According to a report published in January by the IBM Institute for Business Value, of 203 consumer industry executives surveyed, 70 percent expect to have a blockchain production network within three years; 18 percent of respondents say they’re already taking advantage of the technology.
For instance, one company among that 18 percent — Brooklyn, N.Y.-based sneaker manufacturer Greats — currently uses blockchain and embedded smart tags to combat counterfeiting.
“With the swipe of a mobile app, consumers can scan the smart tag and verify the product is genuine,” the report notes. “Retailers can track each sneaker back to the factory in which it was made.”
The report also points out that blockchain technology can help streamline the settlement process between suppliers and retailers by enabling smart contracts to “automatically reconcile settlement claims against contracts and proofs of performance.”
Improved Relationships Lead to Efficiencies
By 2030, analysts from IHS Markit predict that the cost savings and efficiencies from incorporating blockchain into corporate business strategies will reach $2 trillion worldwide. More specifically, the use of blockchain in retail and e-commerce is expected to be worth $164 billion in efficiencies, due in part to factors such as more direct relationships with customers and smart contracts.
With regard to improving customer relationships, the technology could help retailers leverage data on customer preferences without needing to store it centrally, according to a recent Vox article. Inventory management is another huge opportunity, Steve Sarracino, founder and partner at venture capital firm Activant Capital Group, told the publication.
“In retail, the two biggest issues from a data perspective are understanding and knowing where your inventory is — whether it’s in your supply chain or in the store or online — and then matching that with the right customer,” Sarracino said.
Considerations for Getting Started
In October, IBM announced the official launch of its food supply-chain network, IBM Food Trust, after 18 months of testing. The blockchain-based cloud network offers retailers and other participants data from across the food ecosystem to improve efficiency.
Current participating organizations, according to IBM, include Topco Associates, a group purchasing organization based in Elk Grove Village, Ill., that represents 49 members and reaches more than 15,000 stores; and Wakefern Food, a retailer-owned cooperative group of supermarkets that represent 50 companies and 349 stores.
IBM’s blockchain report notes, however, that insufficient skills remain the top hurdle to adoption of the technology. To that end, Michael Carney, a principal at venture capital firm Upfront Ventures, writes in an NRF blog post that retailers considering the use of blockchain must first answer the following questions to get a better idea of their needs:
- What business problems could benefit from the use of blockchain technology?
- Where and how am I using data, and who controls that data?
- Am I currently able to test and deploy blockchain? If not, how can I get to that point?