While the banking and finance world are lighting up over the idea of and savings behind smart contracts, the application in retail is also a hot topic of conversation these days. Smart contracts powered by blockchain enable actions to automatically take place, once a given set of conditions occur (if X happens, do Y). For example, to increase efficiency and traceability for products or materials going across borders, a smart contract could be used to automatically trigger the necessary customs documentation when an order is placed to a specific supplier, sending to a cross-border destination.
Smart contracts can also play a larger role in supply chain tracking, given that the automatic “if this, do that” action can be used to verify the numerous steps in a product’s journey.
Supply chain tracking
One of the most interesting and perhaps impactful uses of blockchain on the retail industry would be its application into supply chain tracking. Walmart is leading the charge in this area, partnering with IBM on a blockchain-based food tracking system. The pilot program’s goal was to improve food safety by collecting information on where and when food was grown, inspected and cleared. As Walmart’s testing have been successful, it’s likely that more blockchain-powered solutions to supply chain tracking are not that far ahead in the future.
The biggest impact blockchain solutions will have on supply chain tracking is trust, as the increased level of transparency and validation breaks down communication silos between supply chain and logistics partners. Retailers with global supply chains will, in theory, be able to verify a product’s movement through each step of the supply chain by digitizing documentation of a product’s journey and writing it to the blockchain. In practice, this would provide several benefits for retailers, including quick identification of a product’s location, verification of materials used and validation of landed costs, to name a few.
Other impacts: Marketing and customer experience
We’d be remiss to leave out the conversation of blockchain’s potential impact on retail’s marketing/advertising efforts and customer experiences — both very big line items for retailers. Retailers are projected to spend more than $15 billion on digital advertising this year, but the ad industry is plagued by fraud driven by bot traffic or other non-human ad views and disagreements between parties on ad performance and billing. AdAge reported that blockchain solutions could provide irrefutable accuracy across platforms, publishers and advertisers. However, the technology is still a long way off from actually stopping ad fraud, as blockchain technology cannot yet keep up with the speed of programmatic advertising. We’re staying tuned.
With customer experience, many are envisioning implementing blockchain technology as a way to win consumer trust, particularly in the age where people care about sustainability and want to know where their products come from. Being able to verify and track products through the supply chain gives retailers the information they need to communicate a product’s origin to consumers to build trust and win wallet share.
As the market around blockchain matures, the tangible applications of the technology in the retail industry will surely evolve. Luckily, retailers can already take advantage of some of the tenets of blockchain through multi-enterprise business network and enhanced collaboration platforms, like Bamboo Rose. The level of visibility and validation that blockchain provides, and the subsequent collaboration, trust and risk mitigation benefits that come along with it will be necessary for retailers seeking to thrive in the current and future state of retail.
Learn more about the practical applications of blockchain in the retail supply chain in our latest whitepaper, “Using Hybrid Blockchain to Build a Better Retail Community.”