E-commerce giants like Amazon and brick-and-mortar retailers like Target and Costco have spoiled consumers with low prices, billions of product options and expedited shipping. So what might catapult the $7 trillion U.S. consumer market to an even higher level?
One word: blockchain.
A distributed ledger technology (DLT) originally intended for cryptocurrencies, blockchain has gone far beyond that realm to include lots of other applications. One of them is retail, where blockchain is used for everything from speeding up shipping to improving food supply processes.
Advantages of Blockchain in Retail
Blockchain in retail offers a slew of benefits that businesses take advantage of. From lower prices to secure payments, companies have found creative ways to enhance their supply chains and elevate the customer experience.
Blockchain technology’s ability to compile data has enabled companies to illuminate different parts of their supply chains. Businesses now offer more insights into where their resources are gathered and where products are made.
As a result, customers can confirm that companies are following ethical standards and apply a greater degree of accountability. This increased confidence leads to stronger bonds between companies and their customers.
Transactions involving cryptocurrencies and other digital assets are becoming much safer, thanks to blockchain. Organizations can rely on blockchain features that track payments and monitor digital assets, detecting fraud based on any abnormalities.
Companies can also set up blockchains with rules governing access. Only approved members are then able to complete specific actions and view sensitive information, creating an additional layer of protection.
The rise of digital currencies has made payments even easier to complete, and blockchain has helped integrate these currencies into everyday life. Retailers can leverage blockchain platforms to set up crypto wallets and accept payments through Ethereum, Dogecoin and other popular cryptocurrencies.
Customers don’t need to be physically present during these transactions either, so businesses can quickly receive payments through websites, mobile apps and digital marketplaces.
Disadvantages of Blockchain in Retail
While blockchain has left a lasting impression on the retail industry, there are some possible setbacks to consider. Problems with energy use, scalability and cost are all factors that retail businesses must address when pivoting to blockchain.
Blockchains not properly organized can prove to be inefficient and end up consuming excessive amounts of energy. The more transactions that occur, the bigger the blockchain system gets. This means that blockchains can get slower as more people join the network, which is something that businesses should consider when investing in the technology.
Scalability also becomes an issue because of blockchains slowing down as they increase in size. Businesses may need to reassess how they use a blockchain, reducing the system to something that merely stores data while relying on different technologies to complete transactions.
Retailers embracing blockchain should consider whether they have the resources to make such a change to their operations. Blockchain technology requires experts who know how to set up and maintain the system as it takes on more responsibilities.
Blockchain in Retail Examples
Although there are risks that come with blockchain, businesses have viewed the advantages of the technology as too good to pass up. Check out these nine companies helping establish blockchain as a legitimate disruptor in retail.
Location: Armonk, New York
IBM finds ways for retailers to improve the overall customer experience with a slate of blockchain consulting services. With the IBM Blockchain Platform, businesses can track their goods in transit and trace them back to where they were produced. The result is a more transparent supply chain that instills confidence in customers, who know that the goods they buy are safe and sourced under ethical standards.
Location: Fully Remote
Coinbase simplifies transactions between businesses and customers with e-commerce tools focused on crypto. The company’s platform enables organizations to accept payments in the form of popular cryptocurrencies, including Bitcoin, Ethereum, USD Coin and Dogecoin. There are two plans that offer a self-managed crypto wallet and a Coinbase-managed one, allowing businesses to take a hands-on or hands-off approach.
Location: Fully Remote
ConsenSys makes it easy for organizations to embrace blockchain technology with its blockchain product suite. While Quorum enables businesses to quickly build blockchain applications, Diligence adds security measures for extra peace of mind. Retail companies can then process faster payments via crypto, verify transactions and better monitor their digital assets.
Location: Arlington, Virginia
Nestle is offering more details on its supply chain by adopting the IBM Food Trust’s blockchain technology platform. Through this partnership, Nestle provides a way for customers to locate the source of beans used in editions of its coffee brand Zoégas. Scanning a QR code on the package gives anyone access to blockchain data, so customers can track their coffee beans and understand the harvest methods used for Nestle’s products.
Location: New York, New York
Fluz uses blockchain to curate a social e-commerce platform. “Fluzzers” (customers) earn cash-back rewards for purchasing digital gift cards to some of the biggest brands in the world — including Uber, Netflix, Starbucks and Nike. The company’s blockchain records gift card spending and social network growth. Users earn additional cashback opportunities and Fluz Tokens in real-time for growing their network. The tokens can then be used to purchase more gift cards.
Location: New York, New York
ShopIN uses blockchain to help retailers gain better customer insight. With its shopping information ecosystem that encompasses both consumer and retailer, the company aims to streamline the shopping process. The Shopin blockchain collects data on customer shopping habits, purchases, preferences and wishlists. Those who willingly share their information are rewarded with cryptocurrency. Retailers then use the information gathered to personalize offers, marketing materials and incentives that spur customers to make more purchases.
Location: Atlanta, Georgia
BitPay facilitates crypto transactions by supporting customers with a platform that accepts a variety of crypto wallets. Whether it’s Coinbase or Metamask, companies choose their preferred crypto wallet to set up an account with no initial fees or monthly minimums. Businesses can then conduct and receive payments from people in over 200 countries, enabling them to expand their international presence.
Location: New York, New York
Portion is a blockchain e-commerce site and marketplace for purchasing digital and physical art. Art enthusiasts place bids on a ledger system, which records each bid, verifies proof-of-funds and processes the winning bid. Winning bidders are then given a blockchain-based certificate that verifies the purchase as well as the authenticity of the art. The company’s Porti tokens immediately divide up the profits between different shareholders at the moment of purchase.
Location: Mount Arlington, New Jersey
Buying.com is the first e-commerce platform that allows both consumers and online stores to buy directly from manufacturers, distributors and wholesalers. Manufacturers usually bulk-sell their items to retailers at a reduced cost. Retailers then resell those items to consumers at a higher rate. Ditching that paradigm, Buying.com manufacturers list their products in bulk quantities. Businesses then get first crack at purchasing a share of the bulk items. Individual consumers can purchase whatever remains at the manufacturer’s lower price.