Blockchain is getting plenty of buzz these days but many retail executives are unsure of where to begin with this emerging technology pundits are telling them can tackle so many areas of business.
In separate reports, Deloitte and the NPD Group shared where they see blockchain making the biggest impact and gaining acceptance in the sector.
Above all, retail firms are dipping their toes into the blockchain waters. Because it’s still early for the distributed ledger technology, companies are understandably hesitant to make sizable investments in a platforms that are still working out the kinks. Some are trialing less complex blockchain initiatives around consumer protection, payments and participation; delivery; digital advertising; and fraudulent transactions, Deloitte found in its “New tech on the block” report.
According to NPD, a major blockchain-backed cryptocurrency from the likes of a Starbucks or McDonald’s could propel payments via virtual currencies fully into the mainstream. Amazon, for one, has already registered three domain names related to crypto, a CNBC article reported.
“Trials” tend to be more budget-friendly as they’re limited in scope—which also limits their overall impact. Those choosing to “explore” blockchain are doing so to enable the connected store and other connected services, according to Deloitte, as well as B2B payments and smart loyalty solutions.
“These are more attractive opportunities relative to trial projects in terms of value but similar in complexity (and cost), and offer greater value relative to investment in the short term,” Deloitte’s report noted.
Yet other areas of opportunity have been put on the backburner in a “wait and see” approach because while retailers know that these blockchain applications could generate benefits down the road, they’re too costly to be worth the investment at the present time. These include using blockchain for targeted item recalls, tracking down purloined product or offerings in the sharing economy, according to the report.
Retailers in the “planning” stages with blockchain-based projects are typically focused on areas that pose a higher risk of complexity but also yield a similarly greater reward.
Connected supply chain, such as IBM’s food safety initiative with Walmart and others, falls into this category, as do applications targeting product provenance and authenticity. Coca Cola launched a high-profile blockchain project using the technology to combat forced labor, while a small European fashion brand used the Provenance to track a finished garment all the way back to the wool off a sheep’s back.
“The rationale for and value of investing in blockchain will depend on a company’s overarching strategic objectives, as well as its capacity, capabilities and culture,” Deloitte said in its report.
NPD called attention to the rise of marketplaces built on blockchain, which cut out the retail middleman by directly connecting buyers to sellers. On such a platform, both parties avoid the usual credit-card fees, trading cryptocurrency directly. Open Bazaar and Soma are already in operation, and Target alum John Wantz believes his blockchain-powered SHOP commerce platform will resonate with consumers in a data privacy-conscious age.