Blockchain is Here: Retail Needs to Get Aboard … or Sink
Consumer loyalty reward programs across every facet of retail are antiquated and ineffective. Seventy-seven percent of adults in the United States participate in loyalty programs, however, more than $100 billion in loyalty points have gone unclaimed as trust in loyalty program benefits plummets. These rewards points go unused because consumers either don’t know how to claim the points for tangible goods or don’t want the goods they're able to redeem. This isn't a new trend. Since the advent of the mass implementation of rewards programs, roughly one-third of all loyalty rewards have consistently remained unused.
The largest incentive for participation in any rewards programs is the end result — i.e., what the consumer can gain from participation. We’re now seeing a new solution to this challenge: blockchain technology and the creation of branded cryptocurrency.
Blockchain technology finally allows for a more efficient and effective system for consumer loyalty programs. At an abstract level, blockchain technology works as a distributed and encrypted ledger of information, kept secure by a globally decentralized network of computers. Think of it as a literal chain, with each link being an encrypted store of information. The information being exchanged can also be used to document occurring processes, encrypting information for the different steps of any supply chain, rendering the process completely transparent.
With blockchain technology, individual retailers can create their own branded currency. This transforms retailer “silos” into larger economic ecosystems that transform passive customers into active participants. This also allows loyalty programs to become inter-exchangeable between retailers. This means that running loyalty rewards programs using blockchain technology, rewards gained from Company A can be used towards purchases from Company B, C, D, and even in games and apps within those ecosystems. For example, points received from buying a coffee can go towards the purchase of a new refrigerator or towards an in-game purchase on your favorite app. Universal exchangeability between loyalty programs will finally make this system of customer loyalty rewards effective, boosting program use and participant retention.
The largest challenge of making this a reality so far has been cost. It’s expensive and complex, both legally and technologically, for an individual company to implement its rewards program on top of blockchain technology. A bridge between blockchain and consumer applications needs to be built, allowing companies to implement blockchain without the need to create and maintain these blockchains from scratch and without having specialized blockchain development experience. We’re finally at the point where this bridge is becoming a reality, and the mass integration of blockchain by the retail sector will bring customer retention to heights never before seen.
Beyond loyalty programs, blockchain technology is of tantamount importance in bringing supply chain models into the modern era. Blockchain works as a decentralized and impenetrable ledger of information, enabling the transit of goods to be accounted for from production to final sale in an instantly accessible and impenetrable format. Waste will be reduced at every step of the process once this accountability is in place. For example, one-third of all food produced in the United States is wasted from spoilage and faults in the supply chain process annually. Blockchain adoption could cut this waste exponentially. Additionally, food-borne illnesses could be quickly identified and contained before they hit store shelves.
Blockchain can revolutionize retail, from production to transit to purchases to rewards programs. Now is the time to jump aboard before the ship sets sail.
Jason Goldberg is the founder and CEO of Simple Token, a a protocol for consumer app tokenization and an ERC-20 utility token that enables any app to launch branded tokens on open scalable side-chains.
