How Web3 is Transforming the Future of Brands And Retail
The future of brands and retail is changing faster than ever. New technologies and the massive effects of COVID-19 are forcing brands to reexamine what they know about consumers, retailers, and how they interact with each other.
As a result, old business models are being disrupted at an alarming rate — and the winners will be those who can adapt quickly.
These changes are accelerating as Web3 technologies like Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) gain traction in the mainstream. In addition, blockchain technology is set to have a disruptive impact on the retail industry over the coming years. According to a report by Deloitte, 86% of executives believe blockchain will be adopted mainstream and will transform their business. While 77% of executives fear losing their competitive edge if they don’t adopt blockchain.
As a brand or retailer, it’s important to find ways to differentiate yourself in an increasingly competitive space. Blockchain technology may seem far away from your brand or product, but it’s closer than you think.
This week we’re unpacking how Web3 is changing the future of brands and retailers. Grab your notepad and fancy pens because class is in session.
What is Web3?
At its core, Web3 is an umbrella term for the decentralized web.
It’s powered by technologies that enable the flow of data between users and applications to be controlled by a network of peers rather than a centralized system. This allows for a more fluid, transparent, and secure exchange of information between users and apps.
Web3 involves sharing data across a network of computers in a fully distributed manner. Web3 enables users to be in control of their data and identity instead of big corporations. Unlike third-party servers and databases, Web3 applications are built on peer-to-peer networks to allow users to interact directly.
Blockchain technology and cryptocurrencies make Web3 possible through direct peer-to-peer transactions and data exchanges. This means users can trade with each other without a central intermediary, such as a bank or company.
So what does Web3 mean for Retailers?
I’m glad you asked.
Advantages of Web3 in retail includes:
- empowering consumers with more privacy than ever before which also gives them more control over their shopping experience
- offering new ways for retailers to connect directly to consumers instead of through third parties
- improvements to customer service
- building new forms of brand value by enabling ultra-personalized shopping experiences
- offering greater transparency into product sourcing and manufacturing (I mean who doesn’t like a good behind the scenes)
- rewarding customers for sharing information about their purchases with friends and family
How can brands avoid being left behind?
In the early days, brands who innovated first had a huge competitive advantage. Additionally, companies with the fastest development of digital capabilities and the best online experience could gain new customers and build loyalty.
With Web3, we’re seeing a similar scenario play out. By understanding what Web3 is and acting fast, brands have a chance to differentiate themselves from their competitors.
With a view to the future, Web3 (built upon blockchain technologies) is designed to give users more control over their data, privacy, and security. It offers a way for marketers to build consumer trust in online systems and platforms that are now so often beset by authenticity, data security, and privacy issues.
Web3 brings a new set of possibilities for brands, retailers, and consumers.
Web3 will challenge brands to adapt their business models, embrace digital transformation and test the waters of agile marketing, as the new infrastructure yields new opportunities for brands to optimize their value.
The Benefits of Web3 For Brands and Retailers
Build meaningful relationships with consumers
One of the primary benefits for brands and retailers is connecting directly with customers. By removing the middlemen, brands can cut out expensive fees, access more data from their customers, and communicate more effectively with their audience.
Data Quality and Trust
For brands and retailers, Web3 introduces a new level of data quality and trust because consumers have to opt-in before any data is shared. The data is inherently more trustworthy. This improves marketing efforts across the board by providing better insights into consumer behavior.
In addition, the brand-to-consumer relationship can be strengthened through transparent engagement at scale, as well as providing a more direct connection with your customers.
The result is improved marketing ROI for brands and retailers. <<insert this graphic>>
Privacy and Ownership of Data
With Web3, consumers benefit from blockchain technologies. They gain privacy and ownership of their online data while also earning rewards for sharing it with brands they care about. This incentivizes users to share their data in exchange for real value that they can use in the real world.
Additionally, each consumer has full control over how others use their data – they can choose to set privacy policies around how long their data is accessible or who has access to it.
Complete Control Over Products
Imagine a world where brands have complete control over their products on the secondary market, where consumers can buy authentic goods with confidence and get rewarded for it.
A world where everyone from the manufacturer to the reseller can verify that a product is genuine, track it throughout its lifecycle, and collect data to improve processes and increase value.
Using decentralized technologies like blockchain, Web3 enables brands and retailers to create an ecosystem of traceable, authentic products verified at every touchpoint in their lifecycle.
This means full transparency, total security, and complete control over your product economy. It’s a powerful proposition with far-reaching implications for businesses and consumers.
Track Products Throughout The Supply Chain With Certainty
Currently, supply chains are tracked through paperwork and databases. This can lead to errors and counterfeit goods. With Web3, companies can create a shared ledger that all parties involved in production can update in real-time as the product moves from one stage to another.
Blockchain technology has the power to completely transform retail and e-commerce by providing consumers with greater confidence in their purchases.
For example, blockchain can allow customers to purchase from retailers whose supply chains have been audited for social and environmental impact or whose product components or materials are traceable back to their origin.
This transparency makes it easier for companies to ensure that high-quality products are delivered without any issues.
Facilitating Easier And Seamless Financial Transactions
The future of crypto promises to take this one step further by bringing together commerce and blockchain technology.
Web3 will bring services like digital identification, micropayments, and commercial transactions to consumers who will be able to connect with brands and shops on a global scale without paying excessive fees or waiting days for funds to settle in their accounts.
As more of these technologies become available, it’s possible to see how they can help create new customer experiences leading to better outcomes for everyone involved like more convenient shopping experiences for customers, more efficient business operations for brands and retailers, and innovative new ways of capturing value for creators.
While the benefits of Web 3 are clear, brands and retailers need to address fundamental challenges Web3 poses for them:
These include
- New technologies need to be understood, and their impact on current business models assessed.
- The industry will be forced to adapt to new business models and introduce new technologies that potentially affect the way they operate.
- Brands will have to join a blockchain or create their solutions and work with partners in the ecosystem to effectively implement Web3 across their supply chains.
Brands such as Coca-Cola and Nestle are already involved in pilot projects with IBM Food Trust, but they have no incentive to share their data with their competitors. Thus, the challenge lies in getting all brands to use a single blockchain platform.
Similarly, on the retailer side, while Walmart is one of the biggest backers of blockchain technology, smaller retailers may find it difficult to afford the technology needed to get onboard.
- Tokenizing digital scarcity allows brands to create digital collectibles similar to physical objects with unique intrinsic qualities. Brands need to consider how this affects their approach toward creating brand value and cultivating consumer relationships.
With the world moving away from centralized networks to decentralized networks, what does that change for brands?
In the same way that e-commerce changed the retail game forever, Web3 is set to change the brand and retail game forever.
While many assume blockchain technology is just for crypto, it’s much more than that. It’s a technological shift that will have a huge impact on everything from finance, logistics, healthcare, and retail, and brands.
Why? Because people trust brands less and less. And brands are starting to realize consumers are looking for something different. They don’t want to rely on brands alone anymore, they want to build their own trustworthy communities.
So what does this mean for brands?
Brands will need to change their approach with consumers if they want to stay relevant in the future. It won’t be enough anymore for brands to sell products or services; they will need to create an experience for the consumer that goes beyond just buying something.
Brands will need to build communities around their products. Communities where people can learn from each other and make informed decisions together. This will give them more value than just buying a product or service from a brand ever could.
Impact of Web3 on brands and retail in the future
The possibilities of Web3 blockchain technology are exciting. The data, insights, and transparency that it can provide for both brands and retailers will no doubt lead to the creation of more effective marketing campaigns, which will ultimately lead to higher satisfaction levels among customers.
The fundamental shift taking place with decentralized technologies like blockchain and cryptocurrency is going to take a while to play out. The use cases we’ve covered in this article will take time to develop and reach mainstream adoption (if ever).
However, there are already signs of a transformation in how brands interact with consumers — and vice versa — taking place. It’s easy to see how these trends can cause disruption in retail, marketing, and loyalty programs.
While it may be too early for a retailer or brand to start adding crypto payments or implementing blockchain-based loyalty programs, getting involved with the latest tech developments is essential for those companies looking to keep up.
https://www.linkedin.com/pulse/how-web3-transforming-future-brands-retail-claudia-pilgrim-icp-mkg/
