With the rise of Bitcoin lot of naysayers have started to analyze its future and impact on the economy. Whether you like it or not it has gained a massive foothold in the market and trends to be a modern-age digital gold. However, the technology which supports the existence of such cryptocurrency is Blockchain. The technology which was once classified as an experiment had revolutionized the banking and finance sector. It has also marked strong footprints in industries such as supply chain, retail, healthcare, and public sectors, etc. Blockchain is widely accepted and embraced by private and public entities. Countries like the UAE aims to move 50% of all their government transactions to be processed on a blockchain. A recent survey conducted by Deloitte found that 59% of Chinese firms have adopted Blockchain. Whereas the Chinese government had ban Bitcoin in 2017 but significantly adopting the disruptive Blockchain technology.
What is a Blockchain?
Blockchain seems to be intricate to understand for many of us, but its core concept is straightforward. It is a kind of database which holds series of data or information and structures in chunk/block that are chained together electronically on a computer that could be accessed, filtered, and manipulated by multiple of the user at once. Unlike other databases – where records are processed by a central administrator, each data contained in a blockchain is copied and distributed to a network of computers, whenever a new block is added to blockchain every computer on the network updates the change. It spreads data to the network rather than storing it on a single database, making it difficult to tamper. With the decentralized system, data becomes immutable – that means once the data is entered it becomes irreversible.
The Possible Influence of Blockchain in E-Commerce
Easy access to the internet and demand for convenience had fuelled the rapid growth of e-commerce in the large spectrum of businesses. Especially, e-commerce has provided an array of opportunities for small to large businesses or brands to reach millions of buyers. However, there are certain constraints for the seller such as heavy online transaction fees, genuineness of the product for the buyer, supply chain management, and transparency in the marketplaces. It is believed that the implementation of blockchain technology can reduce or eliminate those challenges.
- Payment: In the marketplaces seller list their products and the buyer transact payment through payment gateways which are integrated into the marketplaces. The traditional payment processing platforms charge an enormous amount of fee on each transaction. Blockchain technology offers decentralized solutions which allow seamless and secure transaction at a nominal fee. The Request Network, blockchain-based platform that facilitates all kind of e-commerce business model.
- Data Security: The e-commerce platform holds a lot of sensitive data of the buyer and seller, who interact on the platform. Data attributes could be personal to financial information and those data are kept in the centralized server by the companies leaving vulnerable to cyber-attacks and also its stored data are used to manipulate users or sold to others for marketing purpose. The blockchain, DLT (Distributed Ledger Technology) provides upgraded security to prevent hackers from data theft. Blockchain also offers crypto-currency which helps the consumer to transact without exposing sensitive data. Perhaps, the consumer can authorize to transfer from digital wallet to recipient through a randomly generated unique identifier. Since each data added in the Blockchain has to be verified by the peers, it empowers users to hold their data with them and can be used by others at their approval.
- Reviews: The prevalence of fake reviews in the online marketplace is protruding, it could be by the seller to increase turnover, or negative reviews are written by competitors to ruin the sales. A company like Zapit is using Blockchain technology to verify the reviews. It compensates both reviewers and moderators for the authenticity of the review.
- Validated proof of purchase: While shopping online, things that concern most of us are the warranty of the product or the frustration of lost paper receipt or authenticity of the product. Data stored in Blockchain enables manufacturers, retailers, and customers to access data, to validate the ownership of the product.
- Transparency: Lack of transparency has always caused agitation to online vendors against e-commerce companies. There has been a record of incidents where marketplaces deactivated merchant account without any clear explanation and an arbitrary decision of any marketplaces has resulted in disputes. With the effective use of blockchain, platforms can create a decentralized eco-system that can track the wrongdoers within the platform, leaving low space for disputes.
- Supply Chain: Efficient and fast delivery of the products never fail to delight the online shoppers. To improvise the customer experience, e-commerce companies and 3PL (3rd Party Logistics) partners work hard on logistic issues, often they fail to solve. Pressing concerns are record keeping, the provenance of the products, tracking and managing inventory. Blockchain, the decentralized database makes it easier to recordkeeping and provenance tracking by providing easy access to all data via RFID (Radio-Frequency Identification) tags and embedded sensors. Encrypted technology enables vendors to manage inventory avoiding the management cost by storing all the data digitally.
The disruptive technology is expected to streamline the operations of e-commerce platforms by filling the gap of age-long issues such as transparency, trustworthiness, data security, and cost reduction. Before you step up to embrace the recent technology, analyze your customer journey where it can add value to the business. We would be happy to partner with you if you are looking to go digital or on-board eCommerce platforms, we promise to act as a reliable extended family guiding you to the path of success.