Oh, good ol’ brick and mortar, those were the times…
As much as we could dwell on the past though, the current digital retaility is far from what it used to be a mere 10 years ago. With e-commerce growing at a rapid, 15% compound annual growth rate, digitalization has turned the art of shopping into something completely different.
Decades of innovation in the sector have made goods purchasing faster, easier and more widely available than ever. Soon enough we might even be getting stuff at our doorstep without even knowing we needed in the first place. Yeah, your fridge will surely know when you’re about to run out of milk. Sh*t is getting real.
However, shopper’s paradise has not yet reached the sunshine and rainbows stage. Far from actually. Fraud and counterfeit goods are still flooding stores. Food is wasted left and right. Data leaks are anything but uncommon. And when was the last time you actually took part in a loyalty program? One which lasted longer than the moment you purchased that thingy that is. Yep, same here.
Wait, shh… listen… someone’s coming. Oh my god… I’ll be damned! Is that? No, can’t be! But it is! Noo, this is impossible. My, oh my, it actually is, I simply cannot believe it.
That’s right, folks! Blockchain, The Disruptor, is coming in hot to overtake yet another major industry – Retail. Let’s see what needs fixin’ up in here… Did I also mention Blockchain in Retail is expected to grow at a 96.4% compound annual growth rate? Oops, must have missed that one.
Blockchain for Retail Supply Chains & Logistics Management
If you’ve been following our disruption series (which you TOTALLY should be because they’re pretty darn cool), you would have noticed one of our pieces on supply chains where we explained in more detail how blockchain is revolutionizing supply chain management. Same drill here. Regardless of whether you’re selling clothes, food or kinetic sand, there’s a substantial chance your tracking and inventory system is not optimized. IBM has done the research – supply chain visibility is costing global brands $300 billion USD.
Luckily blockchain provides a much-needed fix for that by ensuring data integrity. Additionally, it also provides retailers with the possibility of real-time product tracking, thereby benefiting all relevant stakeholders along the supply chain – from producers to distributors and end-users. Specifically for freight transport, this is absolutely huge as blockchain here spells the end of various logistical inefficiencies.
Blockchain for e-commerce and e-payments
This is, of course, a no-brainer. Blockchain’s most commonly cited use case, namely cryptocurrencies and digital payments, fall nothing short of being shopaholics’ wettest of dreams. Although mainstream adoption (this now pretty much being able to pay in Bitcoin online) is far from reality, the wave of online retailers accepting Bitcoin is gaining more and more traction.
And while traditional means of payments are still preferable for retailers due to the price volatility of cryptocurrencies and user-unfriendly UX of digital wallets, those who opt to implement blockchain payments are able to tap into larger pools of potential clientele. Not to mention the coolness factor, accepting crypto also enables retailers to sell to a global audience.
As transaction costs on the blockchain can be reduced to as close as zero, shoppers’ moreover benefit in the context of micropayments and retailers, on the other hand, are able to better capitalize on low-cost, high-volume types of sales, such as for example app or digital artwork sales.
Smart Contracts should be mentioned here too as they can additionally aid retailers in designing self-executing, automated refund and return policies. Better customer service and a happier end consumer. The result? C a s h f l o w.
Data Protection & Security
There is no way not to include the security element blockchain brings about. For retail, what this is means is the reduction of hacks and other data breach-related risks. Efforts to reduce these is also closely tied to marketing as it can easily be utilized to promote brand awareness and a privacy-aware public image among consumers.
Safe data sharing is another major stress point in the current state of retail. With so many relevant stakeholders involved in the process of a single buy (think marketers, payment providers, data gathering agencies, etc), transmitting personal information is a slippery slope. With blockchain’s encryption and hash function, the possibility of mismanagement is greatly negated.
Customer Retention & Loyalty Programs
Which consumer in their right state of mind wouldn’t want to go to retailers who deeply care about privacy and security? Simply no one. The marketing aspect for retailers opting to go full ‘I love my clients’ mode should not be underestimated at all. The retailer of the future will undoubtedly need blockchain to introduce a safe shopping environment, be it online or in physical stores.
And those loyalty programs with atrocious retention rates and least to say counterintuitive design? Time to put these right where they belong – in the bin. Using blockchain enables tokenization which can be quite useful for any retailer. If carefully thought out, a well-honed loyalty program utilizing a retailer’s native token can open up many external interactions rather than remain isolated for a single use case, as the current state of affairs dictates.
The Bottom Line
Efficient tracking, quality assurance, improved and highly personalized service. It almost sounds too good to be true. But it isn’t… It’s real. Blockchain’s implementation within Retail is massively transforming the industry and positively enhancing trust and brand loyalty. With an increasingly circumspect global consumer base, demand for ethically sourced goods and tailor-made user experience is at an all-time high. Coupled with the data protection element, the introduction of blockchain architecture is a must for any retailer looking to weаther the digital transformation.
However, there is always a catch. Blockchain technology is already complex enough and retail is typically a business where even minor mistakes can cause sheer drops of not only stock value, but also consumer numbers drop. It is therefore imperative for any retailer interested in blockchain tech to make sure they find the right blockchain provider, that is well-equipped to carry out the development of retail blockchain infrastructure.