As of Wednesday, December 27, 2017
Just when you thought you were finally starting to have a basic understanding of social media, RFID, Magic Mirrors, Big Data and a plethora of other retail technologies required for today’s connected consumers, along comes a new term—Blockchain.
For apparel brands, manufacturers and retailers, there is no time to waste on this one. You need to know what it is now and take action to survive and thrive in the new world order of direct-to-consumer and unified commerce.
So what is Blockchain? While the technical details are a little complicated, the value is simple: Brands and retailers can provide customers—at a low cost—indisputable proof of authenticity and the provenance of their products every step of the way in the supply chain. That means from design to delivery to financial transactions, product service and beyond.
Simply put, Blockchain is a distributed ledger with synchronized copies of product DNA held by computers all over the world. There is no master copy and all copies are created equal. So, every transaction that occurs, whether product or financial, is permanently recorded. This is not a secret list guarded by a central fashion authority. It is a widely distributed public list, and every participating computer has a copy of it.
Blockchain technology does this by creating a database of entries built from a preceding “block” of information and stored as a copy. Then it is secured by a complex mathematical algorithm, making it difficult to create fraudulent transactions or alter existing transactions.
So, now that you have these encryption capabilities, what can you do with it in the real world of retail? There is now visibility and assurance across the supply chain—every step of the way. Here are the top three things you need to know right now:
1. Deliver product provenance, authentication and DNA.
Counterfeit and fake designer goods are a multibillion-dollar business and still growing. Blockchain to the rescue. It is now possible for every single touchpoint in the supply chain—from a fabric producer/supplier to a manufacturer to a shipper to a retail store—to add a verifiable record to an item’s pedigree. It means you have true visibility and quality assurance across the entire supply chain. So it makes counterfeiting very hard if not virtually impossible.
Blockchain’s initial impact is focused on enabling brands to provide more-reliable information to customers, and with a new generation of shoppers—Gen Z and millennials—brand trust is very important. So, it’s not only communicating the basics like country of origin and product safety information but also providing product contents, purity, sustainability and other socially responsible data that these new generations expect. This is where Blockchain makes it possible to record every touchpoint in the lifespan of a product as it moves through the supply chain from concept to consumer. This can also be adapted to ensure confidence in the lucrative resale markets, especially in the luxury segment.
2. Power up your e-commerce payment methods.
You may have heard of Bitcoin. Bitcoin is crypto-currency powered by Blockchain that does not require banks or other intermediaries to conduct transactions. One of the reasons why Bitcoin and other crypto-currencies are getting such buzz is because they offer an opportunity to bypass “expensive” forms of payment for something much cheaper. High transaction costs can constrain the apparel industry with low margins and rising production costs. And as more and more brands are going direct to consumer, controlling these transactional costs is more important than ever.
Overstock.com now accepts over 40 different digital currencies as payment on its website. It was the first major retailer to do so, and this has allowed for the introduction of dozens of other popular digital currencies as payment options including Ether, Litecoin, Dash and Monero.
3. Ensure better B2B contracts and visibility throughout your supply chain.
Blockchain can help brands increase efficiency with business partnerships. Think of “Smart Contracts” or “Self-Executing Contracts,” which provide a level of automation that enables unprecedented efficiency and cost reductions throughout the supply chain. Here, Blockchain could reduce the need for and cost of third parties such as brokers and purchasing agents by automatically finding the best price and terms for products. The purchase could then be completed without or with very little human intervention.
Blockchain can also improve visibility into complex retail supply chains, such as information on product status, location, contracts between suppliers and manufacturers, as well as quality-testing results. Brands, retailers, suppliers, manufacturers and shippers today must reconcile information from multiple complex systems. This data can be used to optimize inventory levels, improve tracking and forecasting, and streamline paperwork. Blockchain consolidates digital information into a single Blockchain-based “version of the truth.” The combination of Blockchain and smart contracts can reduce lag times, helping brands meet e-commerce demands more effectively, manage manufacturing and quality controls, and meet consumer demands. This makes for better brand connections.
Jerry Inman is a retail expert focused on the fashion, style and technology industries. He is also the cofounder of the retail consultancy Demand Worldwide as well as the fashion trend forecaster, MintModa.