Rakuten Taps Chinese Blockchain Firm for $60 Billion Authenticity Market
By CCN: In 2008, at least 54,000 Chinese babies suffered after ingesting formula that had been contaminated. Demand for safe products has grown year over year, every year, since then. Companies like blockchain-centric Techrock have capitalized on this market by finding unique solutions to the authenticity problem. Techrock uses the blockchain to track every step of a product’s lifecycle and rewards consumers for verifying it through their mobile phones.
Chinese Consumers Increasingly Willing to Pay a Premium for Authentic Imported Food
In China, it is reportedly difficult to get authentic products. Some researchers have found that more than 90% of the food sold in China is faked in one way or another.
For non-food products, this isn’t such a big deal; but there are some markets where it’s life and death – such as baby formula and other food products, which can have deadly side effects. According to Techrock, which spoke to CCN about their recent partnership with Rakuten, the situation has created a market for authentic goods as large as $60 billion per year.
Techrock uses blockchain technology in two aspects of its business. On the one hand, it offers a loyalty program for customers who use the service to purchase authentic products. On the other, it creates a permanent record of a product’s authenticity.
From Supply Chain to Reward Points, Blockchain’s Role
Every product in Techrock’s store has a digital representation on the blockchain. The company has developed a reputation for delivering high-quality, authentic goods, and it’s applying the same process to its Rakuten “zone.”
Their target market is less about authentic shoes or electronics and more about health supplements and other things which people prefer not to risk. The loyalty program helps them retain customers, and using the blockchain for it, the points have no expiration date. A side effect of Techrock’s Tael loyalty program is that it introduces many people to blockchain for the first time.
Techrock recently entered a partnership with Japanese retail giant Rakuten to get authentic Japanese goods to customers. Rakuten has long had an interest in blockchain companies, but it only touches the technology in a tertiary way here.
Rakuten is looking to expand its reach in China, where it is far from the leading retailer. By contrast, Alibaba is the boss in China – but Alibaba’s eBay-style product suffers a lot of knock-off problems that the rest of the Chinese market does.
Built on Hyperledger, Techrock’s labeling technology ensures that products are real. The customer can verify this with an app on their phone, and once they do so, they earn their reward points at the same time. The rewards can be used to purchase more goods in the store, which encourages customers to keep using Techrock.
Techrock’s partnership with Rakuten means that Chinese customers don’t have to worry about fakes, and they have streamlined access to authentic, safe products. Techrock Co-Founder Alexander Busarov told CCN:
“We already sell in over 220 or 230 cities where our consumers are located. It’s all sent by the local dealer companies. We think our business will grow as the demand grows.”
China is reportedly the largest market for both food and firms that verify the safety of food. Consumers have been driven online as they continually lose trust in local vendors. Regulations and other issues make it such that local companies, like Techrock, will ultimately supply the demand.
Techrock’s partnership with Rakuten is notable because they’re the third to secure such a partnership – JD.com being one of the first – and they are built entirely on blockchain.