Blockchain in Retail: The Real Deal
12 June 2017
Many technology commentators are coming round to the opinion that the emerging technology likely to have the most profound and lasting impact in the retail space isn’t automation or Artificial Intelligence – It’s Blockchain.
“This exciting technology has the potential to speed up transactions, increase security and transparency, and cut costs.” – pwc, 2016
Blockchain for Beginners
For Blockchain newbies, a very quick intro: Blockchain is a distributed database best known for underpinning the digital currency Bitcoin. It provides a secure and open digital way to acknowledge transactions and as a “distributed ledger” is resilient in the face of outages or attacks. Two of its key characteristics – transparency and immutability – mean it is seen as central to re-inforcing trust and confidence through the entire supply chain, and with consumers.In addition IBM presented blockchain during the innovation now (Dragons’ Den) session at our recent Retail Tomorrow conference.
As a technology designed to accelerate innovation, it has spawned a wide range of new companies, such as Provenance, who are on a mission to use Blockchain to record everything that happens in the global retail supply chain.
“Imagine scanning a QR code on a can of tuna in the supermarket and knowing exactly where the fish inside it was caught, who certified it, where it was canned, etc., all timestamped at each step.”
In fact there’s so much to say and think about the Blockchain potential that I’m going to use a phrase I generally try to avoid: it’s mind-blowing.
Fake Goods in the Age of Fake News
For now I want to focus on one specific Blockchain application area. Recent talk of ‘fake news’ has focused public dialogue around what is fake and what is authentic. This has an obvious relevance to retail, where counterfeit products are a constant problem. Blockchain can help, especially when it comes to rare or high-value items.
The nature of Blockchain – an immutable public ledger – allows for the registration not only of all new products, but of every transaction associated with them. It’s simple for people to determine whether the product in question already exists on the system, and if a duplicate appears it can be flagged quickly and confidently.
The expanding market for second-hand rare and luxury goods can also be aided by Blockchain. The nature of the second-hand market means that people are not buying goods direct from the original manufacturer or authorised seller. This consideration, that paper-based methods of verification tend to be non-uniform and easy to forge, means that establishing authenticity can be tricky. Using Blockchain means that authenticity is assured. As mistrust of authenticity is probably one of the main reasons some people avoid second-hand items, Blockchain has the potential to revolutionise the second-hand goods market: a high Blockchain adoption rate could see this market explode.
Another area where Blockchain can prove invaluable is in the verification of diamonds. Historically the provenance of diamonds has been certified by a hard copy, paper-based system. Many people may know of the traditional “Four Cs” used to classify diamonds – cut, clarity, colour and carat. And some may also know that diamonds over a certain carat have a serial number inscribed. Blockchain can now give each diamond a unique identifier using all of the above and many more data points. The platform has both a public aspect (allowing people to cross-reference certificates, for example) and a private area (for example for police reports). An arena which has proven morally challenging (i.e. “blood diamonds”) is greatly aided by technology such as Blockchain.
But it’s not only about high-carat diamonds and Gucci handbags. Blockchain will over time be used both to severely curb the activities of organised counterfeiters worldwide, and to give customers the re-assurance that they are buying the real deal.
An Unwritten Future
One of the most intriguing aspects of the Blockchain acceleration is that it is going to change business, and consumer transactions, in ways we can’t yet second-guess. One thing we can take a punt on with some certainty is that, after Financial Services, retail (and CPG) is the area where it’s likely to have greatest impact.
But what do you think? Is there anywhere other than retail where you see Blockchain being used in the future?