In 2022, blockchain in the retail industry was valued at USD 5.9 billion. By 2030, its value is expected to grow from USD 8.4016 billion (in 2023) to USD 70.05222 billion, indicating a compound annual growth rate (CAGR) of 42.40%. This means blockchain is not just an emerging trend; it is already driving market growth. But what makes it so great and how does blockchain in the retail supply chain work? Let’s find out.
What Is Blockchain?
Blockchain, often called “a decentralized digital ledger,” records transactions transparently and securely. While it started with Bitcoin, its applications have grown over time.
The name blockchain reflects its structure, where blocks link together to form a chain. Each block contains a set of transactions, and network participants, or nodes, verify every transaction. Once added to the chain, no one can delete or alter a block.
Blockchain relies on decentralization, allowing multiple parties to interact with the network and confirm transactions without a single point of control or failure.
Its robust security uses cryptography to protect recorded data. No one can change the data without approval from all network members, making it nearly impossible for hackers to misuse the information.
These crucial features make blockchain ideal for supply chain management, where maintaining data transparency and integrity is imperative. It enables all parties in the network to track what’s happening in the system without allowing control to one specific member. This helps maintain trust between customers, retailers, supply chain parties, and payment gateways.
Let’s learn more.
Role of Blockchain in Retail Supply Chain for Improved Customer Experiences
- Supply Chain Transparency
The supply chain is essentially a network of multiple interlinked businesses. Each business adds value to its offerings before it reaches the final customers. Blockchain records all of these value-addition activities through a set of transactions on a shared and immutable ledger.
This ledger gathers, validates, and shares this data with all the interlinked businesses. So, every member of the blockchain network can have access to information from a single, certified source.
Blockchain is transforming global supply chains with unmatched transparency, and forward-thinking companies are leveraging its potential. For example, Carrefour Bio adopted blockchain in 2022, giving consumers full access to product journey details, from production to store delivery. This made Carrefour the first retailer to use blockchain for its own-brand organic products.
- Loyalty Programs Revolutionized
Whether it is a physical or an e-commerce store, almost every retailer uses loyalty programs to keep customers engaged. However, these programs come with their own set of issues.
For example, customers may not want to redeem their rewards, making it a liability in the retailer’s balance sheets. Or, redeeming rewards might take more time than customers expect, derailing their loyalty and satisfaction. Another common complaint is that customers can use their points only for products of the same brand.
Blockchain is a game-changer here due to its ability to create multi-channel networks with a decentralized system, where all retail members can participate. Loyalty points can, therefore, be spent across different brands and segments. It also enables customers to pay through a single e-wallet for redeeming their rewards. No need for multiple accounts or physical loyalty cards.
This, in turn, comes with several advantages. Companies within the network can cater to a larger customer base. It becomes possible to track loyalty points with zero chances of faking. Businesses can lower liabilities and improve customer satisfaction while reducing operating costs, just like they would with the right customer service tool like Zendesk (or Zendesk alternatives), ultimately minimizing fraud.
- Secure Payment Processing
Traditional payment systems rely on multiple intermediaries, leading to higher transaction fees and long processing times. In contrast, blockchain enables peer-to-peer transactions, removing the need for intermediaries. This direct approach cuts costs and shortens payment processing times significantly.
Additionally, blockchain’s ability to integrate with smart contracts, artificial intelligence, and the Internet of Things results in enhanced automation, greater transparency, heightened security which protects against frauds and disputes, and improved precision with minimal human errors. Prompt transactions, lower fees, and faster processing times can help enhance customer satisfaction and increase the chances of frequent transactions.
- Enhanced Data Security
Blockchain ensures data integrity by time-stamping and verifying all transactions through consensus. Its decentralized structure disperses data across nodes, making it difficult for cyber attackers to tamper with or misuse. Digital signatures and cryptographic hash functions further enhance security, allowing quick detection of unauthorized changes.
- Personalized Customer Experiences
Once a business stores customer data on a blockchain, they can derive significant insights into their buying behavior and preferences. It can also be used to create marketing strategies and product recommendations that are tailored to every specific customer.
For example, by combining blockchain with data analytics, businesses can create highly relevant and engaging shopping experiences for customers. At the same time, customers get complete control over data and they can choose what information to share and with whom.
Wrapping Up
Blockchain has tremendous potential in the retail sector because of its inherent ability to improve transparency, thereby increasing trust between retailers and customers. All of the retail network members can track the developments in the system in near real-time. Retailers can no longer ignore blockchain as staying ahead of the competition is key to staying competitive. Hopefully, this post has helped you understand how blockchain is revolutionizing the retail supply chain and enhancing customer experiences, and why you should make it a part of your business process.
Author Bio
Carl Torrence is a Content Marketer at Marketing Digest. His core expertise lies in developing data-driven content for brands, SaaS businesses, and agencies.