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.