Let’s tell by the example of Walmart, American Express and Amazon, how blockchain technologies change retail - 5 business cases that can be used today.
Walmart: food stuff security
Since 2016, Walmart has been using a blockchain platform developed in conjunction with IBM to track the movement of products through the supply chain from farm to consumer. For this purpose, special RFID tags are used, which are attached to the packaged goods and connected to the system. They transmit real-time data to the system about the location and state of the product.
Walmart intends to solve the following problems with the blockchain.
Food stuff retail issues
Product safety. During the last outbreak of E. coli, 200 people went to the hospital for help, 100 were hospitalized and 5 died. The report of the Center for Disease Control and Prevention (CDC) states that the cause of infection was contaminated romaine lettuce, which has become the distributor of the bacterium Escherichia coli (E.coli).
And this is just one case. According to CDC ratings, every year in the United States, 50 million people become ill with foodborne illness, resulting in 130,000 hospitalizations and 3,000 deaths. According to WHO data, over 430 thousand people die every year due to food poisoning and disease.
The second most important problem is surrogate, diluted and fake food. In the United States, milk, olive oil, fish, grains, and organic products are at risk. In other words, almost all American food is questionable, since most of it consists of these products.
And this concerns all price categories, since fraudsters, as a rule, fake expensive goods. While unscrupulous manufacturers dilute products or use low-quality ingredients (and sometimes harmful) to make cheap products even cheaper.
To solve these problems, Walmart began testing a distribution register back in 2013 to track the movement of goods along the sales chain and inventory status. The ready-to-use product appeared in 2016, and it was decided to test it first on the delivery of mango from farms in Mexico to the counters of stores in the USA.
For this, the mangoes collected on the farm were supplied with RFID tags — radio sensors that track the location and:
● source of origin of the product (farm, plant);
● factory and product / raw material processing data;
● expire date;
● shipping requisites;
● storage temperature;
● serial number.
This information entered the blockchain system in real time. Access to them was provided to all participants of the supply chain: 16 farms, 2 packaging lines, 3 brokers, 2 import warehouses, end users.
Control testing of the system before the introduction of the blockchain showed that in order to track the origin of a single mango slice on the counter to the farmer who grew it, it takes 6 days 18 hours and 26 minutes. After the introduction of the blockchain, the same action took 2.2 seconds.
After the success of the pilot project, Walmart began to implement blockchain in all supply chains. And in some cases, such as, for example, after the incident with romaine lettuce and the E.coli bacterium, the network demanded that all suppliers of greens be transferred to the blockchain in the form of order until September 2019.
Received benefitsConsumer confidence. When a buyer can check where the goods came from, who produced it and how it was collected, as well as which processing it taken - this increases confidence, which has a positive effect on loyalty.
More efficiency. Detailed display of the movement of goods in real time allows you to understand where delays occur during transportation, which in turn makes it possible to optimize the delivery process.
Cost reduction. Transfer of a significant part of the workflow to the blockchain allowed Walmart to reduce the time that the company's staff spent on information retrieval, putting signatures and stamps, as well as shifting the paper from one stack to another.
Provenance: goods origin history
The problem of fakes and counterfeit
According to ratings of the Organization for Economic Co-operation and Development, the global market of “fakes” and counterfeit products in the fashion world reached a record 460 billion dollars in 2018. For comparison, according to World Bank ratings, Austria’s GDP is $ 415 billion, Israel is $ 350 million. The most falsified goods are Rolex, Nike, Ray Ban and Louis Vuitton.
The global market of fake jewelry is estimated at $ 250 billion, fake smartphones at $ 50 billion, counterfeit medicines — $ 30 billion. The list goes on and on.
Blockchain platform from the category of "Software as a Service", which collects and checks the history of the origin of goods. It is designed as a universal solution that can be easily embedded in any point of online sales for any product, if it has a physical embodiment.
In the Provenance system, you can enter information about the materials, manufacturer, shelf life, supply chain, people and processes associated with production and sale. Trading platform participants can refine and change this data if they find flaws or deception. To do this, you need to become a platform ambassador and fill out a special form on the Provenance website.
Users use the platform for free. Business to pay £ 29 per month for the creation of labels and unique product identifiers confirming the authenticity.
Now Provenance is used by:
● Co-op, , the largest consumer cooperative in the UK, to track the movement of food from the manufacturer to the counter.
● Pole and Line producers in Asia for fish supplies to the UK, USA and Japan.
● Organic Association when issuing certificates of organic origin of products.
● The Grass Roots Farmers Cooperative in the United States when tracking meat origin.
● Martine Jarlgaard in the manufacture of fashionable clothes.
Consumer confidence. Using the mobile application Provenance, consumers can track the origin of the product and thus ensure its authenticity, environmental friendliness and safety. This will positively affect the health of the population and remove unethical and unscrupulous manufacturers from the market.
For example, when a buyer sees in the news that the goods of a certain brand have become a source of illness or carry another threat, he will easily find out if they are in his consumer basket. The opposite is also true: it is possible to make research on what products are really high-quality, authentic and safe, so that you can only use them.
For retailers. The benefits of using Provenance are as follows:
● Consumer confidence. When the choice is between a product with a known history and a product with an unknown or dubious history, the buyer's decision is obvious.
● Marketing. Ethical producers and retailers will get an easy way to prove to the consumer that they are really good guys, not wolves in sheep's clothing.
● Legal risks. Selling high-quality and safe goods reduces the risk of being brought to court because of consumer claims.
Amazon: blockchain designer for business
Problems of blockchain implementation in business
A survey of Chief Information Officers (CIOs), conducted in March 2018 among 300 respondents, showed the main difficulties in implementing the blockchain from the point of view of IT directors:
● need to train staff for completely new skills (23%);
● difficult to find professional blockchain developers (18%);
● will lead to significant changes in corporate culture (13%);
● requires complete IT restructuring (14%);
● another 18% said they are practically unfamiliar with the new technology.
Translated into common language, this means that the blockchain is a complex and expensive technology, which introduction there is nobody to do in their company.
Amazon Web Services case
In November, 2018, Amazon Web Services (AWS), a subsidiary of Amazon, launched Blockchain Templates for easy and quick deployment of Ethereum or Hyperledger Fabric based frameworks. Like templates for creating websites from Wordpress, the solution from AWS is a relatively simple constructor in which you can choose one of the standard blockchain applications (DApps) and customize it.
For small and medium retail, in which there are no resources to develop DApps, the AWS Blockchain Templates service is the ideal solution. Thanks to it, the creation of blockchain applications will be as simple and accessible as the creation of sites today: open the designer, choose the desired template, customize and run.
Who already uses AWS templates:
● T-Mobile creates a platform for identifying and authenticating users based on Sawtooth Hyperledger technology - ensuring traceability and accountability in the supply chain.
● Guidewire insurance platform helps PricewaterhouseCoopers increase efficiency with bordereau discharge. AWS blockchain-based solution provides transaction initiation and automatic claim approval (automatic arbitration), which increases the marketing appeal of Guidewire insurance products and eliminates the need for manual intervention in the payment process.
Received benefitsAWS Blockchain Templates solves several problems that hinder the widespread use of the blockchain in business: ● Accelerate the process of developing an individual solution for a specific business - AWS Templates has a huge toolkit for tuning and experimenting with running DApps; ● They make the process cheaper because you don’t need to create DApps from scratch; ● Make blockchain more simple and understandable.
American Express: adaptive loyalty program
Loyalty Program ProblemsIn 2015, global research firm COLLOQUY published a report on the development of the market of loyalty programs, according to which: ● The average family participates in 20–30 different loyalty programs, but actively uses only half of them; ● 50% of the accumulated points will never be used, because of which up to 50 billion dollars is lost annually; ● 57% of consumers refuse loyalty programs, as they take too long, for example, when using cashback, you need to wait up to 90 days.
The inefficiency of loyalty programs is due to two reasons. Firstly, an ordinary customer should always carry from 5 to 20 discount cards or use as many applications to participate in all loyalty programs. In the digital age, this is too inconvenient, especially when it comes to infrequent or not very expensive purchases: medicines, hair dryer, cake, restaurant, and the like.
Secondly, many loyalty programs have an awkward redemption / withdrawal points system. So consider 78% of consumers, according to a study by Collinson Latitude.
American Express case
American Express is developing a new loyalty and partnership program for its customers. The financial giant plans to use a centralized, open-source blockchain to create a hub of adaptive loyalty programs for retail, airlines, banks, car rentals and any other sales outlets.
Under adaptability in American Express imply the possibility of fine-tuning points accumulation program, bonuses and discounts, as well as payments based on various factors. Adjustment can occur in both manual and automatic mode.
An example of the dependence of the conditions of the loyalty program on some factors:
● quantity of goods in stock - the smaller it is, the lower the discount;
● time of day - discount or giving points to customers of certain dishes and drinks in restaurants, fast food or bistro;
● season - big discounts on winter clothes in spring and spring in summer;
● discount for a specific product or service.
These parameters are configured by members of the American Express loyalty program - retailers of goods and services - in real time. The financial giant simply provides services for the maintenance of their ideas. However, American Express warns that it will not contribute to sales of firearms, tobacco and alcohol.
For retailers. Thanks to adaptive loyalty programs, you can more effectively influence the consumer behavior of people, which will positively affect revenue and customer loyalty.
For consumers. Loyalty programs with simple conditions for the accumulation and withdrawal of bonuses. For example, a refund when using cashback services will occur during the day, not three months - no need to wait until the seller and the bank confirm the fact of sale of goods and transfer of money.
For American Express. Loyalty of partners. More transactions within the system, i.e. more commission payments.
CoinGate: payments and financial gateways
Reasons to use cryptocurrency
First, the use of cryptocurrency when paying for goods and services is more economically efficient. According to FRS, a transaction with a confirmed PIN-code costs the business 0.25 cents, the fee for the “released transaction” is even higher - up to 0.51 cents. In the Bitcoin payment system, if you use the Lightning Network gateways, a few cents will be enough for dozens of transactions. In addition, do not forget about the commission costs from consumers, which sometimes reach 5% of the value of the goods.
Secondly, it is safer. Cash transactions on the blockchain are protected by cryptography, a distribution registry and a constant history of all transactions. Smart contracts can guarantee the transfer of value between the seller and the buyer without the participation of third parties.
Thirdly, it is faster. An ordinary transfer can take up to three banking days, cross-border operations require up to five days. Cryptocurrency transactions take 60 minutes or seconds, depending on the blockchain. During operations through the Lightning Network gateways, the transaction speed is almost instantaneous - like with VISA and even faster.
Fourthly, depending on the type of blockchain or smart contract, operations on the blockchain can remain anonymous or the system of verification and identification of the person, as well as the KYC & AML procedure can be involved. In normal financial transactions, the buyer always discloses the data to the bank and the gateways through which the money is passed.
A platform for buying and selling cryptocurrency(for example ERC20 tokens), which provides the ability to deploy payment gateways for retail and web services, both online and with traditional POS options. It is simple, convenient and supports over 50 cryptocoins. In addition, CoinGate allows you to withdraw money in Fiat to various payment systems, including PayPal.
In July 2018, CoinGate successfully tested the Lightning Network technology for micropayments on 100 web resources, including sites for the sale of goods and services. After that, it was decided to transfer all participants in the system to a new technology in order to reduce the cost and speed up financial transactions.
Now payments through CoinGate payment gateways accept over 4,000 web services, including the official websites of the manufacturers of Swiss watches Louis Chevrolet and Chronoswiss, the hosting service Bitlaunch, the Mmoga.com game store and the website Ecommerce application PrestaShop.
Retailers thanks to CoinGate, will increase market coverage and reduce costs in financial transactions. In addition, the seller and the buyer can use a smart contract to guarantee the transfer of goods and money or to arrange a loan without a bank.
Consumers will reduce the cost of goods by 2–5%, since they do not need to pay commissions to the bank and other services through which the money is passed. With transnational transfers, the savings will be even higher - up to 10%.