Blockchain Reunites Retail with Its Products

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Blockchain Reunites Retail with Its Products

By Justin Patton - 10/23/2017

For years, we’ve been witnessing the battle of modern retail: the venerated bastions of bricks and mortar versus the e-commerce barbarians at the gate. But, like all dramatic conflicts, the truth is never so black and white, and each side really wants to be a lot like the other. Most retailers have been working towards the goal of true digitalization, namely the ability to tie any physical item for sale to its online representation, and to seamlessly trade, track or sell an item either by moving its physical form, or by digitally transferring its online avatar. The current reality of the retail supply chain, however, has just been too messy. We can’t truly connect items when we’re still tracking them by quantities, especially when we can’t even agree what that quantity means.

Consider pairs of jeans manufactured and carefully counted and inventoried into cases. These cases are tallied and entered to the bill of lading for transport to the shipping yard. In the shipping yard, the product is recorded by weight. As it’s received in foreign customs, it is measured by value. Not until passing through to the retail store are they again counted by units. How can we possibly track these individual items when we can’t even agree what units to measure them by? And how can we expect precision accuracy? Just in time delivery? Proof of ethical sourcing? Proof that it is not counterfeit? Customization? Or any one of the many other expectations of the modern “I want it at my house by tomorrow” shopper?

The answer is we can’t, not until we start serializing and tracking our items, from factory to home. And this doesn’t create big data, it creates massive data. Consider, if you will, a shipment of 5,000 Bluetooth speakers moving from China to California. In the recent past, you could sum up the shipping information simply: BlueSpeaker x 5,000. That’s as little as two data fields. But in a serialized world, we need 5,000 separate records to contain this data, and it must be accurately traded from partner to partner to partner, across paper, e-mail, ASN and EDI, in the world’s largest and most expensive game of telephone. But there is a better solution with blockchain.

Blockchain excels in cutting these tenuous data dependencies. Instead of telephone, we can just record the data in the cloud once, in a secure network that allows all partners fair and equal access. Blockchain provides simultaneous openness and specificity into what is going on with our retail products, both in their physical forms and in their digital representations. Additionally, it allows us to tether the two together, in symmetry with merging bricks and mortar and e-commerce businesses. 

With blockchain, we have inventory accuracy, claims become a thing of the past, and electronic proof of delivery becomes automatic. Administrative shrink dwindles, fraud and counterfeiting disappear. Quality is no longer general, it is specific, and customers can become as intimately familiar with the history of the items they buy as the retailer and brand prefers. The benefits are almost self-explanatory, but the ROI still needs to be proven, and there are excellent resources to help do so. 

The unification of items and their data, and of the physical and electronic retailers will continue, and blockchain will bind them. And the early adopters will reap the greatest rewards while slow adopters will lag behind — and may never catch up.  Blockchain is the future of retail supply chain, whether all parties are ready or not.  

Justin Patton is director of the Auburn University RFID Lab, which specializes in the business case and technical implementation of RFID technology in retail, supply chain and manufacturing settings. https://rfid.auburn.edu/