Finding an Edge with Blockchain

Leveraging New Tech to Stay Competitive

After working in retail, e-commerce, and consumer products for over 35 years, I’ve found myself increasingly capable of locating the available elements of an industry that can give businesses a competitive edge. Some edges, like the early adoption of e-commerce, were somewhat obvious to navigate. Others, like the specific use of e-commerce systems to cut out inventory costs, required a little more trial and error.

I’ve started to see a pattern throughout the various industry transformations that I’ve witnessed in my time. The biggest boons to any business or industry occur when opportunities come around that decrease operational costs and improve logistics times. What I mean to say is that supply chain management is typically at the epicenter of most expansions, disruptions, and evolutions in business. Figuring out the edges that lead to optimized supply chain infrastructures has allowed me to take part in a few significant and eye-opening shifts during the course of my career.

When George Handgis and I started HomeClub back in 1983, we saw an edge that had been developing across warehouse clubs at the time. We noticed that if we doubled the import footprint of what most other warehouse home improvement retailers were doing, we could house more inventory, decrease our logistics times, and increase our turnover rate. So while more standardized retail operations were doing about 3.5 inventory turns per season with something like $3.5 in sales, we were able to up that by almost tenfold.

That was the basis for the big box retail explosion of the eighties which led to the dominance of giants like Walmart, Costco, and Home Depot. There was an opportunity to improve logistics by thinking about the retail process a bit differently. Those improvements enabled these businesses to become tremendously successful by giving them an edge against their competition which primarily involved supply chain management at its core.

We ended up selling HomeClub and I began to focus on the biggest retail disruptor of all time: the internet, and specifically e-commerce. Much of the e-retailer market throughout the mid-nineties was fragmented and there was an ongoing margin amongst the competitors in this space. I saw an opportunity to create an edge that would allow for competitive pricing while offering a versatile and unique marketplace.

At that time, most e-commerce operations were focused on selling one type of good. Amazon was solely a bookstore, Pets.com was doing pet supplies, and eToys was obviously dedicated to toys. So there was a clear opportunity to offer consumers a variety of products under one roof. And that’s how Shopping.com was born.

With Shopping.com, our strategy was to offer 25 categories, lower operational costs, and attempt to remain hyper-competitive within those listings. We needed to figure out a way to completely remove warehouse inventory storage from the equation. This would enable us to create a platform that could deliver one-off orders to consumers without incurring the costs of housing multiple types of inventory.

Our experience with HomeClub had shown us that every vendor we dealt with over the years were doing special orders at the wholesale and even the direct-sales manufacturing levels. So we decided to locate the manufacturers and wholesalers who were already shipping these “one-off” orders and leverage that situation to our advantage. We used Shopping.com as a platform for consumers to connect with these sellers in an seamless and competitively priced fashion.

By removing the cost of warehousing inventory, we could remain in the margin race, provide a variety of high quality products in an on-demand setting, and ultimately find a logistical edge that set us apart from the other e-commerce operations of the era. Our plan worked and Shopping.com was eventually acquired for $220 million in an all cash transaction by Compaq Computers. That’s when I knew my next big venture needed involve utilizing technology to optimize logistics in a similar way.

My latest project, SupplyBloc Technology, is focusing on providing the power of blockchain to small to mid-sized businesses in order to create efficiencies within their supply chain networks. The goal is to use this technology to help these businesses find a competitive edge by optimizing their logistics. Blockchain can offer small businesses an opportunity to vastly improve overall transparency, tracking capabilities, and transactional optimization within their supply chain systems. SupplyBloc is going to be at the forefront of that offering.

Blockchain can offer small businesses an opportunity to vastly improve overall transparency, tracking capabilities, and transactional optimization within their supply chain systems.

With HomeClub and the big box retail explosion, I jumped on a new paradigm for B&M retail logistics operations. Shopping.com led me to leverage an exciting technology for cutting operational costs in a uniquely rewarding way. And now blockchain is proving to be the next logical step in the evolution of in retail and supply chain management.

A lot of folks feel like they’ve already missed the boat in terms of e-commerce and the internet as a whole. This couldn’t be further from the truth. We’re still very much in the early days of the internet. And while the Amazons and Alibabas of the world might make it seem otherwise, the realm of e-commerce has really yet to be fully understood.

This all brings me back to a hilarious anecdote from Wired co-founder Kevin Kelly from 1994 and a connecting story that they did on McDonald’s lack of internet presence at the time. The story began when the guys at Wired noticed that the fast food giant had yet to register the domain name mcdonalds.com. When they reached out to McDonalds as a friendly courtesy, they were met with general confusion and curiosity. A media-relations person at the company, Jane Hulbert, was even quoted as asking, “are you finding that the Internet is a big thing?”

“Are you finding that the Internet is a big thing?”

Later, Kelly met with ABC executives to offer similar advice for purchasing abc.com. He experienced even more befuddling resistance as the execs were seemingly convinced that the domain name ownership was entirely unnecessary. Kelly left their offices dumbfounded and with quite the story to tell.

The reason I bring this up is to emphasize the fact that even industry giants like ABC and McDonalds are often left scratching their heads when it comes to groundbreaking and easily misunderstood technology. This presents smaller businesses with an opportunity to leverage these technologies to create a competitive edge, disrupt their industries, and ultimately level the playing field. This happened with the internet 20 years ago, and it’s happening with blockchain now.

“The greatest online things of the first half of this century are all before us. All these miraculous inventions are waiting for that crazy, no-one-told-me-it-was-impossible visionary to start grabbing the low-hanging fruit — the equivalent of the dot com names of 1984.” — Kevin Kelly

The above quote from Kelly demonstrates the incredible opportunity that is still out there with regards to the internet. The latest low-hanging fruit is blockchain and its ripe to provide a wholly disruptive and competitive edge. SupplyBloc Technology is my current venture aiming to grab that fruit and deliver it to small to mid-sized businesses in order to optimize their supply chains and transform them into competitive leaders in their respective industries.