How blockchain will transform the future of retail
Consumer trust has become hard to earn and easy to lose.
With many retailers striving to establish, or having already established their place in the online marketplace, finding solutions to secure and maintain consumer trust and loyalty is an invaluable market advantage.
Similarly, the rise of e-commerce has challenged retail and consumer goods industries with issues such as security and complex processes for payments and shipping.
Blockchain, which has until now, primarily been a tool of the financial industry, offers a promise to update how consumer shopping is managed in a digital age.
As a simple definition, blockchain is a shared ledger where all transactions are digitally recorded, helping to eliminate the risk of errors that can occur when each party participating in a transaction maintains its own data set for that transaction.
A significant feature of blockchain is its use of cryptography that means records cannot be changed to modify or counterfeit.
While it may sound counterintuitive for retail and consumer goods industries to provide an opportunity to offer transparent transactions, it may be the solution that helps secure consumer trust.
There are numerous ways that using blockchain technology can create benefits for the retail industry and consumers alike:
Lack of transparency of products in online shopping is an obvious source of discontent for many consumers. Increasingly shoppers want to know more about the products they are buying such as where materials are sourced and whether they were ethically produced. Organisations that provide this sort of transparency that make it easy for the consumers to source this information are on the path to building customer trust and loyalty.
Blockchain technology supports the desire for greater transparency, allowing all parties involved, from the supplier and manufacturer to the retailer and end consumer, to trace a product’s journey. With the use of blockchain, retailers could theoretically create portals that help consumers learn more about the products they are purchasing. For example, by scanning a product on their smartphone – such as a fresh food item – consumers can discover the length of time their ‘fresh’ produce took to move from the farm to the supermarket.
A UK start-up called Provenance is one platform that helps brands provide that transparency by tracing the origins and histories of products. Consumers could trace the seafood they eat from boat to plate, or verify that the wool sweater they just bought came from sheep that are treated humanely.
Reducing counterfeit goods
The production of counterfeit goods is an ongoing issue plaguing many manufacturers and retailers. Blockchain has the potential to have a positive impact on the retail industry by helping to identify counterfeits.
London-based company Block Verify has created a blockchain-based anti-counterfeiting solution for a wide variety of products such as pharmaceuticals, luxury items, diamonds, and electronics. Products can be certified with blockchain’s digital ledger record, which means that stolen merchandise can also be more easily recorded. The organisation works with manufacturers to guarantee consumers will receive the authentic product.
Further to identifying and halting the production of counterfeit goods, systems such as the Block Verify solution significantly increases the transparency of exchanges, helping to assist with diverted goods, stolen merchandise and fraudulent transactions.
Blockchain technology can help retailers provide shopping solutions that have not yet been resolved or updated using new technologies. Consumer warranties is one example of a system that has largely remained the same for decades. Many consumers are now looking to securely save information about their products beyond storing fading physical receipts.
A growing number of consumer-focused companies are already using Warranteer, a service that allows users to smoothly transfer product warranties from paper onto the cloud via blockchain, keeping them up-to-date and easily transferable. Consumers are able to maintain a virtual warranty wallet, saving retailers and manufacturers administrative work and helps consumers see the full value of a product, brand and warranty.
Even before consumers began shopping online, retailers, distributors and shipping companies have been faced with tracking and delivery issues. With the rise in online shopping and subsequent rise in parcels, these challenges have increased.
Israeli startup, Wave, has launched a platform that aims to modernise the global supply chain with blockchain technology. The company has created a peer-to-peer, completely decentralised network that connects all parties of the international trading supply chain, helping to reduce issues involved with international trade. Using decentralised technologies, all communication between these parties will be direct, outperforming pen-and-paper processes and eliminating the need for them to pass through a specific central entity. Connecting all members of a supply chain to the decentralised blockchain allows for a direct exchange of documents between them, solving one of the shipping industry’s largest problems.
Whether building consumer trust or eradicating labour-intensive documentation processes, blockchain can have a significant and positive impact for consumer goods and organisations throughout the retail supply chain.
The technology can help to bring about digital consensus, consistency and accurate records for companies that have been unable to achieve this with other technology and processes. The use cases outlined above all illustrate overarching benefits such as improving speed, reducing fraud, eliminating paperwork and systems, and placing power in the hands of the customer.
The successful implementation of blockchain technology ultimately calls for a willingness for greater transparency from retailers as a first step. Retail companies must work alongside suppliers and regulatory bodies to effectively tap into blockchain technology that deliver real business benefits that can also bring value to consumers.
Kellie Simpson is the managing director of products at Accenture, Australia & New Zealand.