How can Blockchain shake up the buying experience?
Virtual changing rooms. Drone delivery. Try before you buy. One hour deliver slots. Keeping up with the pace of change in retail is dizzying. And more changes are on the horizon thanks to blockchain.
You wouldn’t be blamed for thinking Blockchain is a new invention, but in actual fact, it emerged in 2008 and was designed to serve as the public transaction ledger for cryptocurrency. But the potential of this technology has grown to offer retailers horizontal applications across areas such as payments, customer relationship management, data and analytics.
Before we dive into how this is affecting retailers, let’s take a closer look at what Blockchain actually is.
Blockchain lies at the heart of Bitcoin and other cryptocurrencies. It’s an open, distributed ledger that permanently and verifiably records transactions between parties. The information is recorded in real-time, is unhackable (or so they say) and can be accessed by anyone with the right key, so in a Blockchain-enabled future, every agreement, process, task, payment or customer interaction can be digitally recorded, stored and shared.
Sounds great right, but how will this affect our future buying experiences?
Boosting customer loyalty
Blockchain offers accurate, instant data integrity – which is hugely applicable to data-reliant customer loyalty schemes. The nature of the technology ensures that data is captured at every stage of customer interaction, meaning qualitative analytics will be improved along with customer modelling capabilities.
Some retailers are actively exploring Blockchain capabilities within customer loyalty programs by allowing consumers to store ubiquitous loyalty points within a single wallet rather than accruing them within isolated membership schemes. Expanding the utility of the points means customers would be increasingly engaged with loyalty programs as points and rewards become easier to track and redeem.
The wealth of information could even be tied into artificial intelligence via big data analysis to create personalised communications for each customer, offering the right reward at the right time.
Creating transparency in the supply chain
The recent rise in ethical consumerism and interest in the origins of our products is often at odds with the development of increasingly complex supply chains. But the nature of Blockchain’s unalterable, commonly accessible records could bridge the gap. This technology enables customers to track goods through every link in the supply chain, from manufacturers, distributors, shipping carriers, insurers, importers, wholesalers and retailers. Knowing in real-time the exact source, location and state of all inventory in the system could be a game-changer for most businesses, particularly those dealing in perishable or luxury goods.
Say for example, a supermarket was selling a banana cake, the Blockchain data would not only tell you exactly where and when that cake was made and who by, but would include data about individual ingredients so the retailer could prove the manufacturers were using Fairtrade or organic bananas and sugar, check whether allergens had been included and also that the products was fresh.
Not only could this development add a new level of trust to the brand-customer relationship, unalterable digital recording of every stage in the supply chain process could help ensure authenticity, reducing the risk of counterfeiting often prevalent in the pharmaceuticals, luxury goods, arts, antiques and electronics sectors.
Easier, faster and more secure payments
As we mentioned earlier, in the past Blockchain has been most widely known as a secure and trusted system for tracking transactions and ownership of crypto-currencies like Bitcoin.
This means Blockchain not only makes it possible for retailers to accept crypto-currency payments which brings advantages within cross-border payments and micro-payments, but the digital records created will streamline the returns and refunds process. And using smart contracts with Blockchain could also mean instant payments and automated refunds.
Several global companies including travel giants Expedia and e-commerce platform Shopify are already using Bitcoin in this way.
Increased consumer privacy
Traditional retail systems requires consumers to give their personal data to every company they interact with, from identity to bank details to health records. Each company subsequently stores the data in their own siloed database, with each silo acting as a potential point of failure, leaving brands open to hacking breaches and data loss which has the potential to lead to plummeting sales as shoppers take their custom elsewhere.
If successfully adapted to be private, Blockchain could be used to store this information in a single, decentralised, unhackable ledger – accessible only to those with the correct private cryptographic key. Consumers would even be able to control what level of information they chose to share with retailers.
The resounding good news is that in each case, the customer benefits as well as the retailer. If blockchain offers accurate, instant data integrity making loyalty programmes, points and rewards easier to track and redeem, the customer will become increasingly engaged with the brand. If blockchain can create efficiencies and save costs throughout the supply chain, these benefits can be passed on to the consumer in the form of lower prices. If blockchain enables instant payments and automated refunds, customers may spend more money. You get the picture.
Taking this into account, retails should really consider blockchain as a way to solve some age-old problems across the industry. If you’re looking for a bit more inspiration, check out this blog to see how Walmart, Alibaba and America Express are starting to experiment with blockchain.