Connecting with Customers on the Blockchain

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After years of recession and stagnation, the global economy is buzzing again. People are spending money at rates not seen in almost a decade. This holiday season, shoppers spent nearly $700 billion, the ninth straight year that figure increased. In fact, spending outpaced predictions, and, according to The Wall Street Journal, sales in the holiday period rose at their best pace since 2011.

While consumers are out spending more money, that doesn’t mean that all stores were packed. That same Journal report noted, “E-commerce continued to drive the gains.” This isn’t anything new. U.S. census data shows that e-commerce sales have risen steadily since 2008 with e-commerce now comprising almost 10% of all purchases. Moreover, as consumers are increasingly mobile-first, a recent Recode report stated, “More than half of visits to shopping sites – 54 percent – will come from smartphones and tablets, surpassing desktop computers for the first time.”

Although the accounts of large-scale mall closings sound like something from a Left Behind movie, retail outlets continue to survive. Rather than driving to the store and fighting crowds to purchase items, customers are making the journey for something else. As Pamela Danzinger writes in Forbes, “Going to the store or the mall; therefore, becomes a discretionary diversion undertaken primarily when people want a shopping experience, as opposed to a buying experience.”

The best platforms, both in person and online, are providing customers with exactly the experience that they crave. Shopping has always been about more than just purchasing items. It’s a form of social proof in which shoppers demonstrate their taste, and more importantly, how their preferences align with those of their peers. For a while, that was all brands needed to convey. Advertising messages were relatively simple: “All your friends have this product, and it also happens to be on sale.”

Increasingly, shoppers more than that. A McKinsey & Co. report found that modern shoppers

• Want the best deal. Some estimates assume that as many as 80% of shoppers compare prices online before shopping in stores. For online shoppers, price comparison is a ubiquitous part of the experience. What’s more, Pew Research Center found that more than 50% of people under 50 consult online reviews to make purchasing decisions.
• Are socially conscious. This is especially true for millennials, an increasingly dominant force in retail. Point of origin, item authenticity, and fair trade are essential distinctions for millennial buyers. As The Huffington Post so eloquently put it: “Corporate social responsibility matters: Ignore millennials are your peril.”
• Are brand loyal. Only about half of shoppers are changing their buying habits when it comes to their brands. However, the most frequent reason for doing so is lower prices elsewhere. In other words, but shoppers are brand loyal, but they are willing to find a better value.

Not to be left out, there are several blockchain startups that are using the same technological prowess to leave a mark on the retail environment. Since the blockchain specializes is verification and interaction, these platforms can make a profound impact on the retail environment.

Online platforms are great at presenting products, but they are not as great at verifying their authenticity. A 2016 Nielsen survey found that “Nearly 75% of global respondents, on average, say a brand’s country of origin is as important or more important than nine other purchasing drivers.” The blockchain’s smart contracts can verify an item’s authenticity all the way from production to purchase. This has broad implications for food that is certified organic or for other ethically sourced products like coffee.

Technology is closing the gap between the in-store shopping experience and the online retail space. The blockchain can allow companies, customers, and collaborators to connect in a single environment. For example, blockchain startup Shping will enable customers to scan products in the store to receive product reviews, real-time deals, and other incentives. In this way, the in-store and online experience are collaborating rather than competing.

Shping.com

Finally, blockchain startups can capitalize on customer rewards through digital currencies that launch alone with their platform. This is akin to, though far more productive than, scanning your loyalty card at checkout. Since digital currencies can be traded on exchanges, they have the opportunity to be far more valuable than a simple coupon, and the rewards can be more nuanced than a typical “points accruement” system.

Ultimately, online retail didn’t destroy brick and mortar stores. Instead, the two operate in a co-dependent and mutually beneficial way. People will continue shopping in stores, but online platforms now inform that shopping experience. Moreover, when the in-store experience becomes less valuable than just staying home, customers will simply spend their money online. The blockchain is ready to make a significant impact on this relationship. It may just be the service that helps online and physical retail form a copasetic relationship so that customers can keep spending all this money that they are ready to spend.

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