Awareness of blockchain is at an all-time high, thanks almost exclusively to the increasing price of cryptocurrencies, which are themselves a byproduct of the young technology but also harmful to its good name. Speculative assets like bitcoin and Ethereum have stolen the thunder of the architecture supporting them, yet even so, innovators in several industries have seen through the smoke screen and are betting big on blockchain for other reasons. The healthcare, cybersecurity, cloud storage, and even agriculture sectors are looking at it as the new framework for their future business processes, but one industry especially will be blockchain’s biggest platform in the years to come.
Blockchain has immense implications for retail simply because it’s so relevant to the technology’s earliest and still-evolving ambitions. Remember that from inception, blockchain was the backbone of bitcoin, a digital cash that was purported to bring cheaper, faster exchange and settlement mechanisms to the aging financial sector. Retail, being a multi-trillion-dollar cross-border industry with millions of stakeholders, is one of bitcoin’s juiciest targets—and blockchain’s by extension. The bitcoin community lives in a perpetual dream state, where an announcement of bitcoin support from Amazon, Apple, or another retail giant is just around the corner.
The reasons that enthusiasts entertain these pipedreams is only to see bitcoin gain fiat value, though in its idealized (not current) state bitcoin would indeed cut enormous retail overheads. Retail industry innovators are content to wait while bitcoin slowly irons out its issues and are developing other blockchain solutions in the meantime. Some with payment utility will undoubtedly beat bitcoin to the punch, but blockchain is also likely to help retail businesses provide more equitable loyalty rewards programs, exercise tighter control over their supply chains, offer airtight customer data protection and alleviate other industry pains as well.
The Trouble(s) with Retail
Retail is an enormous industry and has itself created mini-industries and niche sectors that it incorporates to achieve efficiency. Blockchain solutions now exist that address each of these components individually–advertising, data storage, payment processing, warehousing, logistics and more. These haphazardly placed cogs each contribute some function to the machine that enables someone to click a picture in their internet browser and have the item show up the next morning at their front door, for instance. Using blockchain to improve these moving parts will help retail evolve even further.
One much-maligned obstacle in retail is customer rewards programs, which are effective at informing customer brand choices, yet cannot manage to incentivize customers to spend the rewards they’ve accrued. In 2017, a report indicated that there is more than $100 billion in unspent loyalty points for the world’s major retailers, despite an increased expenditure on the part of these companies to improve their loyalty programs. Blockchain is already being used by industry leaders to combat this trend, like in HotNow’s platform, which uses cryptocurrency and the ledger to inspire customers to interact more with brands and be their biggest advocates.
Merchants on the HotNow platform incentivize customers by paying them in HoToKeN to engage in activities like posting about the brand on social media, writing a review, trying a new product, taking photos and other value-added missions. The decentralized ledger can easily show which customers lend the business the most social momentum, and which have the healthiest velocity of tokens between their account and the stores they shop at. HotNow ensures this value cycle continues by offering these special customers the option to borrow HoToKeN in bulk, which is the equivalent of a significant discount at their favorite retailers.
Another area in retail which needs improvement is logistics. The same ideas that make it possible to track a package in today’s retail environment will be upgraded by blockchain in terms of accuracy, transparency and cost. The various systems that must communicate with one another across the supply chain are designed to reduce errors, but they’re not standardized or transparent enough to succeed. Items are frequently lost and damaged during shipping, but solutions like WAVE will help. WAVE is a decentralized logistics platform that acts like a spreadsheet shared between all participants in any supply chain. It will be used to sync operations, obtain more accurate dynamic pricing, autonomously check for quantity and quality discrepancies, and resolve disputes in one place.
Progress Made, But More to Go
With these examples and those of other blockchain ventures, which are revolutionizing areas like payment processing, data sharing and more, retail is slowly repairing the cracks that have appeared in its armor. Success is almost inevitable at this point, yet the big win needed to silence blockchain skeptics hasn’t materialized just yet. Once a solution emerges that is used on a large scale to improve everyday retail transactions, then the biggest piece of the puzzle will have also arrived. This will conveniently deliver the impetus for other industries to pour their R&D dollars into blockchain as well, meaning that critical mass may be just a few more baby steps away.