The year 2008 changed the way people view financial transactions due to the introduction of Bitcoin. It is a currency that works perfectly without a central bank and above all with no backing commodities. The truly revolutionary concept of this currency is the way it tracks transactions. Every transaction that takes place will be stored in a persistent, immutable record, completely open to the public. This record is called the blockchain. Over the past decade, Blockchain has disrupted every industry in the best possible way.
Talk about e-commerce industryIn particular, blockchains are a perfect fit as they are designed to store transaction data. The concept of selling online has only become exemplary over the years due to the profound influence of technological innovations. The latest of these is blockchain technology, all of which are set to revolutionize every nook and cranny of every industry with its enormous potential. From eliminating middlemen to streamlining operations, blockchain has a lot to offer the e-commerce sector.
Before analyzing the different use cases of blockchain for e-commerce, let us first understand the terms blockchain and e-commerce.
What is Blockchain?
A blockchain can be explained as a decentralized digital record that stores a list of transactions in blocks over a peer-to-peer network. These blocks are linked by a cryptographic value. This allows to verify the authenticity of each data. As we all know, cryptography refers to the study of techniques for secure communication. Blocks on a blockchain are linked together. Blocks on the blockchain are immutable, which means they cannot be tampered with or modified once they are created. In this way, a degree of trust is created between the participants in the blockchain network.
What is e-commerce?
This is the act of buying and selling goods or services on the World Wide Web. Money and data are transferred to make these transactions. It is the sale of physical products in the online space and it can also refer to any commercial transaction done through the internet. The first e-commerce sale occurred on August 11, 1994, when a man sold a band’s CD to his friend through his website. Since then, e-commerce has evolved to simplify product discovery through retailers and online marketplaces with the click of a button.
We will now analyze the top 10 solutions that blockchain provides for e-commerce.
1. Faster Transactions
As pointed out by Monetha, a payment processing company that operates on the Ethereum blockchain, the total fees of traditional payment processing systems consisting of about 16 steps can range from 2% to 6%. Considering multiple parties are involved in a transaction, simplifying the transaction process can benefit both the customer and the seller.
When blockchain transactions happen on a single network, the need for a middleman is eliminated. Transaction speed is determined by network speed and new block generation rate.
2. Improve operational efficiency
Blockchain, with its decentralized model, has the ability to streamline operations and drive efficiency into them. Intermediaries such as payment processing and logistics partners can be regulated through smart contracts. The visualization of supply chains can be greatly improved as it provides a series of recorded, non-editable data. Due to the decentralized database, stores can have full ownership of their assets such as products, photos, descriptions, videos, reviews, digital storefronts, etc. Users can access complete information such as the origin, processing and ingredients of the product.
3. Reliable data security
A centralized e-commerce store is always vulnerable as it can easily fall prey to weak encryption. Even well-encrypted systems can be encrypted due to the tricks used by modern day hackers. In a blockchain system, it cannot be hacked from a single point of entry, thanks to its decentralized ecosystem. Having blockchain-based e-commerce prevents hackers from breaking into the network and gaining access to sensitive consumer information and databases. This will also ensure that the business complies with data security regulations.
4. Trust and transparency in payment
A blockchain system that brings transparency in transactions. This builds buyer confidence. Every transaction is stored in a shared ledger and it cannot be tampered with by anyone. The advantages it brings to the e-commerce system are high security, visibility, faster processing speed and traceability. Cryptocurrencies reduce transaction costs for international e-commerce stores.
5. Optimized Supply Chain Management
It increases the overall efficiency of the supply chain. Based on company size and product type, a supply chain can include many intermediaries, span continents, and involve a large number of payments and invoices. This makes it tedious for e-commerce and retail businesses to achieve the level of transparency needed for their supply chain processes.
Blockchain helps in better tracking of product data storage thus allowing any product to be tracked throughout its lifecycle such as who made the product, where it came from, it is saved where it is stored, who purchased the product, and who processed the order. Records of orders, sales, purchases, inventory, and other information cannot be deleted or changed if stored on the blockchain. Blockchain makes supply chains more transparent, fraud-proof, and integrated. This saves significant resources.
6. Integration with business processes
A blockchain doesn’t just process online payments. It is capable of communicating with both existing and new systems. From the point of view of an e-commerce provider, it means that he can create linkages between online stores with a wide range of internal and external processes, partners and systems. Blockchain provides a shared ledger that serves everyone, such as online stores, external organizations, and companies. A blockchain provides a supplier with countless opportunities.
7. Verified customer reviews
Today, online reviews are both a curse and a blessing for e-retailers. Buyers turn to reviews before buying a product. Positive reviews will contribute to the sales of the product. But sometimes, some dishonest sellers may publish fake reviews. Competitors may also generate negative reviews, which in turn will affect the goodwill of their competitors. With a blockchain, product reviews can be verified. This modifies the logic behind creating and publishing reviews. This way, a solid foundation is laid for industry standards that lead to win-win.
8. Offer personalized products
Blockchain helps to capture the purchase history of customers. Full control of this information is vested in the buyer, and they have the privilege of sharing that information with sellers of their choice. With this information, companies will be able to provide customers with products and services that meet their preferences. Personalized offers and loyalty programs will help improve sales and enhance customer satisfaction.
9. Channel expansion
Blockchains and cryptocurrencies have brought the wave of decentralization to e-commerce by creating marketplaces where anyone can sell their products and services. While the trading volume on these marketplaces can be equal to that of regular e-commerce, these front-ends help merchants target a crypto-savvy community and expand their retail channels.
10. Improve User Experience
The blockchain-powered e-commerce system eliminates the need for multi-port logins while supporting purchases with enhanced security. It alleviates customer concerns and provides visibility, helping to spread adoption.
After seeing the vast benefits blockchain can bring to e-commerce, businesses have become imperative to embrace it in order to achieve massive growth. Blockchain serves as the ideal solution for any business looking for a system to reliably and transparently manage customer data. Blockchain reduces dependence on paper-based legacy systems. Blockchain is undoubtedly the best technology partner for any e-commerce business.
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