The genius of blockchain is its trustless system that records, retains, and secures every transaction. You don’t have to wonder if a recorded transaction is accurate either because, in distributed ledger technology, each node has an identical copy of every transaction that can neither be deleted nor edited.
Blockchain relies on an open, distributed ledger that records real-time information. It is a permanent, transparent, and verifiable record of all transactions between participants on the blockchain. The ledger represents a database of information where transactions are stored across a variety of data servers in a ‘decentralized’ fashion. The data is both stored and shared over a peer-to-peer network, with multiple copies of the same data being stored in different locations across different devices.
The retail industry requires and can utilize the facility, trust, and transparency pre-packaged in blockchain technology.
Better customer experience, product traceability, returns and warranty services, and limiting product counterfeiting are all a cinch with blockchain.
Brick-and-mortar retailers suspicious of modern tech continue to lag when it comes to the adoption of blockchain. But, a seismic shift in thinking has been occurring over the past few years, with a growing number of high-end retailers recognizing the potential of this technology.
This phenomenon is part of the greater digital transformation taking place across the retail sector. A recent Deloitte study discovered that, along with e-commerce, digital interactions impact as much as half of every dollar spent in brick-and-mortar stores, caused by the expectations of price transparency, convenience, and relevance.
Retailers can begin by improving the initial buying experience of the customers by providing a better buying experience. With burgeoning outlets and a mix of both in-person and online sales, it is difficult for retailers to keep track of customer preferences and purchase history. Blockchain can help retailers create a single view of the customer that is updated in real-time. This would allow retailers to provide a more personalized experience to customers.
Along with better customer experience, blockchain technology can offer instant and accurate data integrity when applied to data-reliant customer loyalty schemes. With blockchain capturing at every stage of customer interaction will help businesses improve qualitative analysis and add customer modeling capabilities. Retailers can make use of blockchain for customer loyalty programs and can give consumers the option of storing ubiquitous loyalty points with a single wallet rather than accumulating them in isolated membership schemes. This way, customers will be more engaged with loyalty programs as they can easily track and redeem points and rewards. Technologies like big data analysis and artificial intelligence also help create personalized communications for each customer.
Instead of doing away with brick-and-mortar stores, giants like Amazon are helping change the way consumers buy at retail outlets, along with expectations around customer experience and delivery. The online retail industry has driven substantial change, thanks to the rapid advancement of technologies such as artificial intelligence (AI), machine learning, cloud computing, and warehouse automation.4 Quietly ticking away in the background, you’ll find blockchain playing a crucial role in the future of retail.
With its trustless and secure data management, blockchain has obvious implications for tracking where products come from, whether or not they’re genuine, and in what condition they are. Perishable goods, for example, can be monitored by the Internet of Things-enabled sensors to record temperature data on a secure digital ledger. Through the IBM Food Trust, IBM has partnered with Walmart on such a project.
Suppose a product is found to be defective. In that case, a blockchain history enables a business to track the product back through the supply chain, identifying suppliers, manufacturers, and batches that may have been compromised. This technology allows retailers to recall products easily and rectify supply chain issues. A blockchain can be leveraged to solve issues such as recordkeeping and product tracking, proving to be a better alternative to the centralized database. They are adding a new level of trust to the brand-customer relationship. Digital recording of every stage of the supply chain process helps boost product authenticity by providing brands the ability to perform provenance tracking, inventory control, and cost reduction.
Provenance tracking, for example, can track products past just the RFID tag. In the past, using a conventional system was practically no way to differentiate between genuine and fake tags. However, given that a tag contains information about the endpoint of the product journey, which can’t be altered, spotting counterfeit products becomes easy.
To illustrate this, let’s imagine that a customer bought an expensive ring at a jeweler like Tiffany’s that had an assigned smart tag. By scanning a tag, the customer can immediately know that the ring’s end point was a specific Tiffany branch. If he or she bought that ring from somewhere else, the ring is certainly fake.
Blockchain can also be used to protect customer data more securely. We see customers exchanging personal data with every company they interact with. Each company stores this information in a centralized database. This data is put at high risk, especially as these systems are highly prone to system breaches, hacks, and data losses. This will affect brand perception and consumer trust. This information can be securely stored in a blockchain as it is a decentralized, secure ledger that cannot be hacked. People with the exact private cryptographic key can only access this data. Consumers can even control the level of information they want to share with retailers. This way, the consumers are aware of who needs their data and the purpose for which they need it.
The author Pratik Gauri is the Founder of 5ire