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 the industry’s transactions still occurring through offline channels, food distribution has fallen behind the consumer.
Buffalo Market, a California-based food and beverage distributor that seeks to make the food supply chain better for the planet, for businesses and for consumers, recently became the first wholesale food and beverage business to accept crypto payments, taking bitcoin, Litecoin, Dai, Ethereum and Bitcoin Cash. This move positions the company at the forefront of the food supply chain when it comes to digital technologies.
“Like any new technology, there’s hype that happens in the beginning, and then the hard part is doing the implementation,” Sean Howell, co-founder of Buffalo Market, told PYMNTS in an interview. “Then you have a gradual system of piloting things, and then eventually it feels like an avalanche, and you don’t remember what life was like before.”
Future-Minded Payments In An Industry Stuck In The Past
Implementing any digital technology, let alone a leading-edge technology like crypto, is relatively novel in the food distribution industry.
“Seventy percent of this business happens offline, not online, so if you are ordering from one of the big food suppliers, they take orders on faxes and phone calls,” said Howell. He added that this system has “worked for them for 50 years, and that’s where their expertise lies.”
Degrees of separation away from the consumer, who is adopting these crypto payments, business-to-business (B2B) companies risk falling behind the curve.
“My parents are more innovative in retirement than most of these companies,” said Howell, pointing out that his parents know how to interact with voice-enabled devices, while companies still are not integrating with these devices. “So, consumers are far ahead of the food supply enterprise companies.”
Of course, in this industry, many consumer-facing businesses are struggling to keep up with the changing times. While large companies with research and development teams may be staying in step with consumers’ evolving behaviors, Main Street small and medium-sized businesses (SMBs) have a tougher go of it. As Pradeep Elankumaran, co-founder and chief executive officer of grocery app Farmstead, told PYMNTS in an interview in April, traditional grocers that have “historically done pen-and-paper work in brick-and mortar-facilities” may have a difficult time keeping up with digital newcomers.
Crypto For A Cause
Part of the benefit of accepting cryptocurrencies is that, as retailers begin to accept these payments from consumers, Buffalo Market will be better integrated with its customers. However, the main motivation for this launch was the brand’s long-term vision of bringing the supply chain onto the blockchain to bring more transparency and efficiency to the process.
“Our ability to trust in when a product goes from a factory to the warehouse to the retailer — blockchain can really create some improvement there,” noted Howell.
He added that while Buffalo Market’s site is already on the blockchain, the system will not work until suppliers get on board. As the company works toward implementing pilot tests, it will work with suppliers to help move them onto the blockchain, using these cases to “show how it’s created benefits” for other suppliers in the future.
As the blockchain provides more visibility for suppliers and retailers into how ingredients are moving, it also provides benefits to consumers. Howell noted that consumers will “wind up with better quality, higher freshness and hopefully lower prices, because you eliminate losses in this process as well.”
Preparing For The Avalanche
Earlier in the pandemic, Buffalo Market worked with restaurants to help get them through the difficult time period through its Restaurant Bridge program. Howell told PYMNTS at the time, “I think you will 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 significantly more ambitious way to re-envision the future of the industry than simply extending lines of credit to some restaurants. Still, Howell believes that crypto is the direction that commerce is heading, noting how much more easy and intuitive the technology has become since its inception.
“For now, market volatility and pricing give pause there,” he noted, though he predicted that with the addition of stablecoins and other more reliable cryptocurrencies, consumers’ trust in these payment methods may grow. Still, the success of these technologies — and of Buffalo Market’s long-term blockchain plans — lies in the execution.
PYMNTS data from the June issue of the Next-Gen Debit Tracker® created in collaboration with PULSE, a Discover company, found that 51 percent of crypto owners reported being more likely to purchase from merchants that accept cryptocurrency, and 39 percent said they would make purchases exclusively from such merchants. Additionally, the report found that more than three-quarters of crypto owners have purchased or would purchase groceries with cryptocurrency, and the same goes for restaurant meals. Food sellers that do not accept the payment risk falling behind.
“I’d be surprised if [in five years, cryptocurrency] isn’t a huge percentage of wholesale purchases,” said Howell. “From a consumer perspective, there are more inflows into cryptocurrency than many GDPs around the world, so consumers are earning these things, and they’re going to spend them. I think it’s going to have a big outcome, and many companies are asleep in that respect.”
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