Omnichain's Neil Soni breaks down how brands and retailers can use blockchain to deliver a true omnichannel experience and keep business thriving.
1994 and 1995 are seminal years in the world of shopping. In 1994, the first secure retail transaction occurred over the internet. And in 1995, Amazon and eBay were created, ushering in the era of e-commerce. Fast forward to today and practically everyone shops online—whether for apparel or groceries, electronics or even cars. The growing prevalence of e-commerce has left brick-and-mortar retailers everywhere asking: are we dying?
At first you might think that’s a bit of an overreaction, but it’s hard not to make these conclusions given the constant news around store closures and company bankruptcies. In 2019, we’ve seen several household names shutter dozens of brick-and-mortar locations.
- Payless ShoeSource: 2,500 stores
- Gymboree: 805 stores
- Gap: 230 stores
- Sears: 124 stores
- Kmart: 115 stores
- Victoria’s Secret: 53 stores
In this blog, we’ll look at how blockchain technology can help brands and retailers avoid similar fates.
Are we in the middle of a retail apocalypse?
The more innovative companies would tell you no. In fact, many major online disruptors are making bigger stakes in brick-and-mortar. For instance, Amazon—the world’s largest e-commerce company—has been growing its physical presence gradually, including through new bookstores, cashierless Amazon Go grocery stores, and its acquisition of Whole Foods. Other originally online-only companies like Warby Parker and Bonobos have found similar success in new storefronts.
When so many other brands and retailers are closing stores, why are these online players investing more in brick-and-mortar? Well, these companies have recognized that the future is a new breed of retailing: omnichannel.
What is omnichannel retailing?
Simply put, omnichannel is a strategy that integrates all sales channels to give consumers a unified shopping experience. Rather than online and offline operating independently, they work hand in hand together.
Let’s map out an example of what that may look like.
- Customer sees an item online that they like, such as a new sweater
- They order the sweater and the transaction is completed online
- The company uses the customer’s location to determine the closest place with stock—might be a distribution center or physical store
- The customer enjoys a faster delivery
- If they are unsatisfied with the fit or material, they can bring the sweater to a nearby store for a return or exchange, and browse other items
Everything is seamless and convenient, which leads to continued business.
Instead of investing in traditional departments stores with large footprints and investments, Nordstrom has innovated with an omnichannel strategy through its new Nordstrom Local stores. These stores have no actual stock, but shoppers can do online order pickup and returns at these smaller, more widely dispersed hubs. They also offer express alterations and styling services. It’s all about convenience and bridging the gaps between online and offline.
In truth, delivering an omnichannel strategy is easier said than done. Many companies are dealing with fragmented systems and data silos, where they have different enterprise resource planning, point-of-sale, and inventory management systems used online vs. in-store. These silos make it difficult to think holistically about supply chain management (e.g. order fulfillment, demand forecasting, and replenishment), much less delivering an awesome omnichannel experience for consumers.
This brings us back to our solution: blockchain.
How does blockchain fit into the picture?
Blockchain is a distributed ledger technology where transactions are saved in immutable cryptographic blocks. The data is decentralized, creating one interlinked network where information flows seamlessly back and forth in real time, eliminating any and all silos.
For brands and retailers that means total connectivity and transparency between:
- Online and offline channels
- Upstream and downstream in the supply chain
- Supply and demand
Woven together on a single distributed ledger, all links in the supply chain can work together to strategically deliver a modern omnichannel experience.
Companies can see what’s in stock in warehouses and stores to streamline and accelerate order fulfillment. They can see what people are buying online and offline at any given moment to proactively plan production and replenishment across channels to better meet demand. Records for transactions, orders and returns are all logged on the ledger so decision-makers can run analyses and find new ways to engage and attract customers.
All in all, it’s safe to say that brick-and-mortar is not dead. The retail world has simply evolved. As the successes of the likes of Amazon show, customers today are looking for less barriers between online and offline channels. They’re looking for companies who will meet their demands and offer convenience wherever they shop. Blockchain presents a viable way to make this a reality—a true omnichannel strategy where you don’t shutter stores, but use them in tandem with e-commerce, so they can equally thrive together.