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Crowding into stores and malls for Black Friday is now a ghost of Christmas past IBM Supply Chain and Blockchain Blog

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Vaccinations have been rolled out, lockdowns have been lifted, and workers are returning to offices, but 2021 is starting to feel like 2020 all over again, bah humbug!

There is reason to be concerned when consumers are seeing fewer options in the grocery aisles, local shops are closing earlier due to labor shortages, and a spike in energy prices looms as winter begins. Add in continued COVID concerns, and people are staying home, choosing to dine local and doing (a lot) more online shopping. Global research shows holiday shopping budgets have increased 30% year-over-year with 43% of consumers planning to shop online. The National Retail Federation predicts 2021 will be the highest holiday sales on record, making the holidays look promising.

Now is the time for innovation

Large crowds rushing to stores on Black Friday is something of the past. This year, prepping for the five days of cyber week means getting your eCommerce ready to handle the high volume of transactions. Get ready to make customers feel safe inside stores and offer options for contactless purchasing. With consumers constantly reminded that the supply chain is struggling and concerned about holiday gifts, the product is flying off shelves at full price and showing no signs of slowing down.

Deliver the perfect order with a complete omnichannel order fulfillment platform

The new post-pandemic shopper is in charge, knows what they want, and will go to great lengths to find it on any platform. Intelligent technology is smart for sales — 65% of shoppers expect to see product inventory at-a-glance. After placing an order, customers want to have updates on their order, especially order tracking information. Omnichannel technology continues to support sourcing fulfillment and delivery, providing the seamless experience customers now expect.

Availability is the first thing people care about and yet getting it faster will directly affect purchasing decisions.

  • Buy online and pick up in-store (BOPIS) is the new standard delivery option, 85% of customers plan to use BOPIS. This service provides a bonus opportunity for additional sales when customers arrive at the store for pickup.
  • Accurate order fulfillment is a differentiator with up-to-the-minute inventory views. Accurate inventory visibility empowers companies to deliver products faster, see how Abercrombie & Fitch and Ulta Beauty are the first of their kind to offer same-day delivery this holiday.

A few tips from industry insiders

Industry insiders Jennifer Clark and Cathy Hotka recently shared the following ideas during the Smarter Supply Chain Leadership Summit:

Safety measures and fun experiences

  • Only 1 in 3 people say they plan to attend holiday parties this year, leaving most people craving something lively, so make it fun by hiring a local musician or offering something festive like tea or hot cider.
  • Communicate the safety measures your company is embracing to keep everyone healthy — 6 in 10 consumers say they would prefer contactless shopping options in-store, the mobile wallets, and tap-to-pay chip cards are low-touch payment options.

Get ready to sell it all

  • Place your most attractive and fun products in front and ensure any clearance is in the back of the store
  • Avoid empty shelves! Fill them with last year products or remove shelving units to add a chair and create an inviting sitting space
  • Educate the seasonal sales team on how to properly record returned inventory for accuracy and increase sales
  • Take the time to get an accurate accounting of all products in storage, closets, and back of the store — be prepared to sell it all

Enhance the customer relationship

  • Product jammed up in the supply chain? Consider offering a “purchase now and ship later” choice for fulfillment
  • Train the new and/or seasonal employees to be helpful to shoppers by having real-time knowledge of what product is available and offering alternative gift options to cross-sell items
  • Invite your most loyal customers for VIP early access or special privileges

Cathy Hotka, a well-known industry influencer, anticipates gift giving will be more about experiences than products this year. The data agrees as global consumers plan to spend 30% more of their budgets on local outings than they did last year and 22% more on dining out. If some holiday gifts remain stuck in the supply chain backlog, enhance customer relationships by offering experiences or promoting store gift cards to spend after the holidays.

Digital innovation is the future of retail

Customers want shopping to be seamless from personal devices to the in-store environment, making integration core to their shopping experience. Integrating eCommerce strategies will give businesses a holistic view of their customers’ buying history and habits for better insights. The beginning of the pandemic influenced a rapid shift in online shopping and continues to reshape the importance of technology in the retail industry.

Despite the latest COVID concerns, online shopping is increasing exponentially and the best time for expanding eCommerce is now. Consider the customer’s needs both online and in-store to create positive experiences cyber week. Inventory visibility, order tracking, BOPIS, and same-day delivery are bringing customers a boost of joy, just in time for the holidays.

In the Charles Dickens classic story, Scrooge finally realized it’s never too late to make changes.

Learn more about the ways that IBM is helping businesses embrace technology and create growth by visiting the IBM Sterling web pages.

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Blockchain

The bigger role of LUNA in Terra

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In an interview, Do Kwon, co-founder and CEO of Terraform Labs, said that Terra’s ecosystem was built with several use cases such as savings, payments, investments and others that leverage its stablecoin assets. The previous Market Insights newsletter tackled Terra’s ecosystem growth in 2021 and how it got to hundreds of decentralized applications from just two at the beginning of last year. 

And all of it is grounded on Terra’s stablecoins and the protocol’s ability to maintain the stability of their peg. Yet the key ingredient for such stability is its primary staking asset, LUNA. On the surface, investors got to know LUNA because of its rapid price rise in 2021, but according to the project’s white paper, owning and holding LUNA is meant to represent something entirely more foundational to the stability of the entire network.

LUNA as mining power

Terra is a Tendermint-based blockchain maintained by validators who follow the Tendermint delegated proof-of-stake algorithm and vote on new blocks. Validators run programs called full nodes and are required to stake a certain amount of LUNA tokens to be included in the active validator list, which is made up of 130 validators at the moment. Active validators earn revenue via the transaction fees associated with each block.

Those who prefer not to set up full nodes but want to get a share of the validator’s revenue are called delegators. Delegators are fundamentally stakers who delegate their LUNA tokens to validators in order to increase the weight of staked LUNA. Essentially, LUNA represents the mining power in the Terra network, and the more its economy grows, the more LUNA stakers earn in rewards from fees.

LUNA as the volatility absorber

Another critical role of LUNA is maintaining its stablecoin peg. As mentioned, Terra’s stablecoins follow an algorithmic market module, which means the protocol adjusts its supply automatically based on the market’s condition. The protocol is able to achieve this through open market arbitrage incentives.

Take the scenario of 1 TerraUSD (UST) trading above the $1 peg. LUNA holders, in this case, can swap $1 worth of LUNA using the market swap feature of Terra Station and sell it for 1 UST. Then, users can sell this for its equivalent dollar value and profit from the difference. In this regard, the protocol effectively decreases the supply of LUNA and increases the supply of UST, which, with enough volume, could eventually pull it back down to $1.

On the flip side, when the price of UST goes below the $1 peg, the protocol incentivizes users to burn UST in exchange for LUNA. This expands the LUNA supply and reduces UST, driving its value back to $1. The volatility in UST’s price is, therefore, absorbed through the minting and burning of LUNA tokens. So far, the market has been able to respect the peg even at times when it went as high as 30% from $1. In a year, UST deviated from its peg at an average of about 4%.

Stable mining demand

With these considerations, it is understandable how crucial LUNAs role is in the Terra ecosystem and how equally important it is to keep mining demand steady. However, Terra is designed in such a way that fees generated from blocks increase along with the expansion of its ecosystem and vice versa.

Moreover, the supply of LUNA also shrinks when the Terra network grows since its supply is reduced from minting UST. Because of this, mining rewards would not be as predictable, which could discourage users from staking LUNA since it would make profitability difficult to determine.