Blockchain is undoubtedly proving to be a disruption in the way financial transactions are carried out as these non-regulated distributed ledgers are ensuring secure and non-corrupt digital economic transactions using encryption. By extending the potential of blockchains to deliver low-cost, secure sharing of information and value in to the retail sector, there are certain important aspects of retail where blockchain technology can be used. Some of these applications are:
Blockchain based payments can streamline financial transactions in multiple ways. They allow using a new form of digital currency, adding an additional option for payments. Further, due to the nature of the blockchain technology, it is very difficult to alter entries or create fraudulent entries by the participants. Transactions done on blockchain will ensure transparency and reduce the need of additional validation. By eliminating the need for third party intermediaries and additional costs for exchanging assets during transactions, blockchains can potentially prove to be cost-effective by greatly reducing the transaction fees.
Blockchain based transactions can make trading potentially indisputable and also ensure integrity of information shared amongst parties. It can substantially improve visibility of information related to a product such as its location and status, ensuring better optimization of inventory level by retailers or distributors. Moreover, improved visibility of product information till the last mile will mitigate risks due to counterfeiting as the end consumers are able to validate the product characteristics (e.g. material, component specifications, manufacturing date, price, etc.).
Blockchain technology can redefine contract instruments with the help of smart contracts. Smart contracts use computer code to create terms of the agreement and because blockchain operates on a public level distributed among the participants in the system, the smart contracts would be easy to see and monitor. Additionally, blockchain could reduce the need for third parties such as brokers and purchasing agents and thus costs associated with them by finding the best price and terms for products as per the related information available.
Blockchain can go much beyond just enabling trade processes and handling financial transactions. As such, blockchain technology and logic could disrupt traditional loyalty programs. Firstly, the CRM database containing information related to customers can be incorruptible and indisputable due to blockchain technology. Also, with the help of blockchain, loyalty points can be used as payment currency globally.
Given blockchain benefits such as trackability of information and proof of authenticity mechanisms, customers can be assured of authenticity of products right from their origin. Thus the customer can trust not only the product, but also the retail brand as a whole. Moreover, enabling frictionless and secure payments could further enrich the customers’ purchasing experience. All this will greatly contribute to better customer experience management.