E-commerce selling has been around for decades now and the evolution of the industry has been exceptional. Over the years the concept of online selling has been highly impacted by technological improvements. The latest amongst these technologies is Blockchain which is ready to revolutionize the industry with its unmatched potential. From the removal of middlemen to streamlining of operations and reducing complexities at all levels, Blockchain has a lot to offer to help e-commerce businesses resolve their every day as well as long-term challenges.
In addition of course comes the fact that this technology is the foundation of cryptocurrency payments which makes it even more important for the e-commerce domain. It would not be wrong to say that blockchain is poised to change the way transactions are made. With this, both traditional brick-and-mortar setups and e-commerce businesses should be ready for radical changes. We will be focusing on the impact that Blockchain is going to have on e-commerce businesses in the near future.
First Things First: Let’s understand the biggest e-commerce challenges
Before exploring the impact that Blockchain can cause to the E-commerce industry, understanding the challenges and pain points of the industry is a must. E-commerce is a complex domain where survival, sustenance and growth are even more difficult. Here are some key challenges that sellers in this domain have to face on a day-to-day basis as well as in the long run.
- The e-commerce market has always been very competitive, with participants of all sizes offering similar products and services. Moreover, more and more sellers are joining the bandwagon at a rapid pace. This includes new businesses as well as those transitioning from the brick-and-mortar model to this one. So businesses have to embrace smarter business models and technologies to stay in the race, right from setting up exceptional E-commerce stores to streamlining the processes that are to be carried on as a part of the business.
- Besides the challenge of huge competition, another pain point of the sellers is that the traditional business model has middlemen who take away a large share of the earnings during the selling process. For instance, sellers have to pay transaction processing fees to facilitate payments for the completion of the transactions. These fees cut down the profits of the sellers to a considerable extent and result in lower revenues.
- Protection of consumer data is another key concern for these businesses as they need to build the customer’s trust assuring them that their personal and financial details are completely safe. Furthermore, the implementation of data security regulations such as the General Data Protection Regulation (GDPR) has made data security a critical concern for online enterprises. For this reason, sellers usually have to invest heavily in data encryption and other measures to prevent hacking.
- E-commerce selling is a complex process as it involves an array of operations such as supply chain, logistics, payments, and more. Managing these operations and the intermediaries involved is another key challenge for the industry. From ensuring that the inventory is replenished at the right time, to streamlining the shipping and delivery functions, looking after customer relationships, and more, there are a lot of things that merchants need to manage.
As these challenges have been very great in the amount the sellers from the very beginning have been looking for one technology that is capable of handling them all. Fortunately, they have found their solution in Blockchain Technology. Being decentralised, it brings a host of benefits to the e-commerce industry. Let’s explore how:
Payment Methods will be Improved
Blockchain powered Cryptocurrencies that are being used as an alternative to traditional currencies are the first implementation of Blockchain Technology. Customers can choose to pay with Bitcoin, Ethereum, or Ripple in the same way as they would choose to pay with any other payment processor. Some significant features are listed below,
Decentralized
Blockchain is not regulated by any Central Authority which simply implies that only the buyer and seller control Blockchain operations. Thus, no third party can alter, delete or manipulate your transactions. Blockchain technology offers high-security, radical visibility, and faster processing speed with traceability through the decentralized system.
Identity Protection
Cryptocurrencies based on Blockchain Technology don’t reveal the identities of the transacting parties. Cryptocurrencies are like cash in that they don't require the customer to expose sensitive data such as Credit Card number.
Freedom of Transactions
There’s is no Governing body to control how a person uses his/her Cryptocurrencies. Regular payment methods are often imposed with several limits based on the amount and even geographical location. However, this isn’t the case with currencies like bitcoin — Blockchain-based currencies gives users absolute freedom to perform transactions without any spending limit.
Ease of Use
Blockchain-based currencies are unbelievably comfortable to use. One doesn’t need to visit any regulatory authority to create an account like traditional currencies. All this can be easily done at the comfort of your home. Additionally, the virtual currency wallet is absolutely free, so you don’t have to levy any charges to open an account.
Faster Transactions
Traditional transfers often take long, especially sending money across continents may take up to several days to accomplish whereas blockchain transactions take place on a single network, reducing or eliminating the need for middlemen. The speed of the transaction is limited only by the speed of the network and by the speed at which new blocks can be generated.
Reduced Fraud
Blockchain-based currencies are extremely secure to transact with. Because of peer-to-peer technology, it is tough to hack into the process and conduct fraud. Thus making it one of the safest modes of transaction.
Supply Chain Management will get Revamped
Supply chain management is perhaps, one of the most pressing concerns every E-commerce business is impaired with. As the Supply Chain is a critical element of any E-commerce business- Blockchain implementation in the sector will likely solve many problems. Blockchain can be extensively leveraged to solve supply chain issues like recordkeeping, tracking of projects as a less corruptible and better alternative to the centralized database. Other use cases of a supply chain include,
Provenance Tracking
In a Blockchain-based supply chain, record keeping and provenance tracking have become easy, as the product information can be accessed with the help of RFID tags and embedded sensors. The timeline of a product right from its beginning to where it is at present can be traced through Blockchain. Besides this, the type of accurate provenance tracking can also be leveraged to detect anomalies in any segment of the supply chain.
Cost Reduction
When Blockchain is applied to increase the administrative processes in the Blockchain, the additional value incurred by the system is automatically reduced whereas still guaranteeing the security of transactions. The elimination of intermediaries also removes the risks of frauds, product duplicity while saving money at the same time. Customers and suppliers further process payments within the supply chain by utilizing Cryptocurrencies rather than customers and suppliers.
Inventory Management
Blockchain can be extensively utilized in the backend of the supply chain as well. For instance, the management of inventory becomes a whole lot easier by introducing Blockchain in the process. Blockchain implementations in inventory management enable retailers to avoid unessential expenditure on hiring new workers time and again.
More Transparent E-commerce
With the recent backlash that big retailers have been facing in the wake of charges of lack of transparency — this is one of the more serious concerns faced by existing E-commerce platforms. For instance, Amazon was in the news for cutting-off and even disabling a merchant’s page without any explanation. Thus, by applying Blockchain technology in the E-commerce marketplace would establish a decentralized environment where any wrongdoings on the part of the business or merchant can be efficiently monitored. A transparent E-commerce marketplace also facilitates in conducting transactions in a frictionless and efficient manner.
Secure
Blockchain today, can be easily deemed as one of the most secure platforms out there. The Distributed Ledger Technology or DLT which Blockchain boasts, offer excellent security for online database platforms that makes it ideal for implementation in E-commerce. Also, there has been almost negligible reporting of security breaches in blockchain-powered networks. Another significant upside blockchain offers for E-commerce businesses is that blockchain-based currencies don’t exhibit personally identifiable information. Cryptocurrencies operate like cash in the sense that they don’t require a user to expose sensitive data. In fact, the customer himself permits a transfer from his/her own personal “wallet” to that of the recipient. The only discerning piece of data tied to each user’s wallet is a randomly-generated unique identifier. Since cyber attacks and data crime has rapidly increased, there is an unavoidable risk of losing customers data. Therefore, adopting blockchain is the perfect solution to solve these challenges.
Genuine Reviews
Good or bad reviews can determine the order in which a business appears in an E-commerce marketplace or in a search query result. Fake reviews tarnish the reputation of a good company while at the same time promoting a fraudulent one. The reputation of an online enterprise relies on the legitimacy of its reviews. Hence many online operators have increasing concerns regarding the product service reviews found on the internet. Thus, making the Blockchain technology an important source to verify the reviews on their products or services. Bringing Blockchain into the game can help restrict fake reviews, as blockchain stores data in blocks which is then added to a chain of similar information blocks. Each block requires to be verified across a network of computers before it can be added to the chain — once verified — it cannot be altered or deleted. The technology can be employed to create a digital map of someone, one which cannot be modified.
CONCLUSION
Seeing the considerable benefits of E-commerce Blockchain, it becomes imperative for businesses to embrace it for achieving expansive growth. The E-commerce marketplace is waiting to be revolutionized by the applications of Blockchain. Although it may take us a little time to witness these implementations but change is definitely in the pipeline.