Blockchain set to disrupt retail businesses around the world
The process of applying blockchain to retail has begun and exciting developments are taking place
The rise and fall of bitcoins has made blockchain a technology to reckon with. Among other industries, technology is now poised to turn retail upside—providing increased security and transparency to consumers. The process of applying blockchain to retail has already begun and there are some exciting developments taking place in this domain.
Optimize logistics cost: Blockchain can facilitate shipment tracking. It will be like downloading a virtual resume to track a product at every stage and creating a record of the handler’s actions, besides monitoring real-time location, temperature, pressure, or other parameters, for safe-keeping. Retailers can control costs by restricting losses and damages as well as by identifying the source of an issue and isolating the products affected for quick containment. This can reduce product recalls and result in an efficient reverse supply chain.
An Israel-based start-up, for instance, is tackling the supply-chain challenge through blockchain. The members in the supply chain are connected through a decentralised database, enabling them to directly exchange documents. Availability of strong evidence, at each point in the chain, helps manage and resolve disputes.
Build customer trust and earn premium: A UK-based company is using blockchain to build consumer trust, by tracking all supply chain data of a product and enabling customers search it in real time. As an example, it can help customers see where their food was grown, if it is local or not. They can even check what the individual ingredients are (useful for those with allergies) and the supply chain of those ingredients in turn. This is also helping the company charge a premium for its products.
Prevent counterfeiting: Digital businesses, including e-commerce, social commerce and consumer-to-consumer platforms, have all been plagued with counterfeits. Counterfeit goods account for 2.5% of global trade, amounting to $461 billion. Using blockchain, retailers can provide customers with indisputable proof of the provenance and authenticity of their products at every step in the supply chain.
A US-based company has launched a blockchain-based anti-counterfeiting solution for luxury retail and diamonds, electronics and pharmaceuticals. Goods are tagged and verified at the point of manufacture and then certified on the blockchain. When customers buy a product they can check the authenticity and, thereafter, be registered as the official owner on the blockchain.
Another European start-up uses the blockchain to track diamonds—from the mine to the end customer. The permanent ledger ensures that diamonds are certified and reduces the risk of forgery of documents.
The transition to blockchain in retail has the potential to hit the shores like a tsunami. Innovation in retail, however, takes time; organizations often draw up their shields when the time for implementation comes. Only some organizations move ahead, while most others follow the archaic wait-and-watch strategy. An important challenge for blockchain to overcome will be participation. Adoption by the entire value chain will determine the success and impact this innovation eventually has.
The first step for retailers will be to understand the technology and its implied value on their operations. They will also need to identify the business processes for streamlining, paying attention to the supply chain—where a blockchain-enabled network can rationalize duplicative record-keeping and databases maintained by organizations and their suppliers. A facilitated brainstorming session with a blockchain expert can also help retailers identify a starting point and answer the question, whether a blockchain process would be optimal to start from scratch or implement as a process improvement.
Sardul Seth is a partner in the advisory practice at EY and also leads its Spectra Digital Analytics solution.