Blockchain continues to be a topic in boardrooms as brand leaders explore new ways to unleash the power of technology to drive authentic conversations with their consumers. This isn’t surprising, as the World Economic Forum expects 10 percent of GDP will be stored on blockchain technology by 2027.
While it’s still an emerging technology, blockchain can make a profound impact on businesses, helping leaders close the retail execution gap – between vision and execution. It’s critical that brands start to look at its potential to transform their company.
What is blockchain?
As a distributed ledger technology, blockchain provides an irrefutable, validated record of product provenance from raw material origin to point of consumption. It can securely record transactions between two or more parties in a verifiable and reliable manner, and the parties involved in the chain can’t tamper with the information.
Fundamentally, blockchain technology has the potential to vastly improve transparency and accountability across the supply chain. The core capability blockchain provides in the retail and consumer products industries is traceability, allowing organizations to efficiently bring goods to the market and mitigate risk. With insight into the payment process, companies can appropriately price items based on cost for materials, manufacturing, and shipping.
What are the applications?
Thanks to technology, consumers have become accustomed to possessing information at their fingertips, and are putting pressure on companies to share information they deem relevant to their purchasing decisions, including proof of sustainability and origin of products. To ensure and maintain consumer trust, brands can leverage blockchain to provide transparency and traceability through the entire process – from ingredient origination and sourcing to the point of sale.
By making it easier for consumers to obtain the information they want – such as quality, safety, ethics and environmental impact – businesses can foster stronger, more authentic relationships. In turn, this will help yield better business results through improvements in brand equity, social sentiment and, ultimately, increased market share of the products that consumers desire.
While some retailers are just beginning to explore blockchain, leaders are already leveraging its power. Here are a few examples of how it is being applied:
- Cold chain monitoring. Temperature sensors inside sealed containers can record temperature logs to a blockchain, aiding in cold chain monitoring. This allows companies to ensure their temperature-sensitive goods have been stored correctly and are safe for consumption. Furthermore, keeping perishable products fresh for as long as possible reduces waste and cost, and establishes trust among consumers. With the ever-increasing importance of the fresh category, this simple application can drive real bottom line results and boost overall profits in thin margin businesses.
- Social responsibility. With blockchain, companies can trace materials back to the source, show origin and prove authenticity. This is in line with consumer interest, as Nielsen’s recent Global Corporate Sustainability Report stated that 66 percent of consumers are willing to spend more on a product if it comes from a transparent or sustainable brand. Consumers increasingly want to know where their food and products come from, what’s in them and whether they are ethically and sustainably sourced. With blockchain, food can be traced from farm-to-table, assured that it is organic and that is was humanely treated. Or, when shopping for an engagement ring, consumers can determine if a stone is from a conflict-free area, as well as verify other important factors, including its carat size and authenticity.
- Food and product safety. When a product is recalled due to contamination or a safety risk, retailers can use blockchain to pinpoint where the affected batch originated and how widely it was distributed. This will help retailers remove the appropriate products – whether fresh produce or a car part – from shelves faster than ever before, preventing further illness or injury.
As brands and retailers look to stay ahead of the competition and ensure they are meeting consumers’ expectations, the need for a digital platform that promotes trust, security, and visibility has never been greater. Blockchain is a key element of a well-thought-out, winning strategy, and brands should continue to invest. By understanding how the technology, and its many applications, can transform the way their business operates for the better, you can put your brand on the path to better results and deeper customer relationships and loyalty.