Blockchain has the potential to open up a lot of new possibilities for the retail industry. It has a good impact on various processes of the retail industry starting from managing the supply chain to looking after sales services. Even before the pandemic struck the world last year, the retail industry was flourishing. There are several retailers providing internet shopping and their physical storefronts generate the majority of their earnings. Following the pandemic, however, merchants had numerous challenges, including managing the supply chain, selling items, establishing stores, and ensuring the safety of the customers and the staff. This could all be prevented if the industry adopted blockchain technology from the beginning.
Blockchain’s dependability, longevity, and efficiency of tracking and carrying out management operations can provide the ultimate digitization that retail companies require. Therefore, it’s time for the retail industry to take blockchain more seriously and begin integrating it into their legacy systems. As a result, we’ll go over why the retail business needs blockchain and how it can solve all of the difficulties in this guide.
Reasons why the retail industry need blockchain technology
Blockchain is gaining traction in the retail industry. There are several blockchain jobs available in the retail industry. Despite the fact that it primarily uses cryptocurrencies as a payment method, it does not appear to be deterring retail stores from participating. Mostly because it provides a shop with a number of distinct advantages. To start off, let’s have a look at the potential difficulties.
Transforming the expectations of the customer
Consumer expectations are one of the many dynamic elements that the retail industry must cope with. In actuality, consumer expectations appear to shift quickly, making it difficult to keep up. There are simply too many variables at play, causing consumers’ tastes to shift overnight. For instance, a large percentage of customers may like a product today, but the next day, they may have different feelings about it, and others may no longer like it. Seasonal changes, special occasions, vacations, and fashion trends are all important considerations. As a result, the retail industry should be intelligent enough to understand all of this data. However, accurate estimates are still impossible to make in this situation.
Poor maintenance of customer loyalty
A positive customer experience is required to build brand loyalty. In truth, one of the most common problems shops face is losing former clients because they believe they can be readily replaced. We understand that interacting with customers can be difficult at times. However, letting go is a practice that will only come back to haunt them in the future.
If retail shops keep this approach, for example, scaling their business will be more difficult. While promotions, sale deals, and special discounts can make their existing customers feel valued, they are insufficient at the moment because most merchants fail to deliver individualized offerings.
Lack of communication
Large retail organizations that appear to have several divisions are best suited for this. Sustaining such a large number of divisions simultaneously is both costly and difficult. Due to this, the sheer intricacy of controlling and maintaining these divisions through internal communication may not always be possible.
As a consequence of the lack of communication across divisions, the company process might be disrupted and customer pleasure. There seems to be no way to sustain this problem without a robust system to systematize these exchanges. Every company requires technological assistance.
No use of advanced technologies
Many technologies are designed extensively for specific enterprises and, when used effectively, can assist create additional benefits. Retailers, on the other hand, are entirely behind this movement. Many retailers do not even have an in-store presence today. As a result, they are rapidly slipping behind. In actuality, they are still employing an outdated method that has long since expired. Furthermore, many shops find technology difficult to use and do not have the skills to do so effectively. Once again, some retailers make mistakes when it comes to selecting the technology they require.
Cyber hacks
Another hurdle for retailers is the rising amount of cyber-attacks. In reality, numerous retail businesses rely on a traditional client-server networking approach, which is, to be honest, rather insecure. As a result, breaking into the servers and stealing sensitive information is very trivial. Furthermore, because every retailer stores data on its consumers, manipulating that data and gaining access to their credit card or bank account information is rather simple; this might swiftly escalate into a major security breach, resulting in significant income loss. Furthermore, it will imply that consumers do not trust you with their personal information, reflecting poorly on the brand.
Inflation in retail price
Consumers are being forced to pay increasingly higher prices for everyday necessities. Due to which they are likely to have less money set aside for luxury purchases. Retail prices and large price tags, on the other hand, simply serve to deter customers from spending money. Due to these circumstances shops must provide special deals or discounts to persuade customers to purchase the products.
Retailers, on the other hand, are currently unable to cope with the high cost. There is a valid reason behind this. Lack of sufficient automation and planning, on the other hand, might result in higher manufacturing costs, which in turn raises retail prices. So, if you want to scale, having a rate higher than consumer expectations is not a viable strategy.
Poor marketing strategy
Certainly, many retailers are gradually moving into the world of online marketing. However, due to a lack of sufficient expertise on the subject, they wind up spending a lot of money with few results. In actuality, you don’t have to limit yourself to social media marketing; there are various techniques to sell your items to clients.
Customers currently prefer one-on-one interaction with their particular brands. As a result, they may lose interest in a product unless you can provide them with this function. Again, retail companies might over-market things, which leads to increased customer unhappiness.
Fraud
The rising number of fraudulent operations and counterfeit products has been one of the industry’s primary concerns.
In reality, counterfeit items are getting increasingly difficult to detect, resulting in increased consumer unhappiness. Both the client and the retailer will continue to lose money if the problem is not effectively addressed. As a result, retailers must address this problem as soon as possible.
Benefits of blockchain in retail
The use of blockchain in retail has numerous advantages. The demand for blockchain jobsis high in the retail sector. Therefore, there is a lot of scope for blockchain engineers in the retail industry. Some of these advantages are unique and can only be realized if the industry adopts this technology. Nevertheless, with blockchain’s assistance, this industry will quickly overcome all of the obstacles.
Proper inventory management
As you may be aware, efficient inventory management is required if a retailer wants to boost overall efficiency. In actuality, there aren’t any disadvantages to it. Inventory management will assist businesses in keeping track of products, their expiration dates, and consumer preferences. In the retail industry, blockchain can help businesses organize their stocks more effectively. It will also save them a lot of money because it can streamline product shortages or surpluses based on real-time consumer demand. We think it’s a fantastic application for the retail industry.
Changing the payment method to crypto
Crypto payment mechanisms are another amazing application of blockchain in the retail business. As you may be aware, the cryptocurrency markets are now flourishing. More importantly, it appears that several governments are ready to collaborate on central bank digital currency, which is essentially a crypto form of fiat money.
As a consequence it appears that cryptocurrencies will become the currency of the future. Retailers can keep one step ahead of the game by accepting bitcoin as formal payment for their goods. In truth, it’s a terrific approach to entice customers and assist them in paying for the item securely and transparently.
Better management of customer identity
The majority of retail businesses employ a vulnerable client-server networking model. As a result, manipulating that data and gaining access to consumer credit card or bank account information is rather simple. This is a blatant violation of state law and a major invasion of privacy.
To address this issue, businesses in the retail sector can employ blockchain technology to encrypt customer data. They can provide identification processes in the system and keep all data in immutable storage. After the identification process, only the customer will have access to the data, and no third party will be able to penetrate the network and misuse it.
Retail tax streamlining
Each year, every retail business is required to pay taxes depending on its sales. Many people, however, try to avoid paying this $14.5 billion tax! The majority of this tax avoidance occurs among online retailers. If this continues, firms may face felony charges as a result of their actions.
To address this problem, blockchain-based automated sales tax collection can assist in the collection of taxes based on the number of sales or profits produced. Furthermore, retailers can upload the documents, which will be verified properly on the network. This is a terrific approach to pay your taxes on time and prevent any legal problems.
Prevention of fraud
The protection of fraud and counterfeit items is another advantage of blockchain in retail. In truth, the retail sector lost $62 billion in 2019 due to fraud alone. Large-end retailers, in particular, lost approximately 30% of their profit due to permissive return policies and high margins. The issue, however, is not the loss but the harm that the brand suffers as a result of the sale of counterfeit goods.
Retailers can monitor their items from producers using blockchain technology, ensuring that they receive genuine results every time. This, in turn, may make it easier for them to deal with counterfeit goods in the long run.
Providing the source of the product
Another characteristic of blockchains in retail applications is the ability to track goods origin. Consumers are currently wary of anything they purchase. That’s understandable, as customers have a right to expect more when they’re paying for it. On the other hand, retailers can only submit the “manufactured in xxx” seal on the container as proof of origin. As a result of the use of blockchain, businesses can finally provide provenance, as consumers can trace or view the whole supply chain of a single item. It will begin with the providers and conclude with the purchaser. Customers will be able to get the provenance they desire right now, and they will be able to spend their money on a legitimate product.
Smart loyalty programs
Many retail companies now have loyalty programmes that allow them to interact with a much larger audience while also keeping their existing customers happy with their products. However, loyalty systems have flaws as well. Most of the time, they have inconsistencies in their policies that prevent customers from receiving reward points. Furthermore, even if a customer is eligible for points, they may not receive them due to system incompatibility. Retailers, on the other hand, may automate the entire process using blockchain’s payment systems. They can simply pre-program the rules in a smart contract, and if a customer fulfils all of the conditions, he or she will receive the points immediately.
Conclusion
Considering all of the advantages of blockchain, the retail industry is on the verge of transforming. The uses of blockchain technology are slowly but surely revolutionizing eCommerce. Blockchain is perfect for shops because, in addition to being faster and cheaper, it eliminates third-party meddling. The capacity of blockchain to decentralize a centralized service aids in building trust, which is the foundation of every business. Given all of blockchain’s benefits, it is safe to assume that blockchain is here to stay.
