The Retail Apocalypse and Blockchain

Last  month, it was announced that U.S. retail giant Sears was filing for bankruptcy in the continuation of an ongoing trend that many have declared the Retail Apocalypse. The situation has gotten so bad that 57 major retailers have gone bankrupt since 2015 alone, according to CB Insights.

Unsurprisingly, one of the most commonly cited causes of this downward trend for brick and mortars is the rise of eCommerce. Yet, while the rise of online shopping is certainly having an impact, the benefits are overwhelming felt by a single player  – Amazon. According to Similarweb, Amazon saw just under 2 billion visits to their website in the US in March 2018, dramatically outperforming runner-up’s 366 million. This absolute dominance by a single player speaks volumes about the company’s early entry into the sector, growing from an online book purveyor to the go-to resource for buying nearly anything online.

The effect of eCommerce on the retail sector is critical not just for understanding the industry today, but also to seeing how the space will likely evolve moving forward. The key switch here, however, is to replace internet with blockchain. Fittingly, many label blockchain the biggest technological leap forward since the inception of the internet.

So if the internet helped drive the retail apocalypse, and blockchain is the next massive disruption, imagine how significant the impact of the technology could be. More importantly, many of the next decade’s biggest retail winners will be defined by the decisions they make regarding blockchain in the coming months and years.

Value-Based Networks

The power of Amazon stems largely from the company’s gigantic digital presence and nearly limitless scope. From toothpaste to couches to clothing, a visit to is likely to turn up most of a shopper’s needs. Competing with this level of centralization is incredibly difficult for a new player in eCommerce, many of whom are focused on a specific niche rather than all retail industries like Amazon does.

Yet, partnering with complementary companies in order to present a unified, viable competitor to Amazon is fraught with risk. How can you really know if everyone is aligned to play the game fairly in the long term? Is your new partner really acting in the way you had initially discussed and how do you monitor their actions?

Blockchain has a defining capacity to solve for the problem of trust, as it enables unparalleled transparency and rules-based operating through agreed-upon smart contracts. This combination helps mitigate risks of ‘cheating,’ empowering more businesses to combine forces. The ability to take collective power and apply it to the wider competitive landscape is exceptionally powerful, as it returns a higher level of choice to the consumer.

Seamlessly Borderless

The huge task of sourcing and delivering products on time and around the world is one of retailers’ biggest challenges. Yet, these are obstacles where blockchain technology can significantly improve the process.

Blockchain-based ledgers are uniquely transparent and secure. They are ideal for tracking and properly sourcing specific items along supply chains to ensure they were purchased as advertised and arrived at their intended destination. Authenticating such data is important for most purchases, but legally critical for food, pharmaceuticals and other industries. Reputation scores for drivers are seen as fundamental to ensuring a hyper-local delivery focus enabling a business to enter a new market quickly while maintaining quality, while proof of delivery on the chain can minimize mistakes and reduce customer frustrations.

Loyalty Economies

“Stickiness” is a trait that rests among the holy grail metrics for any digital product. It measures the capacity to keep a customer – or end-user – coming back for more because of a combination of great experience and high value. Loyalty programs – whether they be based on airline miles, premium club memberships or anything in between – are seen as a vital method of facilitating this characteristic.

Here too, the combination of improved trust and seamless movement of value becomes imperative. A loyalty program’s reach can be easily expanded, the values accrued more widely utilized and the impact more directly and clearly felt by the end user. This latter focus on bringing maximum value to a customer is especially crucial as it enables a unique ability to provide value that rivals what a giant can bring to the table.

The rise of the internet helped determine the winners and losers of the retail sector, and blockchain will likely have a similar effect. Which companies will rise above? Monitoring their activities with this technology in the coming years could help make this prediction.

By Uriel Peled, Co-Founder & Head of Strategic Partnerships, Orbs

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