How are blockchain technologies changing the retail industry?
Throughout the last ten years, blockchain technology has grown from a technology-focused on cryptocurrencies into a secure, widely-used form of business process automation. In contrast to traditional SAP-based solutions that store data outside of the network, decentralized ledgers enable systems to perform operations and maintain data privacy easily and at a lower cost.
As a result of immutability and traceability, blockchain platforms in retail will serve as an efficient, reliable, and one-for-all solution for suppliers, manufacturers, and other parties involved in the chain of commerce.
The use of blockchain in retail
A number of retail giants are exploring blockchain’s potential in their businesses, including Walmart who has put its leafy greens on the blockchain, and Alibaba, which is using blockchain solutions to track shipments worldwide. Here are a few more ways that crypto trading firms and blockchain can bring benefits to retail.
Identifying the product’s provenance
With the ability to provide end-to-end transparency on the source of origin for ingredients and products on the blockchain, the technology is likely to become the industry standard in the long run, as well as providing a competitive advantage to early adopters.
When it comes to food and beverage manufacturing, traceability is important both financially and ethically. Think of BSE, mad cow disease, the UK crisis of the 1990s, and the China scandal in 2008 that shut down a nation’s spinach farmers for weeks to track down the source of the problem. Using blockchain technology, these scenarios can be avoided through the creation of a huge database of the provenance of foods, improved food safety, profit increases, and waste reduction.
Loyalty points management
Customers would be able to store all their coins, rewards, and coupons in a single digital wallet, rather than trying to keep track of multiple loyalty programs, which reduces redemption rates. Blockchains also offer consumers real-time awards allocation and redemption, making loyalty programs more flexible between consumers and across brands, retailers, and stores.
Retailers are now using blockchain technology to protect consumers from receiving counterfeit items. Blockchain technology is commonly used to prevent fraudulent transactions on digital currency exchanges.
Namely, with blockchain technology, De Beers Group tracks its gems from mine to retail, recording every transaction. This reduces fraud risks and increases transparency for consumers.
Using cryptocurrencies for payment
A blockchain is an advanced system that allows cryptocurrencies to be used as means for transferring value or data and comes into its own when used for cross-border transactions and micropayments. In January 2014, Overstock became the first major online retailer to accept Bitcoin as payment. The retailer has since brought in reports of $5 million in Bitcoin payments per year.
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Data collected from compliant consumers
In response to the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act of 2018, retailers can manage consumers’ information in one central database using blockchains. The use of smart contracts on the blockchain could be useful in this purpose. Smart contracts are software with predefined conditions in the form of computer code contained in a public database that cannot be amended. Each contract has a separate set of rules and executed automatically when these rules are met by all parties. Managing permissions and consumer data access could be managed through this.
What blockchain will mean for retail in the future?
Online giants like Amazon, which have changed consumers’ buying behaviors and expectations of customer service and delivery, have caused some to predict that brick-and-mortar will soon die. Thanks to technological advancements like artificial intelligence and automated warehouses, the online retail industry has been able to drive substantial change throughout society. Blockchain also plays a crucial role in the future of retail, quietly ticking away in the background.
Automating back-office tasks
In retail, for example, smart contracts reduce administrative burdens by streamlining HR processes. In addition, data-intensive admin tasks, such as payroll, can be automated to allow teams to get faster, more accurate results, enabling them to focus on their core functions, such as customer service or sales.
Tracking of staff time
To keep track of when store staff clock in for a shift, time-stamped contracts can be created. Blockchain allows retailers to track and report products with no tampering – a traditionally time-consuming process, especially for retailers with multiple stores, but that is completed in real-time with blockchain.
The enforcement of labor rights in global supply chains
In the Asia-Pacific region alone, 47% of all people working in forced-labor conditions are in supply chains. Of 25 million people employed by supply chains globally, nearly 25 million are forced workers. Coca-Cola, along with the U.S. Department of Labor, decided to enforce labor rights across their supply chains. Blockchain technology is being used by the Department of State to ensure that labor conditions along its supply chain are ethical.
The KnowTheChain forced labor benchmark was applied to 38 food and beverage companies to identify the key areas where forced labor is most common:
- Engagement and governance
- Voice of a worker
- Monitoring and remedying
- The purchasing process
- Assessment of risk and traceability
According to the survey, only three companies were able to describe how they take corrective action for their suppliers, including the means to verify the corrective actions are actually in place – Unilever, Kellogg, and Coca-Cola.
Blockchain enables payments by customers to retailers in cryptocurrency, which is the most common use of the technology. Digital wallet security may have to be improved more before retailers are willing to trust it and use it widely. Retailers are still slow to adopt this technology.
Blockchain’s impact on retail cannot be ignored, whether it’s improving customer loyalty and trust, or reducing time-consuming tasks like admin. With this technology, an industry that has tried, and failed, to achieve such a goal with traditional technology is finally able to keep accurate records with digital consensus, consistency, and resources. The trust, transparency, and transaction efficiency that blockchain technology brings to the retail industry are benefits to businesses of all sizes as it continues to mature.
How are blockchain technologies changing the retail industry?