Four use cases of blockchain technology in the retail industry

Blockchain technology expanded outside the cryptocurrency sector long ago, although it was underrated and perceived with skepticism. Nowadays, companies use blockchain for almost anything, from ensuring data security to managing vast amounts of digital information.

That’s because, compared to cloud storage, blockchain ensures data protection and integrity without requiring third parties to be involved. The encrypted system provides various encryption methods that secure information in safe databases.

Blockchain is, for now, best managed by smart contracts on Ethereum. At the same time, the applications built on the blockchain run without the risk of fraud, downtime and control, which has influenced the ETH price since the network is highly reliable.

With all these benefits, blockchain has made its way into retail too, which is known for being stuffed with data and information that need to be correctly managed. So, here’s how this technological advancement is used in retail.

Traceability improvement

One of the biggest challenges in the retail sector is the need for a proper traceability system.

As businesses use different platforms for data sharing, the inoperability of these processes usually leads to more complications and failure at overviewing the suppliers’ practices. And while barcode systems have proven unreliable, blockchain technology can eliminate these limits through decentralisation.

An effective blockchain-based tracking system is best with smart tags, which can be used in the following ways:

●      As QR codes that almost any modern smartphone and tablet can read;

●      RFID tags (radio frequency identification) require a particular device to emit radio waves and receive a signal back; these tags can scan tags at a distance of up to one kilometer;

●      NFC chips (near-field communication) are similar to RFID but don’t have the same wide range of applications;

Tracing a product can be done by assigning it a smart tag that tokenizes it, making it easy to find. The participants of the blockchain have unique identifiers through which they sign transactions.

Counterfeiting combating

The following problem in retail is counterfeiting, which, although classified as a crime, happens all the time. Imitating a product fraudulently without the original company’s permission leads to considerable revenue losses and even the loss of jobs over time.

Moreover, counterfeiting highly affects customers as they get low-quality products and services.

Using blockchain technology could improve this occurrence by identifying the product’s proof of origin.

This protocol provides evidence that the goods are produced in the issuing country or company, tracking all processes from the extraction of raw materials to the product’s shipment and offering enough visibility through the entire supply chain.

The FDA has already recognised protecting businesses through blockchain technology in the New Era of Smarter Food Safety Blueprint” in which food illness outbreaks will be minimized through blockchain and AI processes. 

Food safety safeguarding

Food safety is yet another issue challenging to control. Companies have always been struggling to prevent economic losses from spoiled food, which ends up in landfills.

But the biggest problem is that many people get ill from consuming these products since companies can’t always ensure that the food transported is still in good condition or transported in certified trucks. 

A solution for eliminating this concern is using IoT technology, which would work as a blockchain-based method, through the following process:

●      An IoT sensor is installed in the location where the food is kept to measure the temperature;

●      Employees get a notification on their devices when the temperatures reach poor degrees;

●      Employees can solve the issue fast by changing the temperature inside, based on the guidelines;

●      At the end of the procedure, the platform does a problem report and records it on the blockchain;

Such a strategy would be able to regain customers’ trust in the company since it provides the best products, and they can learn about the food’s sourcing by scanning it as a QR code.

At the same time, through blockchain technology, it’s easier to pinpoint where exactly a problem occurred so that businesses can predict when the food’s quality is expected to lower to take proper measures. 

Loyalty programmes enhancement

Loyalty programmes are always an excellent way to gain customers’ trust and increase customer retention. It also helps businesses expand and improve their brand image.

Unfortunately, most of these programs lack proper organisation, which is why people are avoiding them. With blockchain implementation, companies can set up some of the best loyalty programmes through:

●      E-wallets to redeem people’s loyalty rewards;

●      Launching offers aimed at specific audiences;

●      Increasing liquidity of loyalty points;

●      Providing traceable and impossible-to-fake loyalty points; 

A company can create a decentralised system to allow customers to spend their loyalty points to spend their rewards across multiple brand and retail segments. This way, all network participants can interact and keep their privacy intact.

Real life examples of a blockchain approach in retail  

Retail blockchain solutions are already approached by big companies that are open to new opportunities, such as the following:

●      Walmart is using blockchain to solve issues regarding logistics and transportation since the company needs to manage enormous amounts of invoices and payments. Since 2021, Walmart has collaborated with a developer of an enterprise company that helps with making all data recorded in the blockchain immutable;

●      De Beers provides the authenticity of their end-products and source materials used in the manufacturing of luxury goods and jewelry through blockchain solutions;

●      American Express partnered with a company to create a blockchain-based system that would allow merchants to create special loyalty programmes for customers with American Express cardholders;

●      Carrefour started using blockchain technology in 2021 to trace some exclusive textile products. Their customers can scan a QR code to find out more about their product, form the producer’s name to the cultivation location;

Bottomline

The retail industry has greatly benefited from blockchain technology.

This method allows a customer to trust the business entirely and also provides best practices to trace the transportation of products, eliminating human error. Therefore, the retail industry can save the costs otherwise lost and improve its strategies to offer qualitative services and products.