The high street is also battling the online retailers, which often have an advantage in terms of operating costs, range of products and potentially most important of all - “data”. Meanwhile, online retailers are in a “race to the bottom”, with price comparison services making it difficult to price products above the lowest price, while service levels and reputation goes largely unnoticed by the consumers. Furthermore, online retailers are also struggling with distribution costs, especially due to the high rates of returns which, for fashion retailers, can be as high as 40%. Online business is growing fast and in the USA it now accounts for over 30% of sales for retailers like Nordstrom and Macy’s.
In response to these challenges, consumer brands are increasingly looking to expand their geographical market reach, to raise their brand’s profile and to collect more data from consumers directly.
Blockchain technology can help consumer brands to accomplish some of these goals. For instance, by incentivizing consumers to scan tags on products, consumer brands can accomplish several things at once:
Provide more information about the product such as provenance data and exclusive content, with the intent to increase the brand value
Collect data directly from the end user e.g. through surveys and quizzes
Reward brand loyalty e.g. through loyalty programs or cashback.
Incentivize consumers to refer the brand and products to their friends
Create cross-selling opportunities e.g. selling insurance or service agreements
Blockchain technology can ensure that reliable data is provided, e.g. regarding provenance, and makes these reward-based marketing solutions cost-efficient, even when “rolling them out” on a global basis. No more need to deal with multiple local currencies and no need to run a complex system to manage the loyalty program balances and transactions. All data is securely stored on a Blockchain, and interoperability between the various systems is possible. For example, Loylogic, which was established in 2005, has a global network of more than 500 retailers and 2,000 online stores offering millions of products and services linked to various loyalty reward schemes.
Retailers can benefit from Blockchain technology in much the same way. They can use similar reward-based marketing techniques to improve customer engagement and data collection. High street retailers can incentivize consumers to visit their stores, not by giving discounts, but by providing more value in terms of rewards, more exclusive products and those controlling access to a more exclusive experience.
For instance, a football shirt sold in a store using Near Field Communication (NFC) can offer exclusive video content from the player, or an exclusive item for an “Esports game”, whereas the same shirt bought online does not come with these value-added features. So, if you want to be Ronaldo in FIFA 20 on your PlayStation, then you have to go to the...