How will blockchain disrupt retail?

Jan 24, 2018
Tom Ryan

Blockchain, the underlying ledger technology behind bitcoin, landed on numerous prediction lists as one of retail’s transformative technologies for 2018. While many focused on blockchain’s potential use in the supply chain, a newer focus is on marketing.

A method of recording, safely storing and tracking complex digital transactions, blockchain’s major advantage is that, once a record is made, it cannot be altered.

Microchips utilizing blockchain can help manage product safety, authenticity and ethical standards across an item’s history.

“Blockchain can help retailers garner greater trust and brand loyalty throughout the product lifecycle, as it can tell consumers not just where an item was made, but also who it was made by, the conditions they worked in and how much they were paid,” wrote Kati Chitrakorn for Business of Fashion. It can also detect interruptions or bottlenecks so that retailers can re-route shipments or advise customers of delays.

A new IBM survey of 203 organizations in the consumer industry found only 18 percent currently using blockchain, but almost 70 percent expect to have a blockchain production network within three years. The top areas blockchain is expected to benefit: product safety and authenticity, supply chain optimization, finance/operational processes, regulatory compliance, promotional strategy management, customer engagement and co-creation.

On the marketing side, blockchain has been touted for its potential to improve the selling and buying of ads across exchanges as well as to reduce the complexity of loyalty programs. But the technology also holds promise for transforming collaboration between customers and partner.

“Wherever there is a need for verified data sources, blockchain can take center stage,” wrote Vanessa DiMauro for Customer Think. “From pharmaceutical companies being able to learn from patient experiences in aggregated and protected ways; to doctors sharing select pieces of research data with other researchers; to the ability to pay for user generated content and influencer marketing activities with a single safe click, blockchain has it all.”

In its “2018 Industry Predictions,” Advertising Age wrote that, while 2018 likely won’t see mass adoption of blockchain, “its ability to provide three solutions to problems as old as digital advertising itself — transparency, authentication and auditing — means this year, marketers (those who have yet to) will sit up and take notice.” 

DISCUSSION QUESTIONS: Where do you see the largest potential for the use of blockchain technology in the retail eco-system? Which applications of the technology are you particularly interested in following?

Please practice The RetailWire Golden Rule when submitting your comments.
"I really like the concept of anonymous, permission-based personalization, with the customer receiving a token in exchange for her data."
"I am bullish on the technology, but it won’t solve all inefficiencies in all markets."
"...some of what blockchain is expected to do can be resolved at the item level by RFID. It’s been nearly 20 years and RFID is still hardly utilized."

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18 Comments on "How will blockchain disrupt retail?"

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Paula Rosenblum

As I wrote in Forbes, I do see a huge opportunity for marketing in the form of “anonymous personalization” – which may sound counter-intuitive, but it actually makes a lot of sense.

It’s also useful in the supply chain – especially if fees for payment for all the stops a product makes along the way can be dispensed with.

But I really like the concept of anonymous, permission-based personalization, with the customer receiving a token in exchange for her data.

Kenneth Leung

I agree that blockchain’s ability to protect data blocks and move them anonymously would help with personalization while giving the user control over how much is shared. Some may choose to be open, and some may create personas to give retailers only a certain view of their browsing and transactions for limited personalization. I’m not sure about the eliminations of fees though, LOL, too many reasons to have fees besides technology. You know as well as I do that the fees aren’t about the cost recovery. 🙂

Michael La Kier

I see cleaning up the mess that is digital advertising as the largest potential for blockchain technology due to the billions of economic impact at stake. The issues that exist — transparency, authentication and auditing — are significant ones where billions are wasted. Cleaning that up would be significant. Blockchain’s biggest impact on the retailer/customer relationship will be making transactions better and faster — think Amazon Go, digital offers and coupons, etc.

Jennifer McDermott

I think the trust, particularly in the e-commerce space, will be a huge benefit of blockchain in retail. The protected nature of the blockchain ledger protects transactions offering greater cybersecurity and will encourage more online sales.

Stuart Jackson

The idea of blockchain is fantastic. But what no one ever says is that there are currently no actual real-world examples of it working in action outside of the bitcoin environment. And even there it’s debatable as to whether it’s really worth the hassle.

If you look carefully you’ll see that companies are always “exploring” or “investigating” or “developing” or “trialling” the use of blockchain; and only sometimes are they actually using “blockchain-related technologies,” i.e. not actual blockchain itself.

Blockchain could well be used one day in the retail industry but don’t hold your breath. At the moment it’s prohibitively expensive even for the big banks and the jury is out on how much it adds to what’s available using Big Data and the cloud.

Ryan Mathews

That’s not exactly right. Blockchain technology has been used to send currency for food to 10,000 Syrian refugees. It’s also being tested in a number of startups. MedRec, for example, is using a blockchain model to address the digital medical records issue. Follow My Vote, Proof of Existence and Sho Card are exploring blockchain’s unique ability to address issues of identity and voter fraud. There’s also work going on today using blockchain to create “smart” financial instruments such as programmable smart contracts and mortgages. The technology is also being explored in terms of its application to distributed cloud storage. So if betas count, there are a variety of real-world examples that can be looked at. Are they practical? Those refugees who might not have eaten without them would probably say so.

Dave Bruno

In the short run, the big opportunity for blockchain to impact retail lives within the supply chain. This seems like a no-brainer, particularly in perishables. However, in the long run, I think there are some intriguing possibilities in consumer marketing. As we continue to seek new ways to personalize every interaction for every shopper, we will forever be limited by privacy and data security concerns.

As Paula Rosenblum describes very well in a recent column: “The consumer owns the key to her data and can permission it out if she wants to. If she agrees to permission it out (and she could theoretically be given Shopin tokens by the retailer for doing so), the retailer is given anonymized information so it can understand the shoppers needs and wants.”

If Paula is right, then blockchain holds intriguing possibilities for “anonymous personalization.” And that feels like it could have huge potential.

Bob Amster

I agree with my colleagues above that the biggest obvious benefits (others may surface later) of blockchain in the retail ecosystem lie in supply chain (tracking product and costs), Paula’s “anonymous personalization” because a consumer can be rewarded for providing permission-based data that are verifiable, and product authenticity, specifically in pharmaceuticals and in those products whose manufacture includes conflict minerals (like the electronics industry).

Ken Lonyai
This is yet another (the latest) overhyped technology. Blockchain absolutely has many potential benefits and it will be implemented to varying degrees. Still, most consumers have yet to hear of blockchain and of those that know the term, scant few understand it. In total, they are not going to have any more confidence or participation with brands or retailers because of blockchain implementations until far, far into the future when hopefully(?) they understand that the benefits they are receiving are created by blockchain fulfillment. The transparency and security benefits being touted are possible, but to a less secure degree, those things are all possible without using a blockchain now. In retail, the problems it’s being expected to solve have been unaddressed or meagerly addressed not because technology is lacking, but because the will is lacking. Unless management wants to solve (fill-in-the-blank) problem earnestly, with leadership, and with the funding to do so, this too will be another miss for retail. For example, some of what blockchain is expected to do can be resolved at the… Read more »
Charles Dimov

Loyalty program simplification, influencer authentication and brand targeting are three areas with potential shorter-term uses in retail.

By merely buying items from a retailer, a consumer’s transactions can be verified without the need for a loyalty card or signup. That’s great for customers, as they will have automatic verification of purchase for warranty purposes. Influencer authentication means that influencers should be actual product/brand users. Public transactions means an influencer can prove this more easily. Finally, brand targeting means that brands will be able to better identify the groups that gravitate toward purchasing their merchandise. Nice boost for improved market targeting.

Brian Kelly
2 years 5 months ago

Big Data is unwieldy; blockchain helps to sort out what is important. The total cost of marketing is about 5 percent of sales. Blockchain’s promise is the ultimate answer to Wanamaker’s question, “which half works?”

Of the 5 percent, content distribution/media accounts for over half. For most retailers, it is greater than annual CAPEX. Coming off CES or NRF, everyone wants to know how to invest. Dollars are precious, blockchain can help address the uncertainty of investment. Customer data is unwieldy, identifying who is valuable is the start. Identifying how to reach customers (distribution) AND what message/content to engage them with is as important.

Of course, even Satoshi Nakamoto says, “retail ain’t for sissies!”

Lee Kent

With the simplicity of the blockchain protocol, it has the ability to dis-intermediate extraneous parties and thus reduce unnecessary costs and steps. No matter the application, and there will be many, this is the biggest plus. For my 2 cents.

Ed Dunn
2 years 5 months ago
As someone who is very expert-level in blockchain technology, blockchain is very disruptive to retailing in a positive way. There are projects that are live right now and blockchain is not a far-off technology. It is actually easy if you cut through the hype. The process of blockchain is (a) write transaction to “unconfirmed” ledger (b) verify transaction and (c) write verified transaction to “confirmed” ledger for distribution. Each party has a distributed ledger built with a “blockchain” method that will fail if modified or tampered with. The advantage of blockchain in retailing is multiple retailers can now share datasets versus using an enterprise data system — this is the most disruptive use case. For example, retailers can use a “shared” loyalty program to track on a blockchain distributed ledger versus create their own loyalty program. Retailers can use their own “shared” coupon distribution and verification system on a blockchain distributed ledger. And one more — Retailers can share BOPIS and commercial freight on a shared blockchain distributed ledger. There are several variations of blockchain… Read more »
Jeff Miller

My favorite quote from the above article is “blockchain has it all.” This seems to be the prevailing narrative that blockchain can solve and do anything and do it better than all previous ways of doing things. I am bullish on the technology, but it won’t solve all inefficiencies in all markets. A ledger, no matter how secure, does not solve as much as people think it does. However, it will transform certain industries and processes especially in places where privacy, security, tracking, accountability and auditing are major components.

In the retail eco-system we will see and should see a lot of experimentation. Some will work and others will not be adopted at a rate to justify effort and expense. Where I see most immediate success is in supply chain where all parties can potentially and accurately track products really “farm to table” or “manufacturer to consumer.”

Cynthia Holcomb

It has taken years and years for retailers to stop thinking their customers shop in silos, (in-store, online, etc.). Blockchain? Blockchain applications? Blockchain in itself is counter-intuitive to the way most people think. I see a long road to usability for retailers. The good news, it’s fertile ground for new companies to educate retailers on and monetize the benefits of blockchain.

Harley Feldman

The two major technology providers in the blockchain space are IBM, who is a member of the Hyper Ledger Alliance, and Microsoft, a member of the Enterprise Ethereum Alliance (EEA). IBM’s development is focused on supply chain activities while Microsoft is focused on transactions between individuals. Other technology providers are entering the marketplace including Oracle and Amazon.

In the early stages of blockchain implementation, supply chains will be the dominant use which is why IBM has a large share of the blockchain market today. As the technology becomes more accepted, there will be more movement to the Microsoft approach. Retailers will ultimately be interested in both applications.

Ricardo Belmar

I’m not sure blockchain should be on everyone’s 2018 list of predictions for retailers as I don’t see many deployments this year beyond “beta tests” and other trials. However, there are plenty of potential use cases for blockchain in retail! I agree with Paula Rosenblum on the potential for marketing applications and personalization. I can see applications in loyalty programs as well as digital advertising.

I’ll still say as many others have here that the supply chain is where I expect to see any initial applications and benefits. Not only can blockchain help at a transactional level, but I see this leading to cost savings for retailers and that can benefit the entire ecosystem. I don’t think we’ll see applications beyond the supply chain for another 2-3 years though.

Ralph Jacobson

I believe Blockchain will be for transactions what the internet is for information. This is a complicated opportunity, but the trust and visibility across the retailer’s ecosystem of business partners is significant. I think this may actually impact high-volume retailers, like grocery in such a positive way that out-of-stock conditions will almost disappear.

"I really like the concept of anonymous, permission-based personalization, with the customer receiving a token in exchange for her data."
"I am bullish on the technology, but it won’t solve all inefficiencies in all markets."
"...some of what blockchain is expected to do can be resolved at the item level by RFID. It’s been nearly 20 years and RFID is still hardly utilized."

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