Retailers had problems during the onset of the epidemic, such as inventory management, supply chains moving, stores operating and employee safe. Retail sales are growing as the world takes cautious measures toward reopening. Now is a pivotal moment for the retail industry to employ blockchain technology to address all challenges of the new normal.
While blockchain technology was initially used largely in the realm of digital currency, it is also a promising technology for a variety of other sectors. Let's look at some of the most impressive blockchain applications by clients and retailers in many business processes in the retail industry.
1. Is It Necessary for The Retail Industry to Adopt Blockchain Technology?
Although there is a shift in mindset, brick-and-mortar retailers are lagging behind in embracing blockchain technology in their businesses. In an MIT Sloan Management Review and Deloitte's Annual Study of Digital Business, 4,300 business leaders from 123 countries representing 28 sectors were surveyed to map the maturity of various industries. The retail business, according to their results, scored significantly below average in terms of digital maturity, pegging them a prime candidate for deploying these technologies.
Why are the applications of blockchain in retail so seemingly sluggish? Consumer trust is retail nirvana in this sector, but it is also readily shattered. Rather than the fact that more and more consumer transactions are taking place online, blockchain provides a method to further legitimize trust, which is beneficial to the retail industry.
Perhaps a better question is whether the retail business should bother with blockchain at all, given how complicated it appears to be. The explanation is simple: their customers are rapidly developing, therefore their technology should as well. Consumer expectations in terms of delivery speed, sourcing, transparency, and authenticity are shifting, and blockchain is poised to assist retailers to meet those expectations, particularly in the areas of mobile payments, supply chain, and financial applications.
2. Blockchain Potential Applications in The Retail Industry
The usage of cryptocurrencies to exchange value or data is now possible thanks to blockchain technology.
Some retailers have begun to examine the blockchain's possibilities in their business. For example, retail giant Walmart has put its leafy greens on the Blockchain, while Alibaba is implementing blockchain solutions for its subsidiaries to track cross-border shipments more effectively. So how can blockchain be used in retail? Here are a few more blockchain applications improving the retail industry.
a. Streamline Retail Sales Tax
Streamlining sales tax is another benefit of using blockchain technology in retail. In actuality, every retail company needs to pay taxes based on their sales every year. Nonetheless, many tend to avoid paying this tax, which amounts to $14.5 billion! Furthermore, most of this tax evasion comes from online retailers. If this goes on, companies can even get felony charges against them for doing this.
Blockchain-based automated sales tax collection can help alleviate this problem by allowing businesses to pay taxes depending on the number of sales or profits they earned in the past. Retailers also have the option of uploading their papers, which will be verified on the network. This is actually a wonderful method to pay up the tax in due time and prevent any legal issues.
b. Product Provenance
The blockchain's capacity to provide end-to-end transparency on the source of origin for ingredients and products provides better products and financial loss avoidance. It is likely to become the industry standard in the long run, and it is and is presently providing a competitive edge to early adopters.
Consider the financial and ethical value of being able to identify a product's origins, particularly in the food and beverage industry. Consider the BSE disaster in the United Kingdom in the 1990s, often known as Mad Cow disease, China's infant milk scandal in 2008, and the 2006 E. coli epidemic in the United States, which shut down a nation's spinach producers for weeks while investigators hunted down the cause. By building a huge database of food provenance, enhancing food safety, boosting profit, and decreasing waste, blockchain technology can help to prevent these scenarios from occurring.
c. Fraud Prevention
Blockchain technology was first developed to prevent fraudulent transactions in digital currency exchanges, and now retailers are utilizing it to prevent counterfeit products from reaching customers. The De Beers Group utilizes blockchain to monitor its diamonds from mine to retail and keeps account of every transaction, minimizing the risk of fraud and providing customers with more information about the business.
d. Management of Loyalty Points
By allowing users to keep all of their points, prizes, and discounts in a single digital wallet rather than attempting to manage numerous loyalty programs, blockchain might be a solution to the low-redemption problem that most loyalty programs confront. Furthermore, blockchain allows for real-time incentive distribution and redemption, making loyalty programs more adaptable for consumers and across merchants, brands, and locations.
e. Compliant Consumer Data
Customers are now exchanging a large amount of personal data with each firm under the existing arrangement. This data is saved in each company's database. This information is in danger, especially because these systems are vulnerable to system breaches, hacking, and data loss. This will have an impact on consumer perception and faith in the brand.
When dealing with the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act of 2018, blockchain helps businesses to manage their customers' digital identities and information in one single database. Smart contracts, which are agreements between two parties written in computer code that runs on the blockchain and is kept on a public database and cannot be altered, might help businesses manage their customer data privacy compliance. This might be used to manage permissions and customer data access. Consumers may even choose how much data they wish to share with merchants. In this manner, consumers will be informed of who needs their data and for what reason.
f. Accepting Payments with Cryptocurrencies
Blockchain enables the usage of cryptocurrencies to exchange money or data, and it comes into its own for merchants when dealing with cross-border payments and micro-payments. Overstock was the first large online shop to accept Bitcoin as payment in January 2014, and it has since received a reported $5 million in Bitcoin payments each year. However, except for a few notable early adopters such as Expedia, Dish, and Microsoft, acceptance in the retail sector for bitcoin payments has been rather modest.
Looking at the retail business, the blockchain paradigm has the potential to affect a wide range of processes, from supply chain management activities up to sales and after-sales services. Through interoperable services and data, these technologies promise to improve the user experience while also facilitating products delivery. Despite being a buzzword, blockchain is increasingly becoming a tangible reality. It is a ready-made and mature solution for retailers in the next years.
With our expertise in consulting across various industries, SotaTek can develop a comprehensive roadmap for the adoption of blockchain in your business. Our business deployment specialists are always willing to assist that first step and hand-holding to get you there. Please contact us today for further information so that future resilience and growth may be included in your planning.