As blockchain continues its crusade to revolutionize the inner workings of almost every industry, some of its earliest and most anticipated applications are finally bearing fruit. As many blockchain enthusiasts can attest to, the retail industry is one of the young technology’s ripest targets, both for the size of the audience and for its ability to garner B2B and B2C users. Now, the hard work that many innovative companies have put in is beginning to illustrate just how different retail will be in the coming years thanks to blockchain.
Just as minute fractions of bitcoin can be tracked on the blockchain’s digital ledger, so can physical items. By the same token, the existing solutions for tracking these goods as they move around the world are infested with middlemen and the fees that they take for ensuring proper oversight of the supply chain. Companies like UPS that invest huge amounts of capital to assure that their shipments arrive on time and in one piece are now looking at blockchain solutions to more efficiently (and inexpensively) deliver comprehensive coverage.
It all depends on the ledger. Once an event is confirmed on the ledger—which might happen by way of an IoT beacon passing through a checkpoint, for instance—it’s permanent. A decentralized ledger is essentially a shared spreadsheet that updates on all user versions in real-time, allowing service providers at every level to stay in sync (and accountable) without effort. The increased transparency of such a system can identify exactly where items are lost on the supply chain, enable shippers to give dynamic prices depending on weather conditions, and more accurately estimate delivery times. Companies taking advantage of such systems can save immensely on overhead, passing the cost savings on to customers.
Identifying a fake item is difficult for someone with untrained eyes, but blockchain can help give retail goods a verifiable identity just as it can a cryptocurrency wallet address. A company that inputs or scans its items with a blockchain solution like Block Verify can always identify a duplicate item due to its absence on the ledger. As a shipment of handbags moves through the supply chain, each bag pings its existence to the ledger which corroborates the bag with its ID number, and ensures that all are accounted for.
This innovation is most useful for high-end retail and pharmaceutical companies, who have much to lose if a fake product makes its way onto shelves. Thankfully, by using mobile devices to quickly label and sync items with the ledger at every stage, it’s virtually impossible for them to go missing or to be replaced with a convincing replica.
3. The Token Effect
Part of blockchain’s value proposition is its unique functionality with tokens, which are derivative currencies using the ledger as a medium to accomplish various transactional feats. People can use it like money, yet its presence on the ledger lends it more utility than cash. With clever use of smart contracts, companies can delegate how and why tokens move through their proprietary blockchains, and can therefore nurture tailored relationships with their customers beyond the simply transactional aspect.
For retail this has many applications, but one of the strongest hinted at so far is in the retail discount economy. Online-to-offline discount marketing companies like Groupon still get away with using inefficient, opaque models that do little more than incentivize single visits from coupon-toting customers, but this will soon change. Already, firms like HotNow are using tokens to help merchants get better quality business. For completing missions like posting a review or image on social media, playing a mini-game, trying a sample product or other value-added activity, customers are rewarded with HoToKeN, which they’ll be able to use at their favorite stores. The ledger tracks it all, and can show merchants who their biggest advocates are, and offer them bigger discounts accordingly.
Online shopping is undoubtedly one of the fastest growing sectors of the retail industry, and it even has a name: eCommerce. Despite its size, one of the problems that has nagged eCommerce since its inception has been the idea of trust. Like the world saw with last year’s Equifax breach, trusting companies that store your sensitive financial and identifying information in centralized servers can have big consequences. It doesn’t matter how purportedly safe these servers are, nor how many Norton, TRUSTe, or McAfee logos are plastered on your favorite e-shop’s site: single entry points are always vulnerable.
Thankfully, blockchain systems are decentralized, meaning that any hacker who manages to enter one of its many disparate nodes will find only minute fractions of the data they need to do any damage. Regardless, the data they see will be an indistinguishable mess, because only those with the relevant private key can make any sense of it. The public and private key system uses cryptography (the prefix of the word ‘cryptocurrency’) to place the burden of privacy on users instead of the thousands of services they choose to interact with. Simultaneously, it preserves the requirement of businesses to have a reliable Know Your Customer (KYC) method.
5. Simplifying Payments
It may be a basic benefit, but giving individuals the ability to choose which currency they transact with is significant. It may be annoying for an individual to exchange their fiat money while traveling, but for businesses in retail handling large volumes of cross-border payments, it’s a serious financial detriment. Blockchain solutions like Request Network will soon provide any two parties a way to transact, regardless of which currency each is using. Furthermore, convenient, automatic and costless currency exchange on the blockchain will also help businesses cut overhead and open their doors to new customers.
Retail Readies for 2018
It’s going to be a big year for retail if blockchain has anything to say about it. The innovations coming from the two sectors combined are already making a splash and demonstrating to the competition just how far they’ll fall behind by neglecting to adopt.