would be able to know whether their supplier is providing them with the freshest ingredients, allowing them to ensure that the pastries to customers they sell are of the highest quality.
Between reducing waste, maintaining quality standards, as well as identifying weak points in the supply chain, retail management can use blockchain technology to radically reduce their expenditures.
Validate Brands
Consumers who are dedicated to particular brands are always worried about whether or not the product they are buying is an original or counterfeit. Third-party manufacturers in China are able to perfectly duplicate a designer product, slap on a brand logo, and ship out an identical product to the world. It’s a situation that made it much more difficult to verify the authenticity of a product, especially if not being bought from an official distributor.
Blockchain technology can allow both retailers and consumers to track data of each individual good, guaranteeing whether the product is genuine or whether it’s a knock-off. Decentralized distributed ledgers ensure that it’s possible for every legitimate stop along the supply chain — from supplier to manufacturer to shipper — will add a verifiable record to the item’s database.
What this will do is will vastly reduce the market for stolen luxury items because every single product can be traced back to its original intended retailer — instantly identifying stolen goods as well as who stole them. Additionally, another benefit will be that resale markets, used good vendors, and antique sellers will enjoy more confidence knowing that knock-offs and counterfeits will largely be a thing in the past.
Customer Service and Loyalty Rewards
Unlike what most warranties and guarantees would demand of customers, most people don’t keep a record or receipt of every purchase they make and save it for the rest of their lives. Should a customer lose their proof of purchase, any guarantee’s made become instantly null and void. The good news is that keeping a folder full of receipts won’t be necessary for the future as blockchain technology would ensure that records are kept on the blockchain. By keeping records decentralized so each party has instant access to digital proof of purchase as well as coupled with the fact that these details can’t be altered by any party, disputes over returns will be easy to resolve.
These contracts can also use smart contracts (algorithms that automatically fulfill themselves when certain conditions are met), which can be beneficial for end-buyers in cases of claims or settling conflicts without the need to escalate a situation with legal action.
It’s also extremely likely that in the future, loyalty programs will become tokenized. Existing loyalty programs often feel tacked on and are a source of frustration among customers instead of improving their experience. The use of tokens as loyalty rewards would simplify the process, allowing both parties to easily manage loyalty points, reward/gift cards, and the redemption process without hassle. Retailers that adopt blockchain can also expand loyalty partnerships with other stores and brands without adding complexity, as tokens can easily be exchanged for an equivalent partner token at a different chain. Smaller retailers can team up with their rewards programs, offering transferable tokens or even universalized tokens between all their various partners in an effect to compete against larger retailers.
Customer loyalty is hard to earn but easy to lose. Retailers that adopt blockchain ahead of the competition will have an advantage in terms of building simple, effective, and rewarding customer support and reward systems — an edge that makes the difference in building trust and brand awareness among consumers.
Payments (Physical and Online)
It’s hard to mention blockchain technology without conjuring up the image of alternative currencies. Many retailers have already begun integrating digital tokens as a means of payment processing for goods and service, which is some cases, are cheaper than more mainstream methods such as credit cards.
Retailers in the Cannabis industry for example (called dispensaries) are a niche retail area that struggles with transactions. With varying regulations depending upon the jurisdiction, many cannabis retailers and companies struggle with dealing with large amounts of fiat cash with little ability to process these proceeds into bank funds. As such, many dispensaries accept bitcoin and other digital tokens out of necessity. At the same time, cannabis-dedicated altcoins are springing up to address this issue.
But even outside these niche sectors in the retail industry, large companies such as Expedia, Overstock, and Newegg have already accepted bitcoin as a payment method — so it’s not hard seeing retailers create and use their own dedicated tokens in transactions. At the same time, using digital tokens will help streamline the process of transcribing sales onto digital records, along with any future returns and refunds.
As for the e-commerce world, it’s important to realize that every single person on the planet has the potential to be a customer, thanks to the internet. What blockchain technology can do is make it possible for those living in countries or regions without reliable finance infrastructure to still participate in the global economy. Participants in the e-commerce arena, both small, independent retailers as well as corporate giants, can appreciate that blockchain will allow customers to have greater access to goods and services that otherwise wouldn’t be possible.
Final Thoughts
Some retailers might find the prospect of incorporating blockchain technology into their operations to be too far fetched. Yet some aspects of the industry, such as the aforementioned cannabis dispensaries, are proving that this can be done (although out of necessity). As other large platforms jump onto the crypto-bandwagon, retailers that have the foresight to become early adopters and integrate decentralized technologies will find themselves at a significant advantage in the years to come in comparison to their competitors.