MarketOrders the leader in global gold and jewelry business deals with unique issues that have received little attention from those who could bring the industry into the 21st century. We reached out to Sukhi Jutla, COO and Co-Founder of MarketOrders on these issues. Here is what she had to say.
- There are many inefficiencies in the global Jewelry industry. In your opinion, how can blockchain technology solve these inefficiencies?
Of all the industries in the world, the jewellery business is one of the most traditional, old-fashioned and most reliant on direct interaction between master craftsmen and merchants. It faces the challenges of both authenticating and proving the provenance of jewellery products.
The supply chain is fragmented and opaque, with many transactions conducted offline and in person. This creates friction and slows down the process, leading to slow and inefficient supply chains in a world where consumers demand speed, choice of products and trust.
Innovation is much needed, which is why we believe blockchain technology can be a viable solution. This technology allows for transactions to be made without the need for a ‘third party’ or middleman interacting. It’s doing business direct; this cuts out numerous layers of interactions between parties and the blockchain is a transparent ledger viewable by anyone who downloads the blockchain protocol; no ‘one’ party/entity owns the data so they cannot manipulate it either.
2. In what ways do you think that blockchain technology can disrupt the jewelry industry?
There are 3 key ways in blockchain technology can disrupt the jewellery industry:
Firstly, the blockchain can be used to make payments on an international basis, which are faster and cost less than traditional banking. This is vital for the trade industry where many transactions are done on an international basis and delayed payments can cause hold ups in the supply chains. Payments also pass through multiple intermediaries, which results in excessive fees for the customer. Using blockchain, you can send digital cash at a fraction of the cost compared to traditional banking transactions.
Secondly, it allows you to create an eco-system where you make the rules. For example, at MarketOrders, we have created the MarketOrders Token (MOT), which is a token-based payment that can be used on our platform. This token would allow for the following benefits:
- Lower prices: Not only does MarketOrders cut out the middleman and offer lower prices than wholesalers, but retailers will receive a discount on their orders when they use tokens to pay.
- Better credit terms: Retailers will be able to benefit from extra credit terms when using tokens as opposed to when fiat is used.
- Lower transaction costs: Cross–border payment costs will be reduced by up to 95% when tokens are used as retailers will no longer have to deal with hefty bank charges to move funds on an international basis.
Thirdly, we would also look to ‘digitise’ every piece of jewellery with the use of ‘smart’ chips or sensors. These sensors would be able to record key data relating to the item such as where the gold was sourced from, whether ethical practises were used or the name of the designer. This data would be viewable digitally when the chip is scanned, and the data would be stored on the blockchain. This data would be accessible anywhere by anyone, further contributing to a more transparent supply chain ecosystem.
3. What is the on-demand economy? How does it work?
Just the way hail riding app ‘Uber’ and takeaway food operators such as ‘Just Eat’ operate, in an on-demand fashion, this is the way MarketOrders operates.
Rather than suppliers producing products and ‘pushing it down’ into the marketplace hoping they will sell, we now invite retailers (who are actually closer to the customer and know what their needs are) to place their orders and dictate to the suppliers what items need to be produced.
This on-demand action allows for suppliers to become more efficient in producing what is needed, thereby reducing the amount of gold jewellery that ultimately gets melted down because it didn’t sell.
‘On-demand’ means the customer is now in the driver’s seat and can pick and choose what they want, when they want it; a bit like the Netflix model! We, at MarketOrders, have transposed this model to a B2B industry.
4. In what ways do you think the jewelry industry can integrate into the on-demand economy? Where does blockchain technology come in?
Right now, as most transactions are done offline and in person, there is no viable way to really see what products sell best and where. Blockchain tech allows for the digitisation of data and enables suppliers and retailers to work directly together.
For too long, suppliers have been pushing down products into the market not knowing they will sell, which means retailers end up with stock they cannot sell or with vital cash locked up in inventory.
Behaving in an ‘on-demand’ fashion means customers can tell retailers what they want, and retailers can communicate this back to suppliers so only products that are wanted are put into production. This model results in less wastage and less carbon emissions from constantly melting gold into new shapes if the original item didn’t sell.
5. In what ways do you think that blockchain technology can aid in the tracing and tracking of materials of questionable origin?
Blockchain (or Distributed Ledger Technology) allows for transactions to be stored on a permanent ledger that is available for all to see and is not owned or controlled by a single entity.
By inserting or tagging smart chips/sensors into the jewellery item, you can now ‘digitise’ this gold asset and use the blockchain to store relevant and pertinent data related to the item.
For example, you could record data such as the metal composition, which country the gold was sourced from and whether sustainable practises were used (you could view relevant certificates verifying this on the ledger). With a smart sensor, the item now enters the world of the ‘’Internet of Things’’ (IoT), meaning you could use Wi-Fi and Bluetooth tech to ‘send’ information about the item as it travels along the supply chain for track and tracing.
6. Speaking about adoption, what strategies do you think blockchain companies can employ to aid the adoption of blockchain technology by players in the jewelry industry?
The lack of adoption generally sets in due to not understanding what is going on. Therefore, there is a need to make available good and quality education and information about this technology, to educate your employees on what this technology could potentially do for the business and most importantly to foster and promote an open and reactive mindset where innovation and creativity is promoted and rewarded.
This tech is still in its infancy and in a world where we demand instant results, we do need to foster patience to allow real and usable solutions to come from this technology. This inevitably means a lot of trial and error and testing out concepts and idea, many of which are bound to fail but are necessary for creative endeavours. If patience runs out, we risk a lost opportunity in not fully realising the full potential of blockchain technology and tossing it to the heap yard too early.
Here are my top tips on creating a successful blockchain strategy:
- Ensure there is a shared understanding of blockchain within your business and team who will execute the project, so they have an understanding of how the technology works. Know what it can do and its limitations. This will also help to get management buy-in and support from stakeholders.
- Define the problem: you don’t want to be boiling the ocean as results will be difficult to quantity. Instead, take time to identify a specific business area or process where you think blockchain could create benefits such as increases efficiently or better transactional performance.
- Build a Minimal Viable Product: prototype your idea using minimum resources and in a short time frame. This will allow you to build something fast and not waste months on something that may fail. This MVP will also help to identify if you have created the right solution to the right problem.
- Identify where you may have skills gap in your team and recruit the right skillset to help you build your solution.
- Once you have a solution that works you can then start to think about scaling this to other areas of your business.
7. Do you think that a global blockchain-based supply ecosystem is possible for the jewelry industry? Please tell us the reasons for your answers.
Theoretically yes, this is a real possibility; to have a single global ledger would allow for full transparency in the industry. However, in practical terms this is probably still a long way off. The main setback being that ALL participants in the industry would need to sign up to this initiative and be committed to it for it work.
It’s important to note that many participants in this industry are small independent businesses who may not necessarily be aware of this tech, understand it, or more crucially, have the funding or finance in place to make the required changes to their current systems.
8. How can blockchain technology aid in finance when it comes to jewelry manufacturing?
This industry is global in its nature as the raw materials are typically sourced from around the world in locations where the metals are naturally found and then refined and processed in other locations before being sold around the world. It truly is a global business!
However, this means payments are made often on an international basis and not all countries have robust banking systems in place. Even when they do, funds are handled by many intermediaries and international payments can sometimes take up to 10 days to process. Even then, the customer is hit with multiple fees imposed by the intermediaries.
Payments sent using blockchain technology are fast, efficient and cost less; payments can be settled in minutes rather than days when using traditional banking and no intermediaries are required.
9. Are we seeing a shift from regular supply chain models to novel solutions to try and improve business models in the jewelry sector? Please tell us your reasons for your answer.
Supply chains usually have little innovation as it’s so fragmented, but this current COVID pandemic has probably highlighted how important it is to have robust processes in place. I think this global event will propel the jewellery sector to rethink their current supply chains and look towards more digital solutions rather than relying too heavily on offline or in person transactions. We have seen systems break down when processes do not have a digital equivalent. This shift towards ‘digital-first’ solutions will only increase in the future so it’s important the jewellery industry embraces this trend now rather than later.
10. Where do you think the jewelry industry will be in ten years’ time? (If you had to guess)
My guess is that the jewellery industry will have to embrace digital solutions because ultimately, consumers will drive this change in behaviour. If jewellers don’t adapt, they risk being left behind in a world which is becoming increasingly ‘digital-first’.
Consumers want products on-demand, lower prices, faster delivery and most importantly, they want to SHARE what they have bought. This means the jewellery industry will need to do more to connect with customers via social media (the fast fashion retail sector has done this really well), allow customers to find products easily online (not all jewellery have a good online presence or user experience) and the process of buying jewellery online needs to be an ‘experience’.
Customers want more than just a product. The industry will need to rethink the experiential component of their products both online and in store. This could see the introduction of Virtual Tech in stores and a more engaging way to interact with customers. It’s exciting times ahead for the jewellery industry!