2. Use blockchain to improve transparency within the supply chain
Web3 isn’t just a consumer-facing technology. Beyond blockchain, crypto and NFTs, one of the most powerful enterprise use cases is in supply chain management.
With transparency and sustainability increasingly important to consumers, especially younger shoppers, retailers and brands face pressure to better track and report on how products are sourced, manufactured and delivered. This requires sharing data among partners in the supply ecosystem and creating an immutable ledger where users can essentially trace the product from source to shelf.
For example, one of the world’s most renowned diamond companies, De Beers, developed Tracr, a distributed traceability platform to track the source and course of every diamond the company mines. This allows the company to verify the authenticity of its stones and directly address consumer concerns about ethical sourcing and environmental practices.
Nestle has similarly invested in blockchain to improve transparency and traceability across its supply chain. In 2019, the company claimed to be the first major food and beverage company to allow consumers to “track their food right back to the farm.” To do this, the brand partnered with OpenSC, a platform that uses blockchain technology to track ingredients throughout the supply chain.
In addition, using blockchain to manage the supply chain enables companies to track and measure sustainability goals, such as containing scope 3 emissions.
3. Bridge the physical/digital divide and create emotional connection with tokens
Web3 experiences aren’t meant to replace physical products or experiences. Instead, it should be seen as another channel by which brands can engage people and build deeper, more nuanced relationships.
For example, when a shopper purchases a beauty product, can they use a token on the packaging to unlock access to an online community where they can watch tutorials or learn more about how the product was designed?
In one real-world example, jewelry brand Tiffany’s made a splash when it issued a limited release of TiffCoin, engraved and numbered coins meant to resemble the brand’s historic Tiffany Money, coins that could be exchanged for Tiffany’s jewelry. Tiffcoins, however, serve as tokens that can grant exclusive access to physical and virtual events.
Four steps to effectively leverage Web3 today
From dismissing Web3 as a fad to failing to integrate initiatives within the wider growth strategy, there are a host of mistakes and missteps brands and retailers can make with Web3. Here are four basic steps to help companies build the right mindset to embrace this technology and draw value from their investments:
- Accept the skepticism. While many executives may still have the instinct to dismiss Web3 and surrounding technologies, we would argue that the numbers suggest they shouldn’t: The metaverse is expected to grow at a compounded annual growth rate of 39% over the next 10 years, with a total market valuation of $678B by 2030. Likewise, the global Web3 blockchain market is estimated to swell to $44.2B by 2031, growing at a rate of 44.13%. Maintaining a healthy skepticism with this technology is wise, but executives must accept that Web3 is already playing an indisputable role in our daily lives — a role that will be steadily growing in the coming years.
- Design Web3 initiatives to solve business problems. Initiatives that leverage technologies like NFTs, blockchain and crypto should not be executed for the sake of doing something new and exciting, but because they have a clear connection to a business goal, like building loyalty or increasing supply chain transparency.
- Test and learn—while aligning to a common strategy. As with any emerging technology, one of the most effective ways to build momentum within the organization is to develop and execute a relatively simple high-value use case. Learnings from early projects should be applied to later, more complex programs. While the world of Web3 is rapidly changing, companies should have a clear sense of their overarching strategy for these technologies and how programs both relate to one another and fit into the broader business plan.
- Iterate and innovate. One of the most exciting aspects of Web3 is that it is evolving so quickly. What was true six months ago may not be true today. A year from now the world will have changed again. Companies need to embrace the “fail fast” approach to ensure they don’t get left behind. Likewise, companies must constantly iterate on current initiatives to incorporate the latest digital capabilities and ensure that their investments are primed for impact.
Contending with Web3 hype with eyes wide open
In our rapidly changing world, we recommend that brands and retailers meet in the middle, between enthusiasm and skepticism. Companies need not take a stand on Web3 so much as find ways to simultaneously embrace the opportunity while maintaining a healthy skepticism about how and where to apply this technology. This is the key to using Web3 in a meaningful way and ensuring that value is drawn from investments. And that’s something everyone can be enthusiastic about.
For more information about practical ways your organization can harness the power of Web3, watch our recent webinar Smart Bets on Web3 in an Economic Downturn.
This article was written by Duncan Roberts, Senior Manager in Cognizant Research, and Alexis Scobie Anderson, Insights and Strategy Lead in Cognizant’s Digital Experience practice.