Blockchain has gone from an obscure innovation to the seat of a technological revolution very quickly. People still debate its viability. But proponents of blockchain know that this public ledger system can change the way we view the world. From an initial standpoint, blockchain has direct financial applications. With the cryptocurrency market gaining steam, it is subject to immense volatility. After all this is said and done, it is general consensus that blockchain is here to stay for the long term. Studies suggest that the general public will completely accept this new tech by 2025 or even earlier. This makes it all the more necessary to adapt and assimilate blockchain into the various industrial sectors. One such prominent sector is the retail industry.
The retail industry is growing at an all time high. Burgeoning demand, availability of products, and market penetration have grown several fold due to online shopping. So how does blockchain fit into the picture? Michael Carney, principal at Upfront ventures, says blockchain and decentralized systems give retailers an opportunity to drive efficiency, maintain authenticity and establish an advantage. It can help build trust with customers, minimize paperwork, and increase transparency across the process.
The four major ways blockchain can impact the entire retail industry are listed below.
The retail industry is one of those which requires and consists of the supply chain which has numerous parties involved within the procedure like manufacturers, suppliers, retailers and the end consumer.
Blockchain in retail Industry: eCommerce and retail banking
Here are some of the cases for which the retail industry needs a blockchain for the better and free flow of Blockchain in the entire retail industry including retail banking.
Blockchain in retail banking
Retail banks deal with individual customers by providing them with basic banking services like savings and transactional accounts, mortgages, loans, card payments, overdrafts, etc. this entire process of giving, taking and transferring money from one account to another and vice-versa comprise a lengthy process. It includes lots of paperwork and involves third party interference.
Since blockchain technology introduces a decentralized ledger, it stores a bank’s or financial sector’s complete transaction history across multiple controlled-access computers replicating a breadcrumb trail of banking activity that is impossible to edit, delete or update.
Blockchain in retail banking reimagines many of the core workflows in finance and banking, from records keeping and cybersecurity to currency, debt and equity management. And banks have only begun waking up to its potential.
Some of the banks that are already harnessing the power of blockchain technology are JP Morgan Chase, Goldman Sachs, Bank of America and others.
Role of blockchain in retail banking
The foremost and obvious benefit of blockchain in retail banking is the technology can manage, approve and log any transaction instantaneously. In addition, it directly contrasts today’s often manual authentication, verification and data-sharing finance workflows banking and finance professions still rely upon to carry out transactions.
Also, in retail banking an average KYC request in today’s date usually takes between 30 and 50 days to review and then go for further approvals. A blockchain system allows approved users to access the same data system instead of every bank and third party vendor maintaining siloed customer data portals and having data duplication for each order. It expedites verifications, netting more than $160 million in KYC cost savings annually.
When it comes to borrowing loans, loan syndication activities take a 21 days journey from loan application to loan disbursement. However, this particular process can immensely benefit from blockchain. With blockchain, loan activities are safer, quicker, as well as traceable, again reducing admin overheads, third-party approvals, data duplication and instances of human error. With smart contract blockchain, core pieces of a contract are also visible, irreversible and indisputable.
But that’s not the end! Blockchain offers many more unlocked benefits to the entire retail industry.
Blockchain in retail industry
When it comes to the application of blockchain in the retail industry, there is a need to accurately reflect the different steps in the supply chain and the transfers of ownership and product transformations at each stage.
Quicker in transaction
Blockchain reduces the time taken to complete a process, thus making it much faster and easier. When placing an order under a blockchain-based platform, the ability to make payments is quicker and there is not any delay either. The supplier or distributor or vendor receives the payments immediately as soon as the transaction is made. This allows them to verify and confirm the order placed with transparency. The order is sent out for delivery and it also reaches the customer at the right time and place.
Logistics also become much more efficient with the use of blockchain as the decentralised network encourages effective peer to peer connection. The supplier can make connections with local logistics easily when the demands are higher. If there is any replacement to be made or refunds, with the help of blockchain, the time period of waiting to get these refunds is also faster.
No central authority
In retail and eCommerce, there is too much involvement of third party entities in every operation that takes place. Any process starting right from the order placement till delivering to the customers’ end is composed of many central authorities like banks, legal systems, etc. The important operation where third party involvement influences the customer the most is during the payment gateway.
This is because when payments are made through a third party bank organisation, a particular charge is levied on the customer for using the banking services. This discomfort is solved when payments are made through blockchain because there is a direct connection between peers. Hence, there is no extra price imposed on the customer as there is no involvement by any other party other than the parties involved in the transaction.
Trust among users
Blockchain operates on a decentralised network allowing all data stored to be visible and available to everyone involved in the operation. This creates an environment where there is no malpractice or miscommunication. No information is lost in the communication channel as blockchain provides a direct peer to peer connection.
Peers can keep a track of each and every transaction and operation due to systematic arrangement of data with the help of blockchain. This creates trust among the users and scrutinizes any data or information. Because of the decentralized network, one cannot make changes in the network easily. This offers transparency to the user or customer providing them with an evidence of where the product or service is sourced from. This creates an environment of trust where the user has knowledge of what is happening between suppliers and their products of service.
Seamless supply chain management
Blockchain provides a hassle free supply chain management to all retail and eCommerce business entities. This is because of the ability of blockchain to record every data and transaction digitally. This allows the information to be accessible anywhere and anytime which further allows the owners to track their products or service.
Since blockchain operates in a decentralized network, if a change has to be made, the complete network system has to be changed. Hence, this is a way of creating a strong network between the owner and the manufacturer. With blockchain, inventory management is also efficient due to real-time data storage. It also helps to make smarter decisions.
Laserfiche is an organization that provides records management edition (RME) to manage digital records for the ecommerce and retail sector. With such services, there is an open transparency in digital records stored in inventory for retail sectors. This will help retailers to manage their shelves based on reliable real-time data. Also, Provenance - another blockchain-based organization that aims to create an open transparent digital record of every inventory item for the retailers. Based on accurate real-time data, this will help retailers control their shelves and manage stores.
Digital Payment Processing
Blockchain was initially used as the framework for digital currencies such as bitcoin. These cryptocurrencies offer attractive advantages over traditional modes of payment. With blockchain, retailers can start accepting payments in the form of digital tokens. Especially in cases where the regular transactions either don’t work or need way too much processing to even be viable.
Another complimentary benefit would be the trail left behind by this new mode of payment. Whenever a cryptocurrency transaction is made it leaves an end to end trail that can easily be traced back to its source. This will drastically reduce the burden on the accounting department of big firms. Instant payments, instant refunds, instant settlements can be deemed possible with blockchain.
Cross border payments and micro transactions are more easily handled via digital currency. Also when large amounts are transferred from offshore, blockchain makes it easy to store and record. A few startups have taken strides in this direction.
TenX, a startup in Singapore has successfully connected the Visa wallet to the digital wallet. Thus, allowing consumers to use their Visa cards for payments. BitPay has integrated bitcoin and the sales point, allowing retailers to accept digital payments.
The adoption of blockchain technology in the retail industry will allow transparency and traceability – giving customers choices and confidence in retailers they can trust. Retailers can ethically consume the required data without compromising the customer in any manner. This will surely improve public relations and brand imaging as well. A blockchain-based solution can provide product authenticity and quality by building trust between consumers and retailers and within the entire retail supply chain.
If you are looking to integrate blockchain solutions in your retail operations, do not hesitate to contact our blockchain experts.