• The retail industry has become increasingly complex in the past decades. Products are made in one part of the world, assembled in another and sold in a third part of the world, whether it is food, clothing or flowers. As a result of this complexity, transparency has become challenging, and it is not always clear to consumers how and what products move through the supply chain. When it comes to tracking products from farm to plate, customers are often left on their own. Even with Fair Trade, where transparency is a pre-condition, it is often difficult to verify if a Fair Trade product is indeed fair.

    This lack of transparency is increasingly a source of discontent for consumers, who want to know what they buy, the materials sourced and if regulations were followed. However, it is also necessary for retailers to understand how their products move through the supply chain. Not only for non-eatable goods but especially also for perishable goods it is important to be certain whether, for example, the temperature during transportation remained within certain limits. As such, the provenance of products is becoming increasingly important, and that is exactly where blockchain, or Distributed Ledger Technology, could contribute.

    4 Applications of Blockchain for the Retail Industry

    The potential of Blockchain for the retail industry is enormous as it can eliminate all errors that generally happen with global, complex, supply chains. There are several ways how Blockchain can help:

    1. Creating Transparency

    Blockchain offers immutable, verifiable and traceable data, enabling anyone with access to that blockchain to check the provenance of whatever is recorded on that blockchain. These three characteristics are what makes Blockchain so valuable for the retail industry because once all supply chain partners participate in a decentralised solution, complete transparency becomes possible for all stakeholder. More importantly, all stakeholders can be confident that the data is correct and has not been tampered with and in addition, it gives all stakeholders in the supply chain a reputation.

    2. Improving Supply Chain Efficiency

    However, not only transparency can be achieved, but also efficiency can be increased when smart contracts are used. Smart contracts can be used to settle transactions automatically once the goods arrive and action can be taken automatically once certain pre-defined rules are not followed. For example, when the temperature in a refrigerated container becomes too high, it automatically results in a lower price to be paid by the buyer.

    3. Warranties

    Warranties can easily be converted to the Blockchain, where consumers can easily transfer them if they decide to sell their product. The company Warranteer helps retailers move their warranties to the cloud and on to the Blockchain, enabling retailers to keep their warranties up-to-date, verifiable and transferable.

    4. Reducing counterfeit products

    Products such as luxury handbags, diamonds or electronics can easily be put on the Blockchain, by adding a tag to the product and storing the details of that tag on the Blockchain to verify and track individual products. Consumers can thus easily verify if their product is real or fake and retailers can follow their products throughout the supply chain and quickly determine whether products were diverted from the original supply chain. The company Block Verify offers such a solution, aiming to reduce the number of counterfeit products.

    2 Use Cases of Blockchain and Retail

    Although the potential of Blockchain for the retail industry is enormous, and there are a variety of Blockchain startups working on retail solutions ranging from transparency, authenticity, provenance, payments and transactions, the number of real examples is still limited, possibly due to the complexity involved with global retail supply chains. Here are two examples of blockchain pilots in the retail industry:

    Walmart: from Mango’s and Pork to Chocolate

    Not surprisingly, the digital-native organisation Walmart, who started using big data before anyone had heard of the term, is one of the first to move into the Blockchain space. First, they experimented with Mango’s, to trace slices of mango to its origin, and Chinese Pork, to track the movements of it in China to prevent disease outbreaks linked to the food. Now, they have teamed up with eight other food giants and IBM to bring Blockchain to their food supply chains.

    Blockchain will not only allow them to improve their data management systems and improve the efficiency within the supply chain but more importantly, it can help prevent infectious diseases becoming deadly by cutting down an investigation into food-borne illnesses from weeks to seconds. Once a source is known, action can be taken instantly.

    Alibaba: Tackling Food Fraud

    Alibaba is collaborating with AusPost, PwC, Blackmores and Fonterra to develop a Blockchain solution that will help the retail giant to combat food fraud. They aim to develop a ‘Food Trust Framework’ to improve Alibaba’s supply chains in terms of integrity and traceability. Food fraud consists of packaging low-quality food with high-quality food labels and is difficult to trace. (Tip: watch the fascinating documentary Sour Grapes on Netflix to get an idea of the scale of such fraud)

    By collaborating with vitamin and supplement maker Blackmores and dairy brand Fonterra, Alibaba wants to offer consumers full transparency in the provenance of these products, thereby hoping to boost consumer confidence. By tagging the products with a QR code, it allows consumers to authenticate and verify products, while the retailers can easily monitor their products across the supply chain.

    Concluding

    Blockchain is a natural partner for the retail industry, by offering much-needed transparency, reducing the possibility of counterfeit products and thus protecting consumers, by making supply-chains more efficient and effective and offering better service to customers using, for example, warranties on a blockchain. There are a number of blockchain startups working on solutions for the retail industry. However, bringing the global supply chains to the next level will be a challenge, as it requires many different stakeholders from across the globe to collaborate with each other. Fortunately, pilots such as developed by Walmart and Alibaba show the potential and more retailers will follow soon.

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