Do you remember when Amazon sold books, and e-commerce was a novelty? The internet has certainly had a significant impact on the way we shop. Now, with blockchain, the retail landscape will be transformed once again.
Here are some of the biggest opportunities for blockchain in retail:
Supply chain and inventory management: Storing information on a distributed ledger makes it possible for retailers to check the information about any product, instantly and in real time. Source and location data is available to any party on the network. This lets retailers optimize just-in-time delivery, ensuring that products are at the locations that most need them. Storing information about products on the blockchain also lets retailers confirm the authenticity of goods along the supply chain. This allows retailers to verify the conditions under which food products are produced, transported and stored, allowing for a much greater degree of product safety. Providing the same information to consumers lets them trust that they are purchasing food that is allergen-free, or goods that are produced in an ethical manner. Because the transparent and permanent nature of the distributed ledger makes forging records impossible, products recorded on the blockchain are also much less likely to be counterfeit.
Payments and accounting: Cryptocurrencies such as Bitcoin were the first use case for blockchain and they have utility in retail. Because payments made on the blockchain do not pass through a middleman, processing fees are lower. Merchants can pass these savings on to consumers. Cryptocurrency payments can also be more practical for international payments and micro payments. This might contribute to growing economies in developing nations. Since distributed ledgers record payment information accurately and permanently, accounting tasks will be streamlined. Smart contracts can also make automated payments for a wide range of products and services a reality.
Another use for smart contracts is in HR processes. Education or training credentials can be verified and tracked on the blockchain, ensuring that employers have access to records of potential employees’ accomplishments. Smart contracts can execute benefits such as health insurance; they can also trigger wage increases based on performance reviews or length of employment. Blockchain can even provide an indelible record of employee attendance, which can help managers deal with absenteeism.
Data collection: Marketers and retailers depend on data. Data about customers – where they live, what products they consider buying, and what they purchase – is invaluable. But in today’s climate of data breaches and stolen information, many customers are reluctant to share their data. Putting customer information on the blockchain benefits both customers and retailers. Customers would be able to keep control of their data. And because retailers would have access to AI-powered recommendations about customer preferences, rather than the data itself, customer privacy would also be maintained.
Advertising: While the speeds with which blockchain ledgers currently process transactions don’t yet make it viable for digital advertising, purchasing advertising via the blockchain can increase transparency, a needed development in an industry where marketplaces engage in blind market bidding, driving up costs for both buyers and sellers. Blockchain technology can also record customer impressions for a specific campaign, providing valuable data for marketers. Finally, retailers might make use of smart contracts linked to geolocation beacons to deliver targeted advertising to a specific market: the specific material delivered to the consumer might depend upon previous purchases or responses to a survey.
Loyalty & rewards: Consumers have a love/hate relationship with loyalty and rewards programs. People like knowing that they can earn rewards for making purchases, but they are often frustrated by complex terms and conditions, offers that expire unexpectedly, or rewards that require jumping through hoops to redeem. Shifting rewards to blockchain-based tokens would eliminate many of these issues. Tokens are easily transferrable, and would not be limited to a single retailer. Tokens could also be used in conjunction with smart contracts to personalize rewards based on a customer’s preferences or purchase history.
In the end, perhaps the most significant benefit for blockchain in the retail space is that it can improve the consumer experience. Enhancements to the supply chain, trust in product quality, lower costs, control over one’s own data, personalized advertising and better rewards programs: all these ultimately contribute to customer satisfaction. Retailers have little to lose and much to gain from adopting blockchain technology.