by Betsy Wecker
I recently attended a talk called “Blockchain for Enterprise” at the inaugural Brandemonium, an international brand conference in Cincinnati, OH, led by Sharad Malhautra, a Senior Manager from Ernst & Young. The bulk of his material covered E&Y’s Wine Blockchain, which allows consumers to access reliable information about the Italian wines they purchase by giving them access to details about cultivation, production process, and point of sale. Consumers use their smartphones to access this data by scanning QR codes on the bottle labels, providing greater confidence and transparency about their purchase. Additionally, the system is designed to help mitigate counterfeit wines and foreign competition to the Italian wine industry.
Although the speaker was approaching the topic from a business perspective, his emphasis on transparency sparked a different question: how can brands use blockchain technology to create differentiation and gain more customers.
What’s Blockchain, and Who Cares?
Many of us have heard of blockchain, but if the meager attendance at the aforementioned talk is any indicator, it’s still an esoteric topic. In essence, blockchain is a decentralized digital ledger that stores a record of assets and transactions across a peer-to-peer network. It’s basically a public registry of ownership and transactions that’s stored in blocks of data. These blocks are secured through cryptography, or incredibly complex codes that create an immutable and unforgeable record, which is replicated on every computer that uses the network.
In her Ted Talk, thought leader Bettina Warburg addresses the behavioral science that underpins blockchain’s significance. She explains how humans attempt to reduce uncertainty in order to exchange value, and that institutions are a tool to do just that. In earlier times, hunter-gatherer communities leveraged violence and social repercussions to enforce economic decisions. Later, as society evolved into a far larger and more complex organism, we developed formal institutions like banks, government, and corporations to mitigate the unpredictability that comes with trading in a global economy. Now, blockchain allows individuals to do that through technology alone, without a central institution or “middle man.”
How Can Brands Use It?
Increasingly, consumers are demanding transparency from the brands they patronize. Some companies, like online clothing retailer Everlane, are taking a literal approach to meet this demand. They call it “radical transparency,” and you can find examples of it on the page of any item they sell. Simple graphics illustrate all the different elements of their pricing structure, with the caption, “We believe customers have the right to know what their products cost to make.”
While this has been a winning strategy for Everlane, incorporating elements of blockchain may allow them to take their transparency to a whole new level. Imagine if, instead of simply breaking down their costs, Everlane gave consumers the opportunity to scan a QR code on the tag of their new shirt. That code would allow them to track the shirt’s journey from the factory to the airport, and into the warehouse. By adding more layers of transparency, the brand could further demonstrate the commitment to its ethos, and thereby, their customers.
The possible applications of blockchain are myriad, but even without applying the technology itself, brands can gain invaluable insights and inspiration from its tenets. By providing consumers with more tools to reduce uncertainty, brands can earn trust and loyalty while growing their bottom line.