Like how the e-commerce revolution hit the shopping shores, be ready for another change in the form of blockchain technology. Whatever the challenges in the e-commerce industry, the blockchain promises to address quite a lot of them and make business easier for the seller as well as the buyer.
To know how blockchain will have a positive benefit to the e-commerce industry, first, you need to know about the advantages of blockchain technology and the problems plaguing the e-commerce industry.
What are the advantages of blockchain technology?
- The blockchain is a decentralized distributed ledger database. The transactions and data get automatically stored in the participant node.
- The transactions that are to be entered in the ledger or a block are validated by the fellow participants. This makes it trustworthy.
- The transactions can only be written by the authorized participants making it safe and tamper-proof.
- The ledger is digitally encrypted so that the data remains secure.
- The inter-relation of blocks makes it nearly impossible to alter the contents of the block.
- The transactions or the data are time stamped. So the transaction can be tracked to its original entry date.
- Smart contracts are those where a transaction gets automatically triggered if and only if a set of conditions are met.
How blockchain will transform the e-commerce industry?
- Payment made cheaper – The payment processing fees charged by the card companies and the banks are too high. In addition to this, the e-commerce platforms also levy fees from the retailers for any transaction made. The blockchain technology is set to lower the processing fees and the sale fees by providing low-cost transactions. The security standards will also be high so that the retailer will stand to gain from it.
- Supply Chain Tracking and Inventory Control – The supply of goods from the retailer to the e-commerce platform and then again from there to the customer is a tedious task to be managed. The store department has to assess the stocks that are to arrive and those that are to be delivered. There can be a problem of fraud with inferior products being supplied. But with blockchain technology, the e-commerce platform can track the movement of goods to and fro from its premises. Also, since the recorded data is transparent, any mismatch in the quantity or quality can be tracked. This will be a boon for the retailer, e-commerce platform and the customer.
- Inventory Control – One of the problems in every product-related business is that of inventory control. The items in the stock have to be replenished and managed. Here, blockchain can help the e-commerce industry in inventory management. By adding smart contracts into the blockchain, the inventory can be managed. The items can be ordered automatically from the retailer when the pre-defined limit (minimum limit) is reached. This ensures that the store neither has excess products nor it remains out of stock.
- Data Security – The data that is collected by the e-commerce platforms remain in their database. But the customer is at loss since this data is many-a-times misused by these e-commerce giants. Also, there is every possibility that the system gets hacked and the database gets stolen. The sensitive information like the credit card number and the personal information are at risk. The e-commerce platforms not only store the customer information but that of their retailers also. But with a blockchain technology, the data is present in every customer node. It is a decentralized system and the data cannot be altered or lost.
- Loyalty and Rewards – With blockchain, it becomes easier to track the total purchase made by the customer and the loyalty scorers earned. The purchase history and the points earned and redeemed are safely stored in the distributed ledger of a blockchain. The rewarding of discounts and point score can be automatically set through the smart contracts.
- Warranties and Purchase Receipts – With the purchase, comes the headache of carefully storing the warranty card and the purchase receipt. The blockchain will be a boost to store the purchase receipt so that the warranty services can be obtained. The blockchain can easily store and track the data thus allowing proof of ownership of the products or services.
- Genuine Reviews – Reviews generated on the e-commerce platform are subject to a lot of questioning. The e-commerce stores are not open about the reviews posted there and no one is sure if it is indeed genuine. With all the ambiguity about the reviews, the blockchain technology helps to solve the review crisis. It helps to verify the reviews and know if it is a genuine and honest one. The customers can be incentivized to write about the products they purchase. The rewards, moreover, can be made through the digital wallets on the blockchain.
- Alternate Payment Methods – The e-commerce sites do offer their customers varied payment methods like COD, cards and mobile wallets. But if cryptocurrency is introduced as a mode of payment, then it offers several advantages over traditional modes of payment. The mode of payment is faster and reliable. The processing fees are lower. There is no fear of the transaction being altered and misused as in case with the card payments. With cryptocurrency, the need for third-party approval is eliminated.
The e-commerce industry is highly competitive, and retail and e-commerce websites are looking at ways and means to stay ahead of their peers. So, businesses have to embrace smarter business technologies to remain relevant in the competition.
The blockchain technology provides the right framework to make things easier and smoother. With blockchain technology, all the stakeholders in the e-commerce industry are sure to benefit in the long run.