Insights

Blockchain in Retail

Josemario Zavala Page, Innovation Analyst at UST Innovation Israel

Distributed ledger technology (DLT), the protocol behind the blockchain, has barely been a reality for 12 years, and use cases in all sectors are beginning to unravel as the industry takes its first steps into institutional adoption. We’re currently undergoing a Cambrian explosion of dApps (decentralized applications) that target businesses in areas ranging from decentralized finance to storage, agriculture, and supply chain visibility solutions.

Retail & Applications Within

The main value proposition of DLT is efficiency; by eliminating intermediaries in the supply chain in a trust-less manner, a huge part of the resources involved can be diverted from operational costs into R&D, product, and marketing expenses.

Due to the nature of blockchain, traceability is one of the main pain points it can address with ease, given the immutability of the distributed ledger. Farmers, CPGs, distributors, retailers, and finally end-consumers can easily verify key details that usually had a cost attached to them: information flows, inventory flows, and financial flows. State-of-the-art ERP systems, manual audits, and inspections can’t reliably connect these key data points. Orders are often split into several packages/shipments; ERP systems don’t sync, many data points are not perceived as important throughout the process, and retailers don’t update their systems on a regular basis, making the consolidation orders of magnitude more complex.

This traceability of supply also allows for exact recall capabilities, which can be lifesaving. If a faulty product in food or pharma is detected, blockchain enables the firm to trace back and identify all the suppliers involved and efficiently recall all the faulty items. This works in parallel with retailers’ ability to track the provenance of goods. Proof-of-Origin (POO) is a simple smart contract protocol that can track the entire chain of supply of any given good. This way, customers will be certain their money is being spent on a legitimate product that complies with their own ethical standards. A neat example of how this is being developed live is IBM’s collaboration with Atea in the Norwegian seafood industry. Atea is providing farms with IoT devices whilst IBM is providing the DLT infrastructure to operate, while only charging consumption fees to farms. All industries will benefit from the more efficient governance models provided by DLT, we believe this to just be the tip of the iceberg.

Blockchain’s usage can be broken down into a few aspects: Firms are conducting physical audits to ensure that all shipments match blockchain records. They are also building dApps that track products throughout the supply chain, check the integrity of the data, and communicate with the ledger to prevent errors or counterfeiting. Lastly, the usage of novel IoT devices like power-less Bluetooth tags automatically uploads records to the ledger without the need for any human intervening.

Current Market and Way Forward

DLT is in its infancy, and we are undoubtedly in the experimentation phase when it comes to blockchain. Most Fortune 500 firms are already testing in-house DLT solutions for their specific needs, but global deployment requires a greater degree of adoption and resource expenditure. We expect to see a shift into a more robust, transparent, and collaborative framework where all parties involved won’t require intermediaries to operate, allowing for maximum efficiency in their operations.

Please share with us your ideas and thoughts on how blockchain is revolutionizing traditional industries!