We spend a lot of time discussing cryptographic markets and values, but the underlying blockchain technology is what makes cryptocurrency really problematic. This month I will explain an overview of how blockchain technology is adopted in different sectors. Today we will talk about blockchain in retail.
U.S. retail sales reached a record $ 5.7 trillion sales in 2017, according to U.S. Census Bureau. And the Boston Consulting Group signals to retailers using technologies and data to personalize experiences to see revenue increases of 6-10 percent. The industry has several components that both the blockchain and the cryptocurrency interrupt completely.
The most obvious is to accept cryptocurrency as a form of payment, but this is just the tip of the iceberg. Retailers are heavily dependent on credit card companies like Visa, MasterCard and American Express. They also use the SWIFT payment processing network.
Then there is the inventory and shipping of products sold to retail. Amazon's rapid delivery model has made these issues even more vital to retailers' success, and physical stores like Borders and Toys R Us that have failed to adapt to Amazon's e-commerce model have become stories of caution.
Let us not forget the changes in consumer tastes, especially in consumables such as food, liquor and cannabis. Even with clothes and jewelry, people want to know where their ingredients come from, whether they are organic, fair trade, etc. And marketing, bringing people to the door, is the lifeblood of any sales operation.
Blockchain technology has answers to the most important operational and logistical challenges of retail. Here's how retailers use blockchain and cryptocurrency to transform their businesses.
Crypto as Currency
It is no secret that the volatility of cryptocurrency prices stifles its traditional adoption. In March, the cryptography market lost $ 60 billion in one day and in July it earned $ 13 billion in just a few hours. This volatility is fun for investors, but it makes companies tired of accepting the crypt as a form of payment.
However, retailers like Overstock, Newegg, Microsoft and Expedia accept at least one encryption as payment. Overstock reports earns $ 120,000 a week in cryptocurrency revenue. KFC Canada has even kicked off 2018 with The Bitcoin Bucket, a promotional chicken and fennel bucket that has quickly sold out and is still on its website for marketing purposes.
Even retailers who do not plan to accept cryptocurrency payments anytime soon may still find themselves doing so. Canada-based encrypted exchange CoinField recently announced moonGO, which will be available to the public in the first quarter of 2019.
MoonGO includes an app and a physical card that allows consumers to use Crypto to pay wherever they are accepted credit cards. Omise, based in Thailand, is working on a similar feature for its OmiseGO payment platform that would allow the use of its proprietary OMG token as a payment on its commercial network including McDonalds Thailand and Alipay.
With over 2 billion unassigned people worldwide, retailers who accept cryptography open new revenue streams, allowing consumers who previously could not shop with them.
Blockchain-based payment networks
While we are on the Omise theme, the company will eventually replace SWIFT Network. This is the secure network used by POS systems to send and receive financial information when using debit or credit card for payments.
Approximately 24 million messages are sent each day through the SWIFT network, and members must pay annual membership fees to use it.
In addition to these fees, credit card processors charge credit card processing fees to the retailer up to 5%, in addition to transaction fees of $ 0.20 or more for each transaction they process. Such fees are often hidden and many processors will charge multiple commissions for each transaction, especially for online retailers, as the physical card is not present during online transactions.
Because cryptocurrency transactions depend on the amount of processed data rather than the actual transaction amount, commissions can be much cheaper. This is why cryptographic payment processors like Coinbase, Coingate and BitPay can offer transaction rates much less than 1% (and all offer free transactions up to a certain threshold).
Cryptocurrencies also eliminate chargebacks, where the company requires money for corporate reimbursements in the event of customer disputes. This forces retailers and customers to resolve their complaints.
Blockchain in retail chains
One of the biggest concerns for buyers is how much we can truly trust the labeling of a product. How do we know if the cotton in our clothes is really organic, that the battery of our iPhone has not been produced by child labor, or that the honey in our bottle is actually honey?
With so many horror stories circulating around the Internet, it's no wonder people are worried.
Large retailers like Walmart and Kroger, along with brands like Unilever and Nestle, are turning to the blockchain to solve these problems. Walmart has partnered with IBM to use the Hyperledger Fabric blockchain to track its products with distributed ledger technology.
At the moment, it is only used in backend operations, but it is only a matter of time before scanning a UPC product or QR code to trace back to their origins in the original factories and factories that produce them. Not only will this bring security and transparency to the buying experience, but it will make the calls much easier.
Just last month, a parasite called cyclosporine-contaminated salads and wraps at McDonalds, Trader Joe's Walgreens and Kroger. A mass appeal has been issued and these companies have been forced to destroy potentially pristine products to be safe. If blockchain technology was implemented, data would be available to identify every contaminated item to control costs and cut losses.
The cryptocurrency and blockchain technology are upsetting the retail sector and soon we will see it penetrate the entire industry. From payments to products, those who adopt this technology are now moving ahead in the technological arms race. Those who resist could find themselves becoming the next successful video.
The author is not currently invested in any cryptocurrency mentioned here.