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While the financial sector has successfully used blockchain applications for several years, blockchain technology has the potential to transform even a range of other industries, including retail.
Recent blockchain-based experiments by major retailers such as Walmart, Amazon and Alibaba are proof of the many possibilities for technology to solve the century-old challenges in the retail sector. For example, blockchain technology can help retailers to improve the way they store information about their suppliers, to facilitate the execution of payments and contracts, and even to strengthen the authenticity of the product to prevent counterfeiting of goods.
As retail sales are moving more and more online, it is important that retailers adapt their systems to meet the ever-changing ways consumers search and buy products. From supply chain management to improving customer loyalty programs, here are four of the most promising use cases for blockchain in retail.
Deal with counterfeit goods
In 2017, retail losses due to fraud were estimated at $ 23 billion. Retailers in the luxury consumer goods sector are particularly vulnerable to fraud, with an average of 20-30% more losses due to their exceptionally high margins and more flexible return policies.
With counterfeiters and retail frauds growing all over the world, blockchain technology offers brands a way to assign an identifiable code or label to each product and allow their customers to access the entire history of that product, from the country of origin to the final retailer – and every step along the way. IBM has recently developed TrustChain, a blockchain that demonstrates the provenance of jewelry by following each stage of the supply chain from mine to the store.
Supply chain monitoring
The ability to track products across the supply chain is one of the most popular uses of blockchain technology in retailing to date. It not only helps to verify the origin of luxury goods and eliminate counterfeit goods, but also has an impact on food security. Walmart is experimenting with the use of blockchain technology in the food chain to reduce waste, reduce tracking times and improve contamination management and transparency. The retail giant has filed a series of patents related to blockchain technology, including one for a "Smart Package" system or devices that contain information about the contents of a package, its environmental conditions, its location and more.
Starbucks is also exploring blockchain technology with pilot programs in Colombia, Costa Rica and Rwanda, which help the company trace its "bean to cup" coffee and share real-time information on its supply chain. The large French supermarket chain Carrefour has also launched the first "food blockchain" of Europe that uses blockchain technology to trace its lines of animal and vegetable products. Consumers will be able to scan a QR code with their smartphones and view the entire product path on the shelf.
The market for traceability technology should continue to grow at 7.15% per year and reach $ 20.95 billion in 2026. While consumers worry more about the origin of the products they buy, retailers in all industries they adopt ethical procurement practices and use blockchains to provide greater transparency in their supply chains.
Turn payments
In 2014, Overstock became one of the first online retailers to accept Bitcoin payments. Today, online retailers of all sizes have begun to accept cryptocurrencies as a form of payment; however, it still takes time for digital portfolios and cryptocurrency payments to achieve mainstream adoption in the sales space.
The vast majority of online retailers still prefer to offer traditional payment methods, mainly due to the drastic fluctuations of cryptocurrency values, while others have found the implementation too complicated. However, this also means that the online payment space is still largely unused.
Resellers willing to experiment with cryptocurrency payments can tap into an additional revenue stream and reach more customers around the world. In addition, blockchain technology gives retailers greater control over how they distribute coupons or discounts and how customers redeem them. Mastercard, for example, has filed a patent for a system that uses blockchain technology to authenticate coupons. The system offers retailers the ability to reduce coupon fraud and deliver highly targeted discounts more effectively.
American Express is also experimenting with blockchain technology to renew its loyalty rewards program. Of all the current uses of blockchain technology, the ability to help retailers simplify online payments and reduce fraud are among the most promising.
Loyalty programs
From collection of store points to airline miles, loyalty and reward programs are a key way to engage their customers and stay competitive. Last year there were only 3.8 billion users of consumer loyalty programs in the United States.
That said, existing programs are often subject to misuse or fraud and can cause a number of problems for resellers if not implemented or maintained properly. As for consumers, many users (57%) feel dissatisfied with loyalty programs or leave them quickly, especially because they find the registration process too complicated or because they spend too much time earning points.
Blockchain technology addresses a number of these problems by offering new ways to manage, protect and ultimately centralize loyalty program data. Blockchain technology not only allows the secure and immediate reimbursement of loyalty points, but also optimizes the development and exchange of points between resellers and programs. With a database of tamper-proof transactions and date and time, dealers can easily and transparently protect and track loyalty program transactions. Ultimately, this can reduce the costs associated with complex loyalty programs and prevent both errors and fraud.
The future of retail
A recent report revealed that by 2023 blockchain in the retail market could grow to $ 2.3 billion or a compound annual growth rate of 96.4%, which would be the highest expected growth among any industry related to blockchain. That said, it is important to recognize that blockchain technology is still in its infancy. But as technology continues to win the trust of large retailers around the world, its potential to disrupt the retail industry is noticeable and the demand for blockchain applications will certainly increase in the coming years.
Blockchain is clearly here to stay and is already revolutionizing every sector. The real problem now is the lack of Blockchain developers, which is blocking the deeper implementation of the technology.
Nacho De Marco, CEO, BairesDev
Credit image: Zapp2Photo / Shutterstock
