Blockchain won’t solve all your problems. However, when applied to suitable use cases the emerging technology has the potential to remove unnecessary “middlemen” and disrupt some well established industries.
That’s the view of Gennady Volchek, CEO and founder of Shping, a blockchain-based customer loyalty platform that claims the new technology is allowing brands to reward customers directly by cutting out digital advertising’s media middlemen.
“There is definitely hype around blockchain in general,” Volchek told Which-50.
“My view is that blockchain is a useful solution for some, but not all, areas. Not every single brand should move into blockchain. It should only be adopted if it solves a particular problem.”
The particular problem Shping has identified is customer loyalty programs. Earlier this year, after a successful presale, the company failed to hit its ICO goal of $46 million, ultimately settling for $8.6 million, according to Volcheck. Falling short means international expansion will have to wait and the company will be focusing on disrupting traditional loyalty models in Australia.
Conventional loyalty models are a “tired concept”, Volchek says, and one that prevents brands from rewarding and engaging with consumers. But the appetite for loyalty programs exists.
Research from MasterCard suggests the average Australian belongs to six loyalty programs with retail being the most popular type. However, much of the value is lost to middlemen between the the brands or retailers and consumers, according to Volchek. He uses the example of disproportionately high transaction fees making it nearly impossible for brands to deliver small financial rewards to loyal customers.
“If you want to reward someone with one cent on the other side of the planet it would be impossible [with traditional methods] because of the cost of the wire transfer,” Volchek explained.
According to Volchek, the Shping platform instead allows brands to reward loyal customers with cryptocurrency in a more seamless and low cost way than traditional loyalty programs – cryptocurrency rewards remove the need for a third party like a bank to verify the transaction and take a fee for their troubles.
“Shping has created a shopper-marketing ecosystem that allows participating brands and organisations to reward shoppers who use the app with a new cryptocurrency called Shping Coin.
“Consumers use the Shping app to scan barcodes in store to find product information and reviews, receiving Shping coins when they do, even if they don’t necessarily make a purchase.
The shping coins can be exchanged for other cryptocurrencies or converted to local currencies, with the real dollar value depending on exchange rates, according to Volchek.
“Shping cuts out the middle man role of the likes of Google and Facebook and rewards the consumer directly for their interactions.”
The company founder and CEO argues consumers are keen to be rewarded with cryptocurrency and the platform can help apply digital efficiencies to in store experiences.
Blockchain and the omnichannel experience
“Despite the noise around ecommerce—not to mention the Amazon fear mongering—the reality is that vast majority of retail sales occur in-store,” Volchek said.
“The challenge for retailers is minimising the number of customers walking out their doors. In other words, the focus for bricks-and-mortar retailers needs to be on enhancing customer experience—in which technology such as mobile applications, robotics and cryptocurrency can play a major role.”
Volchek argues brand loyalty is “more elusive than ever” and retailers are increasingly turning to emerging technology to capture it.