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Cryptocurrency may be the payment method of the future, but food distribution is, in many ways, the industry of the past. With the bulk (no pun intended) of industry transactions still occurring through offline channels, food distribution has lagged behind the consumer.
Buffalo Market, a California-based food and beverage distributor that seeks to improve the food supply chain for the planet, for businesses, and for consumers, recently became the premier food and beverage wholesaler. to accept crypto payments, taking Bitcoin, Litecoin, Dai, Ethereum and Bitcoin Cash. This decision positions the company at the forefront of the food supply chain in terms of digital technologies.
Like any new technology, there is hype at first, and then the hardest part is implementing, Sean Howell, co-founder of Buffalo Market, told PYMNTS in an interview. Then you have a gradual system of steering things, and then finally it looks like an avalanche, and you don’t remember your life before.
Future-oriented payments in an industry stuck in the past
The implementation of any digital technology, let alone cutting edge technology like cryptography, is relatively new to the food distribution industry.
Seventy percent of that business takes place offline, not online, so if you order from one of the big food suppliers, they take orders by fax and phone, Howell said. He added that this system has worked for them for 50 years, and that is where their expertise lies.
With degrees of separation from the consumer, who embraces these crypto payments, business-to-business (B2B) businesses risk falling behind.
My parents are more innovative in retirement than most of these companies, Howell said, noting that his parents know how to interact with voice-activated devices, when companies still don’t integrate with those devices. As a result, consumers are far ahead of food supply companies.
Of course, in this industry there are many consumer oriented companies struggling to keep up with the changing times. While large companies with research and development teams can keep pace with changing consumer behaviors, Main Street small and medium-sized businesses (SMBs) have a harder time. As Pradeep Elankumaran, co-founder and CEO of appFarmstead grocery store, told PYMNTS in an interview in April, traditional grocers who have historically made paper and paper in brick and mortar facilities may find it difficult to follow the digital newcomers.
Crypto for a cause
One of the benefits of accepting cryptocurrencies is that as retailers begin to accept these payments from consumers, Buffalo Market will become more integrated with its customers. However, the main motivation for this launch was the brand’s long-term vision of bringing the supply chain to the blockchain to bring more transparency and efficiency to the process.
Our ability to trust when a product moves from a factory to the warehouse to the retailer’s blockchain can really create some improvement there, Howell noted.
He added that although the Buffalo Markets site is already on the blockchain, the system will not work until vendors get on board. As the company works to implement pilot tests, it will work with vendors to help them make the move to blockchain, using these cases to show how it has created benefits for other vendors in the future.
As the blockchain provides more visibility for suppliers and retailers on how ingredients move, it also offers benefits to consumers. Howell noted that consumers will end up with better quality, higher freshness, and hopefully lower prices because you also eliminate waste in this process.
Prepare for the avalanche
Earlier in the pandemic, Buffalo Market worked with restaurants to help them get through the tough times through its Restaurant Bridge program. Howell told PYMNTS at the time, I think you’ll see a lot more programs from us to help restaurants thrive and improve the food system for everyone, including consumers.
Of course, this blockchain initiative is a much more ambitious way to rethink the future of the industry than simply extending lines of credit to certain restaurants. Still, Howell believes crypto is the direction trading is going, noting how much easier and more intuitive the technology has become since its inception.
For now, market volatility and prices are giving a pause, he noted, although he predicted that with the addition of stablecoins and other more reliable cryptocurrencies, confidence of consumers in these payment methods could increase. Yet the success of these technologies and Buffalo Markets long-term blockchain plans lies in execution.
PYMNTS data from the June issue of the Next-Gen Debit Tracker created in collaboration with PULSE, a Discover company, revealed that 51% of crypto owners said they were more likely to buy from merchants who accept cryptocurrency, and 39% said they would shop exclusively from these merchants. Additionally, the report found that more than three-quarters of crypto owners have bought or would buy groceries with cryptocurrency, and the same is true of restaurant meals. Food vendors who do not accept the risk of payment are falling behind.
I would be surprised if [in five years, cryptocurrency] isn’t a huge percentage of wholesale purchases, Howell said. From a consumer perspective, there is more entry into cryptocurrency than many GDPs in the world, so consumers earn these things and they are going to spend them. I think this is going to have a great result, and many companies are asleep in this regard.
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