Blockchain technology continues to gain traction in the global economy infiltrating most domains including e-commerce.
E-commerce is the act of buying or selling of goods and services over the Internet. E-commerce can gain due to blockchain technology to complete financial transactions securely and swiftly.
The distributed ledger technology employed in blockchains help solve problems that the e-commerce sector is encountering.
The basic blockchain concept can be implicitly defined as: A shared, decentralised, cryptographically secured, and immutable digital ledger.
The future of e-commerce is expected to continue growing, with more and more consumers opting for online shopping rather than visiting traditional brick-and-mortar stores. The COVID-19 pandemic has accelerated this trend even further, as people have turned to online shopping due to social distancing measures and lockdowns.
Blockchain In Ecommerce
Blockchain is a decentralised, distributed ledger technology that enables secure and transparent transactions without the need for intermediaries. It allows for a network of computers to maintain a shared database that records all transactions in a secure and tamper-proof manner.
Blockchain technology automatically tracks transactions from the beginning to the end without consulting a central authority. In other systems the central authority is tasked with preserving the transaction or encrypting the data – but blockchain breaks free from such bondages.
Blockchain tech doesn’t require human intervention. Blockchain does not compartmentalize the transactions, but instead provides transparency around what’s occurred in the history of the transactions.
Blockchain’s Effect On Business
E-commerce relies on transactions majorly and blockchain makes these transactions quicker and secure. Blockchain technology can be used to distribute and store digital assets securely both automatically and manually. Users can also share digital assets using blockchain technology automatically or manually.
Blockchain helps manage user activity such as payment processing, product purchase or searches, and customer service.
Ethereum and Bitcoin are prevalently used blockchain technology in the ecommerce domain. Ethereum is useful to administer blockchains by e-commerce firms. Now therefore customers can make purchases using Bitcoins as per their volition.
Blockchain technology is poised to usher in a brand new way of conducting business that will change things for the better. Blockchain empowers groups to achieve better outcomes. Blockchain makes it possible to reengineer many of the world’s fundamental business processes and interactions.
It also opens the door to new styles of digital interactions. Blockchain has proved to vastly reduce cost and complexity across social institutions, various industries, and government agencies.
Most of us have heard about blockchain and immediately cryptocurrency comes to mind. Although they are related, the two concepts are different. Potential use of blockchain is far larger than the basic applications of cryptocurrency. Bitcoin network operates on permission-less principles and extends anonymity. But a permissioned blockchain network governs membership with known entities.
Benefits Of blockchain Technology
Blockchain is a read-only data structure that cannot be modified once entered. This safeguards data during transactions.
Blockchain technology also ensures transactions are recorded in chronological order. This is helpful if any error related to time of transaction creeps in. Time stamps allows firms to track transactions chronologically.
Blockchain has a decentralized structure that stores data in millions of computers around the world. Transactions are transparent and are stored in blocks. Companies can view what happens to their funds over time.
The biggest advantage of blockchain technology is that any transaction can be traced back to its occurrence. This means every transaction leaves a digital footprint. Which further adds security to the entire system making it preferred by businesses around the globe.
Blockchain technology in e-commerce benefits both sellers and buyers. It provides efficient solutions to cyber dangers and concerns regarding financial security. Blockchain saves expenses on inventory management and payment processing.
Using blockchain technology e-commerce businesses can flawlessly integrate inventory management, payment processing, product descriptions, images and other corporate activities.
This helps businesses save expenses on maintaining resources that carry out these operations separately and on paying the staff that manage these systems. Cryptocurrencies reduce the costs that intermediaries charge for facilitating transactions.
Online merchants face challenges of keeping up with the competition and ensuring client expectations. Then there is the every present danger of losing client data or money due to cyber assaults.
Blockchain technology is ideal while addressing these issues that businesses in the online world suffer. Distributed ledgers provide the highest level of security that e-commerce database management systems need.
E-commerce customers can make quick online payment using blockchain technology provided by third parties. We know that a couple of years back purchasers had to literally wait for hours or even days to complete payments.
But now blockchain technology provides ease of conducting business through a safe, secure and quick system.
Supply Chain Tracking
Business owners often times are not aware of all players in the supply chain. But blockchain technology creates transparency. In the food industry for example, it is imperative to have verified records that help trace each product farm to fork in case of a misgiving. Walmart partnered with IBM Food Trust where blockchain technology keeps track of groceries and other foods.
Walmart Canada deploys a blockchain supply chain and invoice platform that manages half a million shipments annually and reduces shipping discrepancies by a massive 97%.
Transparency in the supply chain helps verify authenticity of parts and ethical sourcing. Efficient audits help in improving supply chain execution.
Blockchain will improve e-commerce for the better in various ways, such as:
According to a report by Statista, global e-commerce sales are projected to reach $6.3 trillion by 2024, up from $3.5 trillion in 2019.
Secure Transactions: Blockchain technology provides a high level of security to e-commerce transactions, as all transactions are encrypted and recorded in a decentralised ledger, making it nearly impossible for hackers to tamper with the data.
Supply Chain Management: Blockchain can help track products and their movement through the supply chain, providing transparency to consumers and helping to prevent counterfeiting and fraud.
Payment Processing: Blockchain-based payment systems can reduce transaction fees and provide faster and more secure payment processing.
Customer Identification: Blockchain-based identity verification systems can help prevent fraud and provide a more secure and streamlined onboarding process for customers.
How Blockchain Will Revolutionise E-commerce
Blockchain in e-commerce has made it possible for third-world countries to trade online. Now clients do not need any intermediaries to process their payments, thanks to Bitcoin’s peer-to-peer technology. Blockchain in e-commerce will also allow retailers to get into unorganised marketplaces in third world nations.
Smart contracts function are similar to computer programs that automate specific actions based on set rules. Smart contracts can automate e-commerce activities as blockchains store them.
This in turn can help e-commerce firms to reduce man-power, as computer systems can automate processes. Inventory management too can be done with smart contracts as sellers handle inventory control.
Accessible Receipts & Warranties
Blockchain technology assists online businesses and clients to save invoices and warranties. Purchasers usually experience loss of hard copy receipts. This makes it cumbersome for buyers to substantiate warranty requirements.
But blockchain in e-commerce will help buyers and sellers to conveniently obtain receipts and warranty data. This will authenticate evidence of ownership and purchase details.
Paying Content Creators
Content creators help in the development of e-commerce platforms, and their efforts should not be marginalised. Paying content creators using blockchain technology in e-commerce businesses will solve many issues.
Content curators can be paid digital tokens for creating and posting appealing material. Digital wallets are already in use to pay for online transactions. Cryptocurrencies will allow users to change digital tokens to their preferred currency.
Loyalty Programs & Personalised Offers
Online shops can use blockchain technology to quickly distribute redeemable reward points to customers when conditions are met. These reward points can be used across several e-commerce sites by online businesses.
Customers can benefit from personalized offers and discounts as a result of blockchain technology. Loyalty programs help in customer retention for e-commerce businesses.
Generating Genuine Reviews
Online store owners can validate customer reviews using blockchain technology. The reliability of product and service evaluations/reviews have always been questionable, this issue can be finally put to rest now.
The legitimacy of reviews determines a firm’s reputation. Embracing blockchain tech by e-commerce platforms will ensure that the genuineness of a review can be ascertained.
Final Thoughts: Blockchain In Ecommerce
Blockchain technology stores data such that it cannot be tampered with or edited. Therefore it’s reliable for businesses. This is how e-commerce stores perceive to store their data. But with blockchain technology, data is stored with everyone who’s using it. That means there is no central location where the information is stored, it’s distributed.
Hence it can be accessed by anyone who needs the info on the blockchain at any time. Blockchain is the backbone of cryptocurrency, but has other uses that can be pragmatic to e-commerce.
The blockchain technology is slowly turning mainstream. This was basically created as the mainstay to digital currency Bitcoin. But now it has been adopted to improve processes in a wide range of industries and is revolutionising them. Blockchain is now being utilised to improve many aspects of our lives from banking to healthcare to e-commerce.
Overall, the integration of blockchain technology in e-commerce can lead to increased security, transparency, and efficiency in the online shopping experience.
After an Engineering degree and a Diploma in Management I devoted 16+ years working in the automotive industry. My innate skill and extreme passion in writing, encouraged me to adopt it up as a profession. I have been writing for more than 10+ years in the software industry. The 400+ blogs I published are informative, exhaustive and interesting to a professional and causal reader.