How Blockchain Technology Will Affect E-commerce

After the massive success of Amazon and Flipkart, the e-commerce industry never looked back and growth has multiplied over the years. This industry does not standstill. According to Statista, In 2018, the e-commerce businesses accounted for 11.9% of global retail sales, and by 2021, it is expected to reach 17.5%. No one was surprised at such growth, as e-retail stores satisfy every need of a modern customer.

Despite immense growth and success, e-commerce still has some drawbacks that need to be raised. Most of their challenges are related to the centric nature of e-commerce platforms and their dependence on payment gateways or some finance-related institutions. However, technology has the answer to these glitches. Industry giants and globally, tech leaders, are giving us hints that blockchain is taking over the e-commerce sector.

The blockchain revolution is set to disrupt e-commerce. It is decentralizing control and cutting out the middlemen. Fortunately, this change in e-commerce offers an ocean of opportunities in the industry. Exploration of blockchain technology is both necessary and exciting.

Blockchain technology is considered the most disruptive technology invention of the fourth industrial revolution. Recently, It has been introduced in different sectors of the businesses ranging from the finance sector, to the energy sector, from transport to supply chain management, from the healthcare sector to the sports industry, and is even being used in online gambling.

What is Blockchain?

Blockchain is an open-source, decentralized network using a distributed ledger technology. It is a database managed on a peer-to-peer network, often known as nodes. Every member of the transaction has constant access to the blockchain and its history. After every recorded transaction, the accounts of all the participants are modified with updated information. The group of operations forms a block, and each block is then linked to one that comes before it. It results in a chronological record, which is impossible to tamper with, alter, or manipulate.

Benefits of Blockchain for Business

Greater Transparency

Transparency is one of the significant issues in the industry. To overcome this challenge, businesses have tried to implement more rules and regulations. But due to process centralization, companies failed to do so.

With the help of blockchain, an organization can go for a complete decentralized network because this technology works on peer-to-peer networks or nodes which are responsible for carrying out transactions and validating it. Once validation finishes, each node keeps a copy of the transaction record. This way, the blockchain network handles transparency.

Enhanced Security

Blockchain comes with advanced security compared to other platforms or any record-keeping system. Every transaction is recorded according to the consensus method. After that transaction is encrypted and linked to the previous transaction using the hashing method. The security is so enhanced that each node of blockchain holds a copy of a transaction and its history. So it is very difficult for hackers to compromise the transaction data.

 Reduced Cost

Cost-cutting is the topmost priority for most businesses. By using blockchain, organizations no longer need to pay third-party vendors or mediators to verify trading partners. And also won’t have to review so much documentation to complete a transaction because everyone will have permission to access a single, immutable version.

Improved Traceability

In the traditional e-commerce process, it is challenging to trace goods. This can lead to several complications, including theft, counterfeit, and loss of items. After the integration of blockchain, the supply chain of e-commerce goods becomes more traceable than ever. It enables every party to track the products and ensure that it is not being replaced or misused during the supply chain cycle.

Increased Efficiency and Speed

In the traditional paperwork era, the transaction of anything is a time-consuming process. It is prone to human error and always requires third-party intervention. By streamlining and automating the process with blockchain, it brings efficiency and speed. In this process, every transaction record is kept by a single digital ledger and its share among all participants. So it becomes easier to trust each other without the need for numerous intermediaries. Thus, clearing and settlement can occur much quicker.

Challenges Faced by the E-Commerce Sector, and How Blockchain Can Help

Payments

The payment industry immensely benefited from blockchain technology. Payment gateways for e-commerce are far from perfect, and even companies like PayPal and Skrill and other payment solutions come with high processing fees on sales made by e-commerce through their platform. These charges often start from around 2-3% of the total purchase price.

Blockchain experiments in e-commerce, such as Request Network and eCoinmerce, aim to create a blockchain-based marketplace. That enables fast and secure transactions for any e-commerce business module. Request Network utilizes blockchain technology for the financial transactions in the e-commerce industry by providing low-cost financial assistance, high-security standards, and an overall astonishing user experience.

Supply Chain Management

The supply of goods from the retailer to the e-commerce and then again from there to the customer is a challenging task to manage. The warehouses continuously assess the stocks that are to arrive and those that are to be delivered. But there can be a problem of fraud with counterfeit products being supplied. But now, with the help of blockchain, the e-commerce platform can track the movement of goods to and fro from their premises.

Blockchain-based projects like VeChain focus to create trustworthy anticipation of the supply chain. An immutable blockchain network provides a transparent supply chain where consumers can see the flow of ordered products they buy, helping increase consumer faith.

Data Security

One of the biggest problems with e-commerce platforms is how to secure data. E-commerce businesses possess tons of data. Most it collected directly from customers and onboard retailers on the e-commerce platform.

Data stored on centralized servers are vulnerable to hackers. Many e-commerce companies witnessed attacks from cybercriminals, and a considerable amount of data has been stolen. However, with a decentralized blockchain-based e-commerce platform, it is virtually impossible to hack all the nodes of a blockchain, so data on a blockchain-based e-commerce platform is considered to be relatively safe.

Loyalty and Rewards

With the help of blockchain, it is easier to track the total purchase made by the customer and the loyalty scores earned. The purchase history and the points earned and redeemed are safely stored in the decentralized ledger of a blockchain. You can also use smart contracts to set automatic reward discounts and point scores.

Receipts and Warranties on the Network

E-commerce websites used to send receipts and warranty cards along with the product. Then the online mailing trend began, and it became easy to share this information through online platforms like email. But now, blockchain technology makes it up to the next level. It’s possible to store all the receipts and warranty details online in cryptographic data blocks, also known as nodes. Users can access these bills from the retailer’s network. Claims and warranties could get easier for buyers. And the blockchain system can help in validating proof of ownership in case of false claims.

The existing e-commerce industry witnessed many ups and downs and faces many challenges, But transformed e-commerce businesses facilitated by blockchain technology will enjoy skyrocket sales and customer satisfaction. This industry will become more streamlined and transparent once blockchain rolls entirely out. We can expect to see approximately seventy-five percent of the business milestone to be achieved within the next five years.