The technology that has been driving bitcoin and several altcoins is being used for retail now, and its likely you may not have even noticed it. De Beers has placed diamonds on blockchain and Walmart has put lettuce on it. Startups are putting skin care and liquor and fancy watches on the blockchain. Thus, it can now be safely said that there is someone who is also selling something.
Blockchain may be known for keeping of data, though its mostly as the fundamental tech for cryptocurrencies. In general, a blockchain is a sequence of records, shared among a network, that are both accessible and absolute, which means no member can change or delete the data within them without invalidating the rest of the sequence. The definition is up for debate among experts, but there are most who agree the aim is to produce an archive that’s hard to interfere with and easy to confirm freely.
For instance, a retailer might want to keep record of his or her supply chain on the blockchain database in order to track and battle counterfeits. For this to be effective, every department— from factory to distributor to shipper to warehouse to store — would need to partake so that there are no holes in the data. Duplicates of the data will be stored across many devices called “nodes” generating a decentralized system that acts as a safeguard against hacking. it’s worth familiarizing yourself with the areas of retail that could eventually be improved by blockchain. Here are some that technologists, investors, and analysts are excited about now.
” In retail, the two biggest issues from a data perspective are understanding and knowing where your inventory is — whether it’s in your supply chain or in the store or online — and then matching that with the right customer,” Steve Sarracino, founder and partner at Activant Capital Group, a growth stage venture capital firm, stated.
This would give companies a better control over their shipments and other properties as well as consumers, as their frustration resulting from going to shops only to find out the item is out of stock will reduce. Not that the retailers themselves like it either.
A study by IHL Group, a research and consultancy firm, has shown that stock outs (industry idiom for the aforesaid out-of-stock scenario) cost retailers nearly $1 trillion per year globally. With a better record and clear system through the supply chain, both parties can be on the same track – monitoring the progress of the shipment and having the knowledge of when the products need to be refilled. Blockchain can be of great help by increasing accountability and ensuring that all parties get accurate and updated data.
“There’s no magical fairy dust blockchain platform…It’s got to be some sort of web-based platform that you’re using already, and then you’re going to program blockchain behind it so that each piece of inventory has tracking. You have to interact with the physical world, so there has to be a way to do that: barcodes, RFID, visual scanning — there has to be some analog-to-digital [interaction].”
This is one of the main sprints for any blockchain initiative made to track goods: The system has to be uniform, effective, and itself resistant to counterfeiting (QR codes, for instance, are easily copied).
The problems with counterfeits and diverted products ending in some marketplaces like Amazon is really a worry for the cosmetic industry. Though diversion isn’t technically illegal, unapproved resellers can’t assure the chain of custody on their products, meaning customers may be getting fake or expired product (neither of which is good news for a cosmetics brand either).
“The systems that these companies have been using for problems like diversion are based on traditional cloud databases, and because they don’t have the full supply chain or network onboarded, they don’t really have any way of determining the moment that something is diverted. They have to go around and inspect and scan product. If you are tracking it on blockchain and integrating all of these systems so that once it leaves the packager and goes to the first distributor these events are recorded, you can determine at what point the chain was broken,” says Samantha Radocchia.
For some items like a designer fur coat, blockchain can assure customers of its source instead of reliance on the authentication techniques of individual specialists – a major challenge facing the luxury resale market.
Andrew Frank of Gartner research firm, said “in order for it to really work for goods, there has to be end-to-end consistency to record each action in the blockchain, so there are no breaks in the chain where you can no longer be sure that the object you’re holding is the object is created in the factory.”
Modes of Payments With Blockchain
Although the deficiency of standardization in blockchain will give a problem, the tech offers an interesting opportunity for companies that want to avoid credit cards in payment processing. Retailers have a tendency to to operate on very thin margins — groceries, for example, run at an average margin of between 1 and 2 percent — hence the increasingly high fees that credit card companies charge businesses can put a significant dip in profits. If you can charge the customer directly, says Sarracino, “you’re talking about being able to double the margin and/or decrease prices for the consumer. Long-term, that can be super powerful.”
Therefore, how fast can see the effects of blockchain on what we buy and how we buy it? If Walmart is the place you do your grocery shopping or in the market for a diamond ring, then the response is near, even though is not likely for you to see much difference in the store. The changes are likely to happen behind the scenes and be more understated than the booming headlines might suggest.
Ultimately, though, the potential of blockchain is placing power in the hands of the sundry rather than the few and reinstating some appearance of trust to a society increasingly devoid of it gives the impression as good a goal as any for retail to follow.
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