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BlockChain

How Blockchain Technology Can Deliver Value To The Retail Industry

Blockchain’s immutable ledger, cryptography and decentralized database bring to retailers several benefits at all stages, all the way from farm to customer doorstep.

Omni-channel commerce has leapfrogged into a trillion dollar industry. It has turned the world into a small retail village where consumers are able to reach out and pick any product of their choice without any difficulty.  

But, this convenience has brought a long list of operational challenges for retailers.

Some evident challenges include:

  • A restricted view of the supply chain due to several intermediaries
  • Ensuring product authenticity amidst Counterfeit products, stolen goods and fake labels
  • Complicated shipping and logistics processes that are repetitive in nature

Blockchain As A Value Driver For The Retail Industry

Blockchain can provide the retail sector with several bold and innovative use cases that will help address the above-mentioned challenges.

Ensuring Transparency In SCM

In Supply Chain Management, traceability of inventory is critical for pricing and profitability. The existing systems require retailers to compile information from multiple sources like manufacturer, supplier, 3rd party logistic players, etc. to know the real-time location of inventory.

Due to the manual processes involved and lack of real-time data capture, inventory planning ends up being a guesswork which ultimately leads to a phenomenon called the ‘Bullwhip effect’.

Bullwhip effect is caused when the retailer raises too many orders for a product thus causing piling up of inventory and increase in inventory carrying costs like warehouse rent, carriage, octroi, etc.

Blockchain can prevent the occurrence of Bullwhip effect and similar SCM inefficiencies by providing suppliers, retailers and logistic players with real-time digital information. This will help improve inventory demand forecast accuracy and reduce dead stockpiling or stock-out situations.

Identifying Stolen Or Counterfeit Goods

According to the Organisation for Economic Co-operation and Development’s Trade in Counterfeit and Pirated Goods publication, “5% of goods imported into the European Union are fakes.” This amounts to a staggering USD 461 billion.

Luxury items like fashion clothing, premium watches, electronic gadgets, home appliances, toys, etc. are the most counterfeited goods.

Blockchain can help customers and retailers ascertain product authenticity and quality at all stages of its transit and distribution. All product information, including ingredients, item number, place of origin, etc. can be tracked in the uneditable digital ledger.

This availability of information will improve customer trust and also help retailers prevent counterfeit goods from taking a share of their revenue.

Uncomplicating Paper-based Shipping Procedures

Sending a consignment from one port to another involves processing a bulk stack of paperwork like Bill of Lading, Certificate of Origin, Letter of Credit, etc. This paperwork has to be scrutinized, approved and re-approved at several junctures by shippers as well as port authorities. This processing delays the clearance of the goods often reducing their shelf-life and putting retailers at the risk of missing a timely entry into the market.

Blockchain with its decentralized record keeping can remove the need for this paperwork. It will create a common platform for scrutiny and exchange of confidential records related to the consignment. This will help accelerate the pace at which goods can be shipped to ports and subsequently cleared from customs to retailers.

The Way Forward

Blockchain is a relatively new concept. Retail is one among the many industries where it will radically change the way everyday business is carried out.

Retailers who are proactive in adopting Blockchain will be able to attain an early-mover advantage. Of course, there are inherent challenges like resistance to organizational change, migrating massive data volumes from legacy systems, training stakeholders and so on.

However, the benefits that immutable digital ledger can bring to a retail business outweighs all these initial hiccups. It is time for retailers to move fast and embrace Blockchain as the future way of doing business.

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How Blockchain Development Could Be a Disruptive Force In The Digital World

Blockchain is a chain of blocks made up of encrypted records. Blockchain development will do to transactions what Internet did to information collection and distribution.

That’s the elevator pitch for blockchain.

Now let’s take a look at how it works in the real life. Imagine you want to buy a car and register it in your name. This requires you to go through several physical checks and paper records to ensure the car’s title and sale worthiness before getting into the registration process.

Apart from your scrutiny process, the records would also have subject to multiple scrutinies by middlemen which makes the process tedious and time-consuming.

The bad news is, despite the record checking and vetting, transactions do end up in a folly.

Information tampering, false information and errors make can make the process unreliable and difficult.

Blockchain aims to eliminate all these difficulties in tracking, recording and vetting ownership of tangible assets and digital information.

Any business that has digital assets ranging from contacts to smart contracts can gain significantly from Blockchain development.

What Makes Blockchain So Powerful?

Blockchain is an uneditable (the technical term is immutable) digital ledger that is updated on a real-time basis. It is stored on a distributed network connected by peer-to-peer systems that no single authority owns completely.

It is decentralized

Nobody can claim ownership over a blockchain neither can anyone take down blockchain single-handedly.

It is time-stamped & cryptic in nature

Every single record in Blockchain is encrypted and time-stamped. It is not possible to edit the record unless it is owned by the user and also the user has a private key to access it.

Records are immutable

Each block of records in a blockchain is linked to its previous block or series of blocks, which when edited, updates all dependent blocks on a real-time basis.

Uneditable records, time-stamping and encryption has led to wide adoption of blockchain for real-life business applications. Before you know it, Blockchain would be influencing every single transaction that you carry out in our everyday life.

Almost every industry that relies on digital data would be disrupted by Blockchain. The positive impact will be evident on two major industries: Banking and Retail.

Reducing Lender’s Risk in Banking & Financial Transactions

In the banking industry, earning and maintaining customer trust is of paramount importance. Existing methods of clearing settlements, trade finance sanctions, syndicated loan processing, etc. are prone to fraud and error.

Blockchain can reduce that lender’s risk by combining databases of financial transactions, loan payables, bad debts, loan defaulters, etc.

For instance, a lender can cross-check if a collateral security is already pledged with any other bank before the loan is sanctioned. Similarly, the creditworthiness of borrowers can also be verified by scrutinizing their past banking and financial transactions enlisted in the digital ledger.

Since all the records are decentralized and cannot be edited easily, it makes a trustworthy source for lenders to rely on for decision making. This also simplifies quicker cross-border payment transactions which otherwise have to be routed through intermediaries.

Who is using it?

The Royal Bank of Canada is experimenting with a Hyperledger based Blockchain system to facilitate cross-border transactions between its Canadian and US banks.

Providing real-time traceability in Supply Chain Management

Supply chain is one sector where inventory traceability needs to be ensured each time the inventory status or value changes.

For instance, perishable items like meat, milk, vegetables, etc. require being transported in cold storage condition until they reach the store rack.

A retailer would want to know all possible details about the inventory like its origin, time when it was shipped, the temperature at which it was stored during transit and similar status updates of the inventory at all stages of the supply chain.

Such information should also be verified and authentic. Blockchain makes it possible by setting the platform for various businesses using the same network to validate the data on a real-time basis. In a supply chain, it would include the farm, the transport agency, warehouses and retail stores.

Each time the block, that is the record is added to the chain, it becomes part of the immutable ledger which can be referred to spot quality issues, end of shelf-life approaching goods or even spoilt goods easily.

Who is using it?

Walmart has already optimized its retail options for the good by implementing blockchain for ensuring food safety and to improve end-to-end supply chain traceability.

Final Words

Blockchain development has numerous practical uses for everyday business transactions. The number of applications to which it is used will exponentially increase in the coming days. The adoption rate will increase drastically as and when business leaders gain clarity over existing security. The day when Blockchain will become the common norm of business transactions is not very far.

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