Although some institutions in the financial industry have successfully adopted blockchain technology for many years, blockchain technology is also likely to change many other industries, including retail. Recent blockchain-driven experiments by large retailers such as Walmart, Amazon, and Alibaba have proven that the technology can solve the inherent challenges in the retail industry. For example, blockchain technology can help retailers improve the way they store supplier information, help seamlessly execute payments and sign contracts, and even enhance product authenticity to prevent counterfeit goods.

As retail businesses move more and more online, retailers must adapt their systems to accommodate the changing consumer approach to finding and buying products. Below are four use cases for the most promising retail industry blockchain from managing the supply chain to improving customer loyalty programs.

(1) Combat counterfeit goods

In 2017, global retail sales losses due to fraud were estimated at $23 billion. Retailers in the luxury consumer goods industry are particularly vulnerable to fraud, with a very high profit margin and a more flexible return policy, and their losses have increased by an average of 20% to 30%.

With the rise of counterfeiters and retail fraud around the world, blockchain technology provides an effective way for companies to assign unique scanable codes or labels to each product and allow their customers to access the entire product. Historical records, including from origin to final product distributors, as well as transportation status along the way. IBM recently developed the TrustChain blockchain technology to prove the source of jewelry by tracking every step in the supply chain from mine to store.

(2) Tracking the supply chain

Tracking the supply chain is one of the most important uses of blockchain technology in the retail industry to date. It not only helps to verify the source of luxury goods, but also eliminates counterfeit goods, but it also has a huge impact on food safety. Wal-Mart is the first to use blockchain technology in the food supply chain to reduce waste, reduce tracking time, and improve pollution management and transparency. The retail giant submitted a number of patents related to blockchain technology, one of which involved a "smart packaging" system or equipment containing information about packaging content, environmental conditions, location, and more.

Starbucks also piloted projects in Colombia, Costa Rica and Rwanda to explore the application of blockchain technology, helping the company track the state of its coffee products from coffee beans to coffee cups and share real-time information about its supply chain. Carrefour, the largest French supermarket chain, also launched Europe's first “food blockchain”, which uses blockchain technology to track meat and vegetable product lines. Consumers will be able to use a smartphone to scan QR codes and view the entire process from production to placement.

The food traceability technology market is expected to continue to grow at a rate of 7.15% per year and will reach $20.95 billion by 2026. As consumers increasingly focus on the source of their purchases, retailers across all industries adopt more advanced procurement practices and usage. Blockchain provides more transparency to its supply chain.

(3) Conversion payment

In 2014, Overstock became one of the first online retailers to receive bitcoin payments. Today, online retailers of all sizes have begun accepting cryptocurrencies as a form of payment; however, digital wallets and cryptocurrency payments still take some time to become mainstream in the retail space. The vast majority of online retailers still tend to offer traditional payment methods, mainly because of the volatility of cryptocurrency values, while other retailers consider the implementation to be too complex. However, this also means that the online payment field is still largely undeveloped.

Retailers willing to try cryptocurrency payments can take advantage of additional sources of income and reach more customers around the world. In addition, blockchain technology allows retailers to better control how coupons or discounts are distributed, and how customers can redeem coupons or discounts. For example, MasterCard has applied for a patent for a system that uses blockchain technology to validate coupons. The system provides retailers with a way to reduce coupon fraud and more effectively publish highly targeted discounts.

American Express is also experimenting with blockchain technology to improve its loyalty reward program. Among all current uses of blockchain technology, the ability to help retailers simplify online payments and reduce fraud is most promising.

(4) Loyalty program

From collecting supermarket points to accumulating airline miles, loyalty and reward programs are the basic way retailers attract customers and remain competitive. Last year, there were 3.8 billion consumer loyalty program users in the US alone.

Despite this, existing programs are often vulnerable to abuse or fraud, and if not properly implemented or maintained, there may be many challenges for retailers. On the consumer side, many users (57%) are dissatisfied with loyalty programs or quickly renounce loyalty programs, mainly because they find the registration process too complicated or because they take too long to earn points.

Blockchain technology addresses these issues by providing new ways to process, protect, and ultimately centralize loyalty program data. Blockchain technology not only allows for the safe and immediate redemption of loyalty bonus points, but also simplifies the development and exchange of points between retailers and projects. With a tamper-proof, time-stamped transaction database, retailers can easily and transparently protect and track loyalty program transactions. Ultimately, this can reduce the costs associated with complex loyalty programs and prevent errors and fraud.

The future of the retail industry

A recent survey report shows that by 2023, the blockchain size in the retail market may grow to $2.3 billion, or a compound annual growth rate of 96.4%, which will be any blockchain-related industry. The highest growth rate in the forecast. Nevertheless, it is important to recognize that blockchain technology is still in its infancy. However, as this technology continues to earn the trust of large retailers around the world, its potential to disrupt the retail industry is clear, and the demand for blockchain applications will undoubtedly rise in the coming years.

Blockchain technology will revolutionize every industry in the future. The real problem now is the lack of blockchain developers, which hinders the deeper implementation of blockchain technology.