How Blockchain Is Solving Retail's Big Supply Chain Problem

Author: Yory Wurmser

January 2, 2018

Inconsistent and incompatible databases between vendors, shippers and retailers are slowing down the retail supply chain, but blockchain technology could potentially change the game. eMarketer’s Yory Wurmser spoke with Kate Hiscox, founder and CEO of Venzee—a cloud-based platform that lets the various participants in the supply chain sync their data—about the inefficiencies in the supply chain and how blockchain can overcome them.  

eMarketer: What makes the retail supply chain so inefficient right now?

Kate Hiscox: One of the biggest challenges for retail is the fact that 90% of the industry still uses spreadsheets. If you think about supply chains today, the world has hundreds of thousands of databases, which are built by different solutions inherently with different data structures. But in order for supply chain data to move, those databases and solutions need to talk to each other.

Right now, there’s an enormous cost associated with the labor-intensive task of taking what comes out of a vendor’s system and making it compatible with a retailer’s system, and in that process, also enriching it and removing errors.

eMarketer: Is it just a matter of simplifying the way databases connect with each other?

Hiscox: We’ve got two issues. First, we’ve got problems in system connectivity. The next piece is, if you put two systems together, there will be format differences. For example, if you and I manufacture furniture, you might call the color of a table “color” and I might call it “finish.” You’ve got collision there at the data level. 

eMarketer: How does blockchain get around this?

Hiscox: Instead of having these hundreds and thousands of databases around the world, we view blockchain as one single distributed database. You suddenly remove a lot of those incompatibility issues and that data collision. From a very high level, that’s what we see blockchain being able to do for the supply chain.

eMarketer: How are all the different parties within blockchain authenticated in a way that’s more secure than what exists prior to blockchain?

Hiscox: By its very nature, blockchain is an incorruptible digital ledger of records or facts—good and bad—replicated, in some cases, across hundreds and thousands of computers. Because it’s in a decentralized, peer-to-peer network, entries are indelible. You cannot alter data retroactively once it has been recorded in a block, because the alteration would have to happen across all the other subsequent blocks as well. That means you’ve got an indelible proof of work across a single entity in an open-end pure network.

eMarketer: What’s the incentive for vendors to participate?

Hiscox: Once products are out and sold online—once they go through a platform like ours and make it into a store on Shopify or onto a retailer’s ecommerce site—the vendor doesn’t know a lot about what’s going on with the products. Do people search for them? What are they purchased with? Did they land in a cart that was abandoned? 

There’s a ton of analytical data that vendors would like to have, but a lot of their tracking is still at a revenue level. They know that if they make a lot of money on a particular SKU it was popular, but it’s difficult to drill down into meaningful data after a product ends up online.

By the nature of blockchain, they can have access to that information as the product moves through its lifecycle, from inception to being listed online with certain retailers, to what happens after that. It’ll give vendors more of an in-depth view into the way their products perform outside of just how much revenue they generate.

eMarketer: What’s the timeframe for blockchain becoming widely used in retail?

Hiscox: There’s a lot of tire-kicking going on right now. The industry is trying to get to grips with what and how and who. There’s a lot of exciting innovation going on, even at the large retail level. It’s being taken seriously. People are starting to understand its problem-solving capabilities and how it could be applied to supply chain in retail. We’re not that far away—over the next two years it’ll become more widely used.