Till now, we have seen how blockchain has been disrupting multiple industries, transforming the way businesses carry out their day-to-day activities using transparent, reliable, and certain use cases.
However, the eCommerce sector doesn’t stay still. According to Statista, the global retail e-commerce sales were around 4.9 trillion dollars in 2021. This value is expected to increase by 50% within the next four years, reaching $7.4 trillion by 2025.
Because of this rapid expansion, industry powerhouses like Amazon, Alibaba, and eBay have emerged based on centralized data and dominance.
So what innovation can be brought up to operate more effectively in the e-commerce business?
The solution is new technology.
Nokia, for example, ranked first in mobile phone manufacture in 2007. In the same year, Apple launched the iPhone 1, nobody remembers Nokia? Apple is everywhere in the media.
E-commerce is the same idea. New technologies have the potential to break monopolies. This technology is, again, blockchain!
So, let’s dive in to know how blockchain can create a difference in the eCommerce sector.
How Blockchain Works in eCommerce
A blockchain is a distributed ledger in which data (or blocks) are linked together in a chain. Because the data is accessible and managed by multiple parties, discrepancies are easily detected, making it reliable.
While blockchain has long been linked with Cryptocurrencies, its true potential is now being recognized by a variety of businesses. According to Gartner, the corporate value-add of blockchain will exceed $360 billion by 2026.
Blockchain’s key features include:
- Without a central authority, blockchain enables transparency and consensus-based trust.
- The decentralized ecosystem provides a solid foundation that is nearly impossible to hack.
- It allows consumers to engage directly with businesses or other consumers, bypassing the need for intermediaries.
- Blockchain can convert insights into unchangeable assets, enabling more precise data management.
- It can save businesses up to 90% of their costs.
Blockchain technology enhances the safety and speed of e-commerce transactions. Utilizing blockchain technology, digital assets can be shared and secured manually and automatically. In addition, user actions like online payments, product searches, purchases, and customer support can be handled by this technology.
Blockchain e-commerce solutions have possibilities that go beyond online payments. On a bigger scale, the technology can be used in:
- Supply chain management
- Inventory management
- Marketing Strategies & Data Protection
- Improving customer experience
- Detecting fake product reviews, and so on.
In the further sections of the article, you will get to know about all these applications in detail.
Key Benefits of Blockchain in eCommerce
E-commerce is a great application of blockchain technology because sellers and buyers benefit from it. The technology is easy to use, offers simple solutions to cyber threats, and improves financial security. It also saves money in managing inventory and processing payments, as we will discuss below.
E-commerce companies can easily link inventory control, payment services, product descriptions, and imagery with other business processes. By reducing the cost of maintaining the systems that support these activities and paying for IT support workers, they can save money. In addition, as a result of cryptocurrency, banks charge lower fees for facilitating transactions.
2. Enhanced Security
Many online businesses feel it challenging to keep up with competitors and expand customer demand. They are also vulnerable to cyber attacks, resulting in the loss of user data and money.
Online sellers can address these issues using blockchain technology. Using distributed ledger technology, e-commerce data warehouses enjoy the highest level of security.
3. Faster Transactions
Blockchain technology such as Waves can quickly make online payments on e-commerce websites. Unlike traditional payment procedures, where consumers had to wait hours or even days to complete transactions, blockchains now offer consumers the flexibility they need online.
4. Improved Business Processes
Apart from transactional data, blockchains can hold smart contracts that can automate processes like regular payments and inventory control using preset rules and if-then expressions.
For example, imagine buying a Rolex and making a deposit using a blockchain-based cryptocurrency. You receive a receipt that is stored in a digital contract.
The store ships the watch to you on a specific delivery date, and if it doesn’t turn up on time, the blockchain refunds your deposit. On the other hand, if you get the watch, the blockchain sends the retailer your entire payment.
Blockchain can also hold digital documents such as customer invoices and warranty claims, making it much easier to verify ownership and warranty validity while simultaneously reducing the number of paper records.
5. Access to Global Consumer
Banks in developing countries often do not provide security systems to their customers. By utilizing blockchains and cryptocurrencies, they can bypass banking intermediaries, giving access to a broader range of eCommerce retailers. In addition, forward-thinking companies can enter new emerging markets by using blockchain and cryptocurrency technologies.
6. Rewards and Referrals for Interactive Customer Experience
Brands can easily issue rewards, cashback offers, and referral programs that can be redeemed across various sites and affiliate brands using blockchain. Companies can also pay influencers or content creators in cryptocurrencies, which can subsequently be exchanged into their currency.
How Blockchain Will Transform the eCommerce Sector?
E-commerce sites and blockchain technologies establish an economic network that benefits both customers and online stores. Using distributed ledger technology in their business processes, online merchants find new ways to serve their customers.
Blockchain technology can be used to improve the consumer experience. Several e-commerce applications that blockchain will create are listed below.
1. Smart Contracts
The Smart Contract is a computer program that automates work by following predetermined rules. Because smart contracts are stored on blockchains, they can automate activities related to e-commerce.
E-commerce businesses can expand by reducing costs associated with hiring employees for tasks that computers can handle. Smart contracts can also simplify inventory management. Online sellers will easily be able to monitor their inventory.
2. Supply Chain Monitoring
Online retailers can achieve their business goals by building a trustworthy supply chain. Thanks to supply chains, store owners can know what products are on their way and when they will arrive.
In addition, supply chains help business owners verify the commodities offered by vendors. They may prevent vendors from swapping certain products and increase transparency when they use the blockchain to track the supply chain.
3. Generating Genuine Reviews
Online business owners can use blockchain technology to authenticate customer reviews. Reviewers of Internet services and products are questioning the reliability of most of them.
Credible product reviews and ratings are vital to the reputation of an e-commerce company, so these companies can use blockchain technology to generate authentic ratings.
4. Loyalty Programs & Personal Offers
Online retailers can easily provide their customers with redeemable reward points after they reach specified purchase thresholds by integrating blockchain technology into their business operations. Many online retailers have confirmed that these reward points can be used across various e-commerce websites.
Due to blockchain technology, customers can also take advantage of customized offers and discounts from retailers. E-commerce businesses can grow their customer bases and expand their product offerings by using loyalty programs.
5. Inventory Control
Inventory control is one area where blockchain can be extremely beneficial. For example, businesses can reduce inventory by using traditional shopping carts, but they can also order new goods when pre-defined criteria are met. This ensures that the online business never goes out of stock while also preventing the accumulation of excess inventory.
6. Warranty Management
Consumers and businesses are frequently frustrated by the loss of paper receipts and the inability to confirm warranty coverage. Retailers can quickly and efficiently store warranty documentation with blockchain. Manufacturers, merchants, and customers will all have access to the data, making warranty data easily available and verifiable.
Recent Examples of Blockchain-Based eCommerce Project
Here are some examples of real-world initiatives that demonstrate blockchain’s impact on eCommerce:
Although this isn’t a blockchain initiative, Amazon has gone even farther, recommending that organizations adopt Amazon Web Services (AWS) as a blockchain-as-a-service solution with ready-made blockchain templates.
AWS currently provides managed blockchains to businesses based on popular Ethereum and Hyperledger.
So it’s not difficult to imagine Amazon accepting cryptocurrency in their web store, which would be a great milestone for eCommerce.
MetaFactory describes itself as a “platform for community-owned digiphysical clothing.”
It’s organized as a DAO and provides artists with a platform to design things that are then manufactured, transported, and distributed by the platform’s partners.
Its goal is to bring designers, businesses, and buyers into a single community while also eliminating pricing inefficiencies.
Given the importance of storytelling in today’s fashion industry, MetaFactory would be an interesting social experiment.
The platform is still in its early stages, but if they move their cards well, it could rival Shopify.
3. Honeywell Aerospace
Honeywell Aerospace operates an airplane resale segment with over $1 billion in parts.
Filing complicated documentation with the FAA, including time-consuming paperwork, is required when selling refurbished airplane components online.
The procedure has been greatly simplified, saving the organization huge amounts of money in document management expenditures.
Given how reliant B2B eCommerce is on sophisticated supply chain operations that are also incredibly wasteful, blockchain could be an ace.
Blockchain Has Already Gained Momentum in eCommerce
Blockchain technology and e-commerce are intriguing in transparency, stability, and cost benefits. Businesses that cannot provide value to their clients face several risks. Despite these advantages, companies must adopt blockchain for long-term success due to its unique benefits to e-commerce.
Those vendors wishing to embrace a transparent business model and deal with consumer data efficiently may find blockchain technology a great option. Furthermore, it reduces the demand for paper-based manual processes and ensures the security of crypto transactions.
To stay ahead of your customers, your business needs to explore the tangible benefits of blockchain technology and e-commerce.
At Parangat, we develop blockchain applications to help businesses prosper and optimize user experiences. Contact us anytime if you’d like to learn more about how blockchain might help your e-commerce business adopt this new tech.
With roll up the sleeves, dive in and get the job done approach, it was year in the year 2010 when Sahil started Parangat Technologies. Emphasizing on a healthy work culture and technology driven company, he has successfully created a workplace where people love to work and live. He is a software engineer and a passionate blockchain enthusiast.