Walmart Brings Blockchain To The Grocery Store

Nov. 20, 2016 4:22 PM ETWMT
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Daniel G. Jennings is a professional freelance writer, longtime blogger, and recovering journalist with nearly 20 years of writing experience. He has written hundreds of articles and blog posts for clients all over the world, many articles on stocks and financial topics for Motley Fool and Seeking Alpha, and other forms of copy for many different websites. Off the web, Jennings has an MBA and a BA in history; he has also worked for newspapers in four states and in the accounting department of an S&P 500 corporation. He is currently the owner and operator of the Car Insurance Samurai, Market Madhouse, and Make Cash from Books blogs.

The world's largest retailer; Walmart Stores Inc. (NYSE: WMT) is testing the use of blockchain technology in grocery stores. The company aims to improve food safety by using blockchain to keep track of food.

The discount behemoth is using the diffused-ledger technology to track an unidentified brand of packaged produce in the United States, Bloomberg Technology reported. Another blockchain technology developed by IBM (NYSE: IBM) at Tsinghsua University in Beijing is being used to track a pork product in China.

Walmart hopes that some of the same attributes that keep bitcoin safe and secure will make it easier keep track of foods. The company wants to create a unique token for every food product it sells. Diffused ledger technology will let the retailer track every one of the token and reduce the cost of storing all that information.

The hope is to create a database that will enable Walmart's managers to know exactly when food arrived in a store and where it is. That way they can pinpoint products that might be overaged or contaminated and remove them. One goal is to reduce the danger of food poisoning, another is to reduce inventory costs by making easier to replenish supplies stocks.

Walmart Becoming a leader in Blockchain

Walmart is becoming something of a leader in blockchain and encrypted technologies. It is testing Walmart Pay, a quick-read (QR) code based payment technology in 4,600 stores in the United States.

Like bitcoin Walmart Pay uses a token and encryption to keep transactions to secure but it does not use blockchain. Walmart Pay actually generates a different image for every transaction to keep it secure.

If Walmart can roll out the world's first blockchain-based inventory system it would be able to greatly reduce costs. That would make the company more efficient and ease the integration of online retail and brick and mortar stores.

Another use for blockchain would be to make delivery faster. Making inventory easier to track would make it easier to offer same day delivery through solutions like Uber. Walmart is experimenting with same-day delivery services through Uber, Lyft and Deliv in the United States.

Obviously the ultimate goal for Walmart would be to create its own blockchain based cryptocurrency, or payment solution. That would enable the company to reduce accounting costs by eliminating cash transactions and cutting banking costs. It is also making efforts to integrate Walmart Pay and Chase Pay.

Walmart has taken some steps to do that lately by eliminating 7,000 accounting jobs in its stores and adopting a centralized digital invoicing system for some supplies. That too would be fairly easily to integrate with a blockchain-based inventory system.

Walmart might just become the world's leader in retail blockchain technology. If it does, Walmart will remain the world's dominant retailer for decades to come and possibly block the advance of Amazon to retail dominance.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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