The digital currency system Bitcoin is just one application of blockchain technology. And while it garners much attention, future retail applications are almost certain, according to Marshall Cohen, chief retail advisor at industry tracking firm The NPD Group.
He said just as charities have started using blockchain to track donations and ensure money stays in the right hands, healthcare is exploring the technology to safely store medical records and share with the proper parties while improving the speed of diagnoses.
Cohen recently noted that before blockchain is practical in retail, brands have to understand its relevance. NPD said it’s not just about payment methods or sourcing transparency. It also has the potential to touch all areas of a company. Cohen highlights a few areas where blockchain has the ability to impact retail including revolutionizing supply chain management, preventing against counterfeiting, simplifying payments and creating safer data security.
He said blockchain technology can maintain long records of any data sequence. In retail, that could be when a product is purchased or shipping logs from manufacturers without the risk of falsely editing the data.
“With blockchain, you can track the origins of anything from a T-shirt to an apple to a luxury bag,” Cohen said. “Imagine documenting transactions in permanent, decentralized records, monitored securely and transparently.
“Blockchain could significantly reduce time delays and human mistakes, and monitor cost, labor, waste and emissions at every point in the supply chain. In the food sector, a manufacturer could automatically identify contaminated products in a matter of seconds and wouldn’t need to pull an entire product line from store shelves in the case of contamination.”
The NPD report noted IBM is partnering with nine retailers and food companies (Walmart, Unilever, Nestle, Dole, Tyson Foods, Golden State Foods, McCormick & Co., McLane Co., and Driscoll’s) to revamp data management processes with blockchain. Walmart uses blockchain in China to source its pork all the way from the pig to the customer. This enables the retailers to provide transparency to all the players along the supply chain.
Cohen said Walmart also has a patent on drone delivery systems that facilitate orders in a cleaner way, track package contents, environmental conditions and location. Walmart supplier Coca-Cola is starting a pilot to use blockchain to identify inhumane labor conditions in its sugar supply chains. Coca-Cola plans to create a secure decentralized registry for workers and their contracts to help securely record their workers’ identities while providing a trail in case employers abuse their power.
Counterfeiting items is a $1.2 trillion global problem, according to Research and Markets 2018 Global Brand Counterfeiting Report. The rise of online commerce and third-party marketplace sellers have made the crime more prevalent in recent years. Blockchain technology can help consumers verify what they ordered online and what they receive in the mail is what they intended to purchase.
NPD notes manufacturers and distributors could prevent counterfeit goods from being used in their final product, especially when a single product often uses parts from different sources.
“Blockchain offers a possible solution to these challenges with its decentralized ledger that can store a history of transactions across a shared database,” Cohen said in the report. “By making the record accessible and verifiable from anywhere in the world, blockchain can enable the authentication of goods and eradicate the criminal element of counterfeit goods in the retail supply chain. By pairing hardware chips with blockchain technology, a product can take on a digital history, going as far back as the raw materials that were used to make the product. This allows retailers and consumers to verify their purchased products are genuine.”
NPD reports a number of companies have already launched blockchain counterfeit deterrents. Blockverify offers transparency to pharmaceutical, luxury, diamond and electronic supply chains. Blockchain works to verify counterfeit products, diverted goods, stolen merchandise and fraudulent transactions.
Diamond company De Beers is using blockchain so its customers can ensure a diamond has been conflict free. VeChain is a blockchain system that embeds customized chips into luxury products and allows manufacturers to trace the product from end to end. Consumers can scan a product with a mobile app to instantly know whether it’s real or fake.
Walmart has already proven it’s interested in simplifying payments with the implementation of Walmart Pay, an app launched two years ago to speed up transaction times in stores and provide the retailer with a complete history of a customer’s purchases.
NPD said the next step for retailers is to develop their own cryptocurrency to prevent customers from having to use credit cards when shopping online. NPD said the practice makes sense for the retailer, because if the customer could send the payment transfer via blockchain, it would avoid third-party clearing house fees retailers pay for processing card payments.
“Such a move could allow retailers to lower prices and incentivize consumers to shop at one retailer over a competitor,” Cohen noted. “This idea is not as ludicrous as it might seem. Amazon recently registered three cryptocurrency-related domain names, suggesting a potential move into the cryptocurrency space. If large companies like Amazon, Walmart or Starbucks issued digital coins that inspired public trust, blockchain-based cryptocurrencies might gain acceptance by the public and other retail giants.”
Stronger Data Security
Blockchain is also being used to protect consumer data from a breach. NPD’s financial services team said private blockchains allow users to dictate who can participate in the network, removing the chances of foul play.
Walmart recently filed patents that could allow the retailer to store vendor and consumer e-commerce payment data using blockchain technology to improve security. This application would encrypt payment information in digital shopping systems and create a network able to automatically conduct transactions on behalf of a customer. The payments would be received by one vendor or more, depending on the services and who provided them.
“Data transparency is becoming increasingly important,” Cohen said. “With consumers more conscious of how their data is used and stored, blockchain may offer an additional level of transparency.”
Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.