How Walmart, Alibaba, and Others are Shaking Up Retail With Blockchain
Blockchain’s disruptive sweep of almost every industry is now making its way into retail. Huge names like Walmart, Alibaba, and American Express are starting to experiment with how distributed ledger technologies can help them do business better and more efficiently to serve their customers.
Blockchain technology turns out to be ideally suited to solving some age-old problems in the retail industry, from supply chain operations to international logistics and flexible loyalty programs. Here are the most ambitions blockchain experiments going on in retail right now, and some ideas of where they are leading the retail industry.
Walmart: Supply Chain Traceability
One of the most practical applications of blockchain technology so far is in supply chains. Walmart is banking on blockchain technology to makeover its supply chains to win trust with its customers and give it an edge over competitors.
The path from farm or factory to the customer can be long and complex. Supply chains often span many companies, countries and jurisdictions. Getting all these separate parties with independent interests to cooperate in a trusting way is no easy task. Many companies along this chain hoard data to protect their own interests, making it difficult for anyone to have a clear picture of the whole product journey.
This lack of transparency has some obvious pitfalls. When things go wrong — which they often do — it can be difficult to trace where a product came from, where it’s been, and when. This is especially problematic with products like food, where people’s health is on the line. If there’s a contamination somewhere in the supply chain, retailers need to know what products it has affected immediately in order to quickly remove it from shelves.
This is where a blockchain solution can make a huge contribution. Companies with different or even competing interests can use a blockchain system to collaborate in a trustless and tamperproof way.
IBM is teaming up with Walmart, Kroger, and Nestlé to start using this technology to shed light on some of the biggest supply chains in the world. The idea is to “allow all participants to share information rapidly and with confidence across a strong trusted network.” Hopefully, added transparency will promote more responsible behavior from all participants.
The system they are working on will allow data to be captured for every food item at every point in the supply chain. This information is stored securely on a blockchain where the relevant information can be accessed by anyone that needs it. Frank Yiannas describes it as “FedEx tracking for food.”
If all goes to plan, the benefits will be increased safety, faster crisis management, and improved customer trust.
Alibaba: Fighting Food Fraud
Tracing back defective and contaminated products isn’t the only problem with opaque supply chains. Food fraud, the substitution or misrepresentation of food for economic gain, is a huge problem in the food industry. In complex supply chains, food products can be substituted for cheaper alternatives to save money. This is exactly what happened in the Tesco Horsemeat scandal, where some packaged beef meals were found to contain up to 60% horsemeat.
Alibaba, one of the world’s largest retailers, has decided to use blockchain technology in the fight against food fraud. In a collaboration with four other companies from New Zealand and Australia, Alibaba is combining a blockchain ledger with QR coded product tags.
The products movements will be recorded on an open ledger. As blockchain can be an open technology, consumers will actually be able to use their phones to track their food products all the way from the farm to their hands. Alibaba hopes this will be a huge boost to consumer confidence.
Maersk: Streamlining International Shipping
With all that extra transparency and cooperation across the supply chain, there’s also an opportunity to improve efficiency.
Shipping products across the world requires effective communication between all the different land transport providers, ocean carriers, governments, ports and customs brokers. This system is currently slowed down by the point-to-point communications that are often still paper-based. Considering that the international shipping industry carries 90% of the world’s trade, it’s a major kink in the supply chain of almost every retail company in the world.
Maersk, the largest shipping company in the world, has already started testing blockchain technology to make supply chains more efficient. In a joint venture with IBM, these two trade and tech giants are building a blockchain-based platform for more efficient global trade.
The platform, based on hyperledger fabric technology, will be a neutral, open, blockchain-based version of the currency manual, error-prone processes. Its core function will be to deliver two key services:
- A transparent way for supply chain participants to securely exchange real-time shipping information.
- Digitizing and automating paperwork, speeding up processes and reducing errors.
Maersk themselves estimate that paperwork in global trade can cost up to a fifth of the physical cost of transporting it. If the Maersk-IBM collaboration is successful, it will mean more efficient retail supply chains as well as cheap and available products for consumers.
American Express: Flexible Loyalty Rewards
American Express is reimagining what’s possible with retail loyalty programs by using blockchain technology.
Loyalty programs are a big deal in retail. That’s because it’s much cheaper to keep an existing customer than find a new one. The Loyalty Report 2017 found that the average consumer is involved with 14 loyalty programs and has the cards for 7 of them in their wallet. That’s a lot of wallet space and things to remember.
American Express is capitalizing on the openness of blockchain platforms to create a new type of loyalty program. American Express has built a distributed ledger that allows merchants to tie American Express reward points to their own products. Blockchain technology makes it possible for merchants to offer these rewards from their own websites or apps. This means that a brand can tap into the American Express rewards program to help sell their own products or promote their services, without setting up their own loyalty program from scratch.
AmEx’s blockchain also uses hyperledger fabric. It allows merchants to send offers to customers via smart contracts. These smart contracts are fulfilled on the blockchain, and it’s possible to keep customer data private.
Boxed is the first major retailer to test the new loyalty system. Boxed is promoting certain products with 5 times the regular American Express rewards to nudge customers to buy.
Getting the Rest of the Retailers On Board
These companies are the pioneers testing out how blockchain technology can be used effectively all across the retail sector, and they are already reaping the rewards for that. But, most retailers don’t have the deep pockets of Walmart or Alibaba to build their own platforms from scratch. There’s a gap in the market here waiting to be filled.
That gap can be filled by projects like Osa DC. What they are building is a blockchain platform that retailers, producers, and consumers can start using easily without the major costs and risks involved with building and testing the technology from scratch or the technical knowledge to maintain a blockchain. One that quickly delivers the benefits of blockchain we’ve seen, plus more.
The Osa DC platform offers three main services to businesses and consumers:
- Supply chain tracking - The Osa DC system tracks products all the way from producers to shops. Data on how products are transported, handled, and stored is collected and made available on the blockchain.
- Data analytics - This collected data, along with open data sources, is cleaned and analyzed by machine learning algorithms. If something goes wrong, the artificial intelligence engine can notify whoever needs to know. This helps retailers solve supply chain problems and optimize their inventory.
- Consumer digital assistant - A smartphone application to help customers choose the right products. The data collected from this tool can be fed back into the analytics engine.
The digital assistant is one of the outstanding innovations of Osa DC. With a snap of your smartphone camera, the app can recognize images of products on store shelves as you shop. For example, if you want to find products without sugar, just take a photo in-store, and the app will highlight on your screen which products meet your requirements.
The really powerful thing is that as consumers use the shopping assistant app, the data generated can be shared securely and privately on the blockchain with the rest of the supply chain data. If the data you provide is particularly valuable, you’ll even earn money for it in the form of Osa DC tokens.
This is Just the Beginning
The internet has already changed the retail industry beyond recognition with e-commerce. Now these changes are going even further with one of history’s most disruptive economic technologies — Blockchain.
Just a decade after the technology’s inception, Walmart, Alibaba, Maersk, and American Express are already testing how blockchain can improve transparency, integrity, collaboration, and customer rewards. With specialty blockchain projects like Osa DC on the way too, retail is likely change even more in the near future.