Emergence Of Blockchain In Retail Industry

Retail Industry is one of the fastest growing industry due to the ingress of different players. The main pillar for any business to be successful is the customer satisfaction and the baluster of customer satisfaction is the affinity between expectations and experiences. If these two matches, the customer is satisfied. To increase the level of customer satisfaction, it is important to maintain their credence for the products.Many customers get confounded when thinking about buying new products, which results in their dissatisfaction towards that products.  

So gaining the trust of a customer is of great importance, right? For this a retailer have to avoid the uncertainty of the consumer to buy the product i.e. maintaining a good buyer-seller relationship is necessary. If a new product is introduced in the market many customers would be in a state of confusion whether to buy that product or not. This perplexity about the products can be avoided if the supply chain journey, starting from the origin to the point of consumption is clearly visible to the end consumer. In this post I am going to share how Blockchain transforms the retail sector by managing the supply chain and thereby improving the customer loyalty.

Many cases due to retail losses were reported and mainly retailers in luxury consumer goods industry are susceptible to this fraud cases. With the rise of retail fraud around the world, the emergence of blockchain technology can light up a remarkable shift in the retail sector. First of all, let us have a glance on: what does blockchain actually means? In layman’s terms blockchain is just a chain of blocks and each blocks are made up of digital pieces of information. Each block in the chain is linked to the previous blocks and these individual blocks contains data, hash and hash of the previous blocks.

The above figure shows three blocks: the first block has no forerunner, so it doesn’t hold the hash of the previous block. But this is not the case of other two blocks. Block 2 has the hash of first block while block 3 contains the hash of second block. This mechanism makes blockchain secure. If an attacker changes the data present in second block, the hash of the block also changes. Though, block 3 contains the old hash of block 2 makes all the blocks following after blocks will be invalid as they do not have the correct hash of the previous blocks. Blockchain uses a distributed peer – peer (or P2P) network to secure themselves in which everyone is allowed to join. When someone is new to the network he or she will get the full copy of the blockchain. The blockchain transaction is carried out mainly in four steps. First step is to request a transaction, this involves contacts, records or any other information.

In the second step the requested transaction is transmitted to a P2P network with the help of computers. In next step the network of computers validates the transaction and the user’s status with the use of algorithms and the last and the fourth step is after the completion of transaction the new block is added to the existing blockchain; which is permanent and unchangeable. The above four steps of transaction are summarized using a figure given below:

There are many uses of blockchain in transforming retail industry of which some promising uses have been discussed here. One way to gain a loyal customer is by tracking the supply chain of the product. As mentioned above, many customers are hesitant to buy a product which is new to the market. This is because they do not have any idea about the origin of the product, ingredients present or by using it cause any health issues or else due to some other reasons. All this confusion can be avoided by enhancing the supply chain transparency i.e. by capturing the data and provides an end to end tracking by giving the details of the product’s origin and the complete history of it to the end customer thereby increasing their faith.

Customer data management, security and sharing is another important application of blockchain. With a blockchain data sharing system, customers can actively share their needs and preferences with the retailers by sending them shopping lists in the form of smart contracts. The uses of blockchain is not limited to retail industry, it can be used in places where secure transfer of items like money, property, contracts etc. can be consigned without requiring a third-party mediator like bank or government.