Blockchain as a transformative technology has become a pillar of the web 3.0 and industry 4.0 revolutions. It is disrupting many sectors, making them more transparent, decentralized, and secure against tampering. eCommerce is one such sector that is heavily investing in blockchain too.
Recently, eCommerce giant Amazon has been exploring blockchain use cases since 2018 to improve its services and bring more efficiency to its workflow. It has also recently initiated offering some of those blockchain services among its other cloud ones. Furthermore, it’s not just Amazon, companies like Carrefour, Alibaba, Nestle, and Walmart are also actively using blockchain to improve transparency in their processes; no wonder the global blockchain technology market is poised to grow by over $2.3 billion by the end of this year.
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What is Blockchain?
While blockchain is not a new technology anymore, there is still some confusion around its use cases. Moreover, its potential is still not yet fully uncovered. This is why understanding how blockchain is and can disrupt the eCommerce industry is important to first understand what the technology is all about.
Blockchain is a digital ledger that records information like transactions across several nodes or servers in a peer-to-peer network. The mechanism of blockchain renders all the information recorded on it to remain most secure against tampering and hacking. It uses hashing techniques to create secure blocks to store data and then link them to one another. The linking of information makes them immutable, and the decentralization of the servers improves transparency. As such, blockchain makes for the ideal technology to create a stronger and more efficient backbone for multiple eCommerce processes like payment transactions, inventory management, and supply chain tracking.
Blockchain in E-commerce
Blockchain and eCommerce both have multiple overlapping arenas, which gives rise to many opportunities and use cases. Foremost of these common grounds is transactions. Blockchain is the technology to make transactions more transparent, secure, and efficient, and eCommerce is nothing if not a business of transactions. Other than that, blockchain can also support activities like payment processing, customer care, quality assurance, and product searches. The application of cryptocurrency to make purchases is yet another use case for blockchain in eCommerce. Here are some of the ways blockchain is transforming the eCommerce sector.
Did you know transactions incorrectly identified as fraud cost the eCommerce industry USD 9 billion yearly? The presence of intermediaries has always remained a necessary evil for the eCommerce sector. Payment processing channels lack transparency and are being handled centralized. This can lead to dishonest manipulations, unreasonable charges, and huge chargebacks. Blockchain, by decentralizing the payment procedure, helps avoid all these pitfalls. In a blockchain-based eCommerce store, there are no intermediaries, and all the transactions are authenticated by the parties concerned through smart contracts.
Supply Chain Tracking
The supply chain is at the foundation of any retail business, and eCommerce is no exception to that rule. Without an efficient supply chain, no eCommerce business can hope to run in a profitable state in the long run. Since many eCommerce platforms perform by selling products directly from the suppliers, it is important for them to maintain the quality and delivery timeline of their customers’ orders; blockchain helps them ascertain that. By implementing blockchain in the supply chain, the operator can ensure that the suppliers are offering the exact products and in the quality and timeline agreed upon.
Another area where investing in blockchain development services has been helping eCommerce businesses is – inventory control. The technology can help automate the refilling of stock on time, preventing cases of stockout and overstocking. What more? It can also help in assuring the quality of replacement requests and execution whenever a customer creates one.
Loyalty Reward Programs
Blockchain can help eCommerce platforms create more personalized loyalty rewards for their customers. The technology can track all the transactions and order history in a more secure manner allowing the platform to find customers’ preferences, all the while maintaining the protection of their data privacy. What more? Since blockchain can also be utilized to create smart contracts, loyalty and reward programs can easily be automated. For example, if the customers are rewarded for shopping more from the brand, the smart contracts can add discounts to the final amount to be paid whenever a customer crosses a certain spending threshold.
eCommerce businesses can also use blockchain to manage back-office processes in a more automated fashion, improving resource optimization at every stage. The smart contracts made with blockchain can eliminate intermediators, reducing the operational costs heavily. This also eradicates the occurrences of fraud and inventory theft, all with minimal investments. This results in an overall increase in cost savings, all the while improving the efficiency of the workflow.
Reviews are the most effective UGC or user-generated content that helps brands establish authority and improve their conversion rates. However, they are the double-edged sword that every eCommerce brand remains wary of. In marketing, fake reviews can be used to elevate a wrong business, misguiding guileless customers into buying things from the wrong places. What’s worse is that competitors can also use fake reviews to tarnish the reputation of a genuine business. In short, fake reviews are harmful to both the customers and genuine sellers. Their presence also undermines the effectiveness of the true reviews. Blockchain saves both brands and consumers by verifying the authenticity of genuine reviews. When an eCommerce store or a review website uses blockchain to collect reviews from customers, their legitimacy can be confirmed by the consensus.
Lack of transparency has always remained one of the major concerns for eCommerce stores. This is especially true for bigger marketplaces that deal with multiple suppliers and merchants. From poor quality management to fraudulent activities around product prices, lack of transparency can lead to consumers’ distrust and eventual loss in revenues. With blockchain, all this can be prevented quite easily. An eCommerce store with inventory information on the blockchain will help ensure that the entirety of it remains public, and if there is any wrongdoing, it can be tracked instantly.
Blockchain offers an easy way to manage warranties and guarantees for both customers and sellers. It can be used to store receipts and warranty cards. This will not only help in eliminating paperwork and related challenges but also ensure that both customers and buyers never lose any warranty details. The immutable nature of the technology will also see to make the warranty details tamper-proof, while the decentralized structure will make the entire system more transparent for all the parties concerned.
The transparency around product information and the ease of managing invoices, taxes, and warranties will compel customers to stay with the brand for longer. The convenience and reliability of a brand grow exponentially when they use secure methods like blockchain. Customers can easily see the commitment to quality and transparency and immediately feel better about remaining associated with the brand. Moreover, blockchain also ensures the automation of every little update in the inventory. Since up-to-date product descriptions and quality certificates reassure customers’ buying decisions, it will eventually result in improved customer loyalty and consequent benefits.
Retailers from around the world are investing in custom e-commerce development services to have a global storefront for their businesses. They understand the importance of digitalization and are leveraging the technology the best they can to improve their net revenues. That being said, owning and managing an eCommerce store is not without its share of challenges. Now while blockchain is not the one foolproof solution for all of those, it certainly is helping make the transactions more secure, inventory tracking more reliable, customer retention easier, and cost savings more efficient. So, if you own an eCommerce store and are looking to reap these benefits, know that blockchain is the future.