With the emergence of a new retail in the internet era, traditional business models have evolved to meet the demands introduced by new retail. Businesses from all industries have also adjusted and upgraded their services to adapt to new situations. In recent years, a new marketing and operations concept, known as the supply-to-business (S2B) model, has taken the retail market by storm and has been regarded as one of the most advanced business model available.
In the context of the rapid development of new retail, the application of blockchain will be a breakthrough in the implementation of the S2B model. But what exactly are the impacts of blockchain and the S2B model on the retail industry? As a breakthrough and extension, how will blockchain support new retail and how will it inspire the retail sector?
The S2B model was developed to cope with the constantly evolving demands of customers. Precisely, it is S2B2C, a powerful data-based supply chain platform (S) connected to thousands of businesses (B), that directly serves customers. By utilizing the power of the internet, S2B2C helps users interact more effectively and at a lower cost.
As a whole, suppliers and small businesses co-serve customers. In the Internet era, "co-serve" has two meanings. First, when serving customers, small businesses have to use specific services provided by suppliers. Apart from SaaS-based tools, suppliers should also offer some value-added services based on the integration of the upstream supply chains to help businesses to serve customers better.
Second, suppliers must have information about the process in which small businesses serve customers and receive real-time feedback from small businesses so that suppliers can improve services for small businesses. This requires that the process by which small enterprises serve customers is updated online. Also, suppliers and small businesses achieve network- and software-based automatic collaboration to better serve customers. For example, a supplier supplies goods to a micro-business but is not involved in the process in which the micro business serves customers. In this case, no higher value gets created, and this is not S2B2C. The S2B model will soon become a backdrop of the retail industry.
Let's analyze the S2B model in the new retail era from macro perspectives. In the new retail era, the application of blockchain offers an attractive opportunity for development and breakthrough. Regarding the norm requirements, the core of the model lies in that production is driven by consumption and backed by robust and scientific supply chain systems.
The blockchain technology is a natural fit for handling commodity traceability and circulation. In the context of new retail, the application of blockchain is of great benefit and has the following features:
We can have multiple parties in blockchain maintain the same data source together and involve as many commodity supply chain participants as possible. More participants will result in more data maintained along and higher consumer confidence on data. The decentralization feature of blockchain and the distributed network naturally overcome the disadvantages of a centralized system.
It can also prevent malicious acts or accidental loss of data. Maintenance of the same data source by multiple parties helps us eliminate the information islands between different systems. Besides, for privacy protection, by anonymity, the blockchain technology also guarantees user privacy by other technical means, including coin shuffle, ring signature, homomorphic encryption, and zero-knowledge proof, which adequately protect the privacy of consumers.
Several e-commerce enterprises in China have already implemented the blockchain traceability technology this year, with remarkable results. Let's now look at a typical implementation of blockchain for new retail.
First, blockchain technology is used to connect the supply chain that involves different participants in commodity circulation to the blockchain storage system. Information includes places of origin, manufacturers, channels, retailers, brand owners, and consumers. The information on every participant is visible in the blockchain system.
Second, consortium blockchain operation items get broadly divided into the following categories: consortium blockchain, automation, visualization, data efficiency, and inter-chain bridging. There is a complete operating mechanism for each link. Data link information is comprehensive, automated, open, efficient, rational, and interconnected.
Such an operation management mechanism is more scientific and rational. Especially in the food industry, for example, through the unique traceable code of the beef purchased, consumers can identify the authenticity of the beef and trace the information throughout the process that significantly enhances trust. Big data-based public opinion analysis facilitates enterprises to carry out smart marketing activities such as brand culture publicity, maximizing the benefits of enterprises and consumers.
Finally, the retail industry features fragmented transaction data, diversified transaction nodes, and complicated transaction network. The collection, storage, and integration of commodity production, circulation, and delivery information is a core task for end-to-end retail supply chain management.
Consumers, regulatory authorities, and e-commerce malls are most concerned with the credibility, reliability, traceability, and security of information throughout the process. The blockchain technology integrates the consensus mechanism for multiple transaction parties, distributed data storage, point-to-point transmission, and encryption algorithms. It is a natural fit for end-to-end information management in the retail supply chain. It safeguards consumers.
The application of the blockchain traceability technology mentioned above allows consumers to keep track of commodities and the process. It provides an excellent platform for reproduction by manufacturers, market supervision, and operation and management of the e-commerce market. There is another use for blockchain in new retail that closely relates to the origins of blockchain – accounting.
Blockchain was created based on the idea of a vast "decentralized" ledger database, changing the traditional centralized accounting to distributed accounting. The blockchain is made up of a string of data generated by cryptography. The application of blockchain is intended to build a credible distributed business ecosystem that supports both self-reinforcing and extension.
According to the features of blockchain I mentioned above, its information is transparent, open, and public. For the retail market, the profit gets divided into two parts: one is the real commodity value, and the other is the added value of market information.
The two sources of profit must be analyzed rationally. In the blockchain-based environment, market players can increase potential cooperation based on the openness of information. This cooperation is the expected positive effect of the credible distributed business ecosystem. It is also the basis and premise of distributed accounting.
Cooperation in such a favorable ecosystem can be more straightforward, more efficient, and cost-effective, which thus facilitates effective resource integration and creates more economical and social values. Each blockchain participant can find its place in the blockchain, make its contributions, and get returns for self-fulfillment.
Based on discussions above, it is evident that the blockchain operation model intends to combine each business element with the features of business participants and blockchain. It also aims to digitize each component involved and establish a standard platform for information sharing and unification. In this process, the blockchain mainly addresses transaction trust and security problems. For this, I propose three technical innovations:
For example, bitcoin uses proofs of work. Only when there is control over more than 51% of the nodes in the whole network, it is possible to falsify a report. This is impossible when enough nodes are connected to the blockchain, thus eliminating the possibility of falsification. The previous technical innovations can serve as right preconditions and preparations for accounting and accurately adapt target commodities, participants, and business activities in the real world to the blockchain world for positive interaction.
Only in this way can distributed accounting be performed. Blockchain accounting merely is about data decentralization. Multiple nodes distributed in different places perform transaction accounting. Each node keeps complete accounts, so they can all supervise the legality of transactions and testify transactions. This mechanism is different from the traditional centralized accounting solution where no node can keep accounts independently. This prevents a single bookkeeper from getting controlled or bribed to keep false accounts.
Moreover, as there are plenty of accounting nodes, theoretically unless all nodes get destroyed, no accounts will be lost, which ensures the security of account data. For example, there are 100 people in a village and one accountant has to keep accounts for every transaction. One day, the village wants to appoint Mr. Wang to buy something. The village needs to check accounts and get money from the accountant, and also needs to confirm whether Mr. Wang is reliable and whether he will take the money away as his own.
Here, the accountant plays the role of a bank. In this way, the accountant role becomes the least efficient link in a transaction and creates risks. For example, if the accountant is absent, nothing can be done; the accountant may be bribed, causing losses to the village. However, with the blockchain technology, a complete account is kept for everyone in the village. To trade with a person, you only need to deal with this person without third-party intervention.
If there are sufficient accounts (100 accounts for 100 persons in the village), there is an advantage of blockchain as it is unlikely to lose those 100 accounts. The entire data security gets improved as everyone has an account. This process lowers the cost for the industry and even the society, hence improving the efficiency. Besides, there can be an optimal distribution of resources, which will inevitably lead to the birth of new business operation models and efficient operation.
The blockchain is an inevitable outcome in the new retail environment and will inevitably spread over the retail industry, especially the e-commerce industry. We should keep up with the times, seize opportunities, and facilitate the industry to better adapt to the new retail environment.
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