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How Blockchain in Retail can ensure Product’s Authenticity?


Nowadays, in the retail industry, customers have various concerns like

  • The quality of the product
  • Fairtrade practice
  • Retailers’ claims for their stock or goods

Traditional retailers face a challenging business environment due to continuing margin pressure, greater global competition and detailed record keeping. They also struggle with issues like lack of supply chain visibility, high transaction fees, empowered consumers and counterfeit products.

However, today’s socially-active customer is more conscious and demands well-sourced and authentic products.

Therefore, the retailer has no other choice than to improve the visibility of the goods’ movement from production to sale.

A blockchain-enabled system can build trust among the retail supply chain stakeholders and revolutionize the retail supply chains by:

  • Managing the supply data
  • Autonomous transactions
  • Chain-of-custody information.

Also, enhanced visibility across the entire retail supply chain can benefit all the system stakeholders.

This article puts light on the following content in the article:

What are some of the challenges in the retail industry?

  • Poor Inventory Management
    Currently, every stakeholder involved in the retail market stores the information in two ways:
    • Personal systems, making it inaccessible to other stakeholders.
    • A centralized server, which is vulnerable to hacks.

    Also, performing sales prediction has become complicated with the growing needs and complexity of stock-keeping unit management.

    Therefore, the traditional retail system requires an innovative solution to enhance their inventory processes.

  • Lack of Authenticity
    Increasing growth affects the quality of the items, resulting in the production of fraudulent products. A survey done by the Organization for Economic Co-operation and Development (OECD) says that the counterfeit products accounted for about $461 billion in 2013.

    The sale of pirated goods in the market has increased due to a lack of information on raw materials’ origin and production.

    The lack of authenticity creates trust issues among the retail industry stakeholders, which is also one of the biggest challenges. Also, the customer always worries about the quality of the product and where it has been manufactured.

    The different stakeholders involved in the system currently do not have information about the details added by others in the network during the entire process.

  • Regulatory Compliances and Complicated Contracts
    Various lengthy contracts like bills, sales agreements, etc. are signed by stakeholders in the retail process.

    It takes long periods to agree upon these legal contracts, which causes delays in the process.

Blockchain can address the retail industry’s above issues by enabling a peer-to-peer network and replacing the role of a centralized authority.

How can Blockchain in Retail bring transparency in the product’s supply chain?

Webinar Details

Author’s Bio

Akash Takyar
Akash Takyar
CEO LeewayHertz
Akash Takyar is the founder and CEO at LeewayHertz. The experience of building over 100+ platforms for startups and enterprises allows Akash to rapidly architect and design solutions that are scalable and beautiful.
Akash's ability to build enterprise-grade technology solutions has attracted over 30 Fortune 500 companies, including Siemens, 3M, P&G and Hershey’s. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.
blockchain in retail

Stakeholders involved in the Retail Supply Chain Network

  • Manufacturer/Producer
  • Packager
  • Logistic Service Provider
  • Wholesaler
  • Retailer
  • Consumer

Step 1: Producer adds the production details to the blockchain

A producer or manufacturer who produces the product to be sold in the market can add the production details to the blockchain, like:

  • Raw materials used
  • The origin of production
  • Manufacturing date
  • The procedure of manufacturing
  • Quality standards followed 

Once stored on the blockchain, production information can be accessed by the retail supply chain network participants.

The details added by the producers/manufacturers can bring fairness to the system by making information transparent to everyone.

When a product gets manufactured and passes the quality tests, the quality assurance team can add the quality check certification to the product ID, which is then stored in the blockchain.

The team of manufacturers distributes the products to the packaging company.

Step 2: Packagers add the packaging details to the blockchain

After the product is manufactured, it is sent to the packaging company to make the item look more organized and appealing.

While packing the items, packagers add the essential details to the blockchain, like:

  • Carton box type
  • Packaging date
  • Packing materials used 

The information provided by the packagers can help ensure retailers and consumers that the product’s packaging has not tampered and the product is safe to use.

Once the product is packed successfully and the details are added to the distributed ledger, the distribution request is sent to the logistics service provider for transporting it to the wholesalers and retailers.

Step 3:Logistic Service Providers add the carrier details to the blockchain

The product can be transported via IoT-enabled vehicles having different types of sensors. While shipping the items to the wholesalers, logistics service providers can add transportation details to the blockchain, like:

  • The number of products to be delivered
  • Types of products (fragile/non-fragile and food products)

The sensors installed in the IoT-enabled vehicles can also directly send gathered information to the blockchain, like:

  • The temperature under which items are stored in a vehicle
  • Real-time location

The information shared by the transportation service providers can help wholesalers/vendors confirm if the number of products delivered is the same as that of the transported and if the items were kept at the right temperature.

Step 4: Wholesalers/Vendors add the sales details to the blockchain

Wholesalers/retailers can add the details related to sales to the blockchain, such as:

  • Products bought/sold
  • Maximum retail price
  • The selling price of the product 

Adding all this information on the distributed ledger will bring fairness and trust to the system.

Retailers can be ensured about the number of products sold or available. Also, it will enhance the inventory management system by bringing transparency and traceability.

It can also help auditors and government bodies to conduct taxation audits quickly and easily with blockchain.

Step 5: Consumers can trace back the entire supply chain

Blockchain Supply Chain solution in retailing can enhance the trust level between a consumer and a retailer.

Due to the transparency in the retail operations, a consumer can track the whole product life cycle along the supply chain. With a blockchain-based application, they can quickly get to know if the product is manufactured appropriately or not and it has passed the quality checks.

From bringing transparency in the product lifecycle to managing inventory, handling payments and getting security to the consumer’s data, blockchain in retail can resolve a wide range of business issues.

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What are the benefits of implementing the blockchain in the retail industry?

  1. Enhancing inventory management
    With the increased complexity in SKU (Stock Keeping Unit) management, sales forecasting has become challenging for retailers. From real-time location to the exact source of origin and number of products produced or sold, every piece of information related to the retail operations can be stored on the blockchain.

    With the potential of blockchain to offer traceability, it can drive efficiency to the inventory management process by easy tracking of availability of products.

  2. Detecting thefts
    The involvement of multiple stakeholders also leads to the problem of theft. According to the FBI, cargo thefts cause a loss of around $30 billion per year.Since IoT sensors can generate the data captured about the products at each step of the retail supply chain process, blockchain can help store the permanent records so that thefts can be detected at any point in time.
  3. Provenance Tracking
    Grocery retailers who specialize in organic and GMO-free food products can benefit from blockchain’s ability to bring trust in the system. It can help to shore up consumers’ confidence who feel that organic label is a strategy to charge high costs.The blockchain solution deployed in the supermarket chains or other retail businesses can allow customers to trace a product’s journey from the manufacturer to the store.
  4. Improving customer rewards/loyalty programs
    Around $117 billion are issued by US businesses every year to offer customer satisfaction and reduce their liability. It becomes impossible for consumers to track the loyalty programs they are registered with and the loyalty points unused each year.A blockchain-based application can enable users to redeem points across multiple channels and platforms, reducing liabilities and enhancing customer satisfaction. It also cuts down the operating costs and reduces the chances of fraud.
  5. Proving product’s authenticity
    By allowing consumers to scan a code etched into the product to access the product life cycle’s history, implementing blockchain in retail can renew the trust and make customer relationships better.

Use Case of Blockchain in Retail Supply Chain: Walmart 

Walmart wanted to build a decentralized food supply chain to track food sources in food-borne diseases easily. 

Walmart partnered with IBM to run two proof of concept projects to test this idea:

  • Tracing mangoes sold in Walmart US stores.
  •  Tracing pork sold in Walmart’s China stores.

The experiment was successful. 

In China, certificates of authenticity were uploaded to the blockchain, increasing trust in the system.

In the USA, the tracing time was reduced from 7 days to 2.2 seconds. 

This blockchain is built on Hyperledger Fabric. Today, it assists Walmart to trace the origins of over twenty-five products.

Walmart is planning to broaden this system to include more products soon.

The transition to blockchain has the potential to bring transformation in the retail operations. 

A blockchain-based solution can provide product provenance and quality by establishing trust between consumers and retailers and within the entire retail supply chain.

If you are looking to integrate blockchain in retail operations, contact our team of blockchain development experts.

Webinar Details

Author’s Bio

Akash Takyar
Akash Takyar
CEO LeewayHertz
Akash Takyar is the founder and CEO at LeewayHertz. The experience of building over 100+ platforms for startups and enterprises allows Akash to rapidly architect and design solutions that are scalable and beautiful.
Akash's ability to build enterprise-grade technology solutions has attracted over 30 Fortune 500 companies, including Siemens, 3M, P&G and Hershey’s. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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