Brick-and-mortar supermarkets and department stores have long since disappeared. In the wonderful world of e-Commerce, you can buy practically everything, from groceries to jewelry, clothing, books, and money transfers. E-commerce marketplaces like Amazon, Flipkart, and Shopify are crowded spaces where you can find almost everything you’re looking for online. What could be cozier than ordering your favorite things from the comfort of your own home?
But have you ever considered what goes on in the background of these sites? While these sites provide users with a positive and productive experience, they have several technical and operational flaws that need fixing as soon as possible.
Do we need a digital marketplace built on the Blockchain?
Let’s start with the basics of what makes an online store tick. The components of an e-Commerce platform are extensive: a wide variety of products, a sizable customer base, and a mountain of data relating to sales, communications between vendors and buyers, shipping, billing, and other operational details. Storing and managing such a massive amount of data, while crucial, is also incredibly daunting and labor-intensive.
First, it is crucial to protect the privacy of the millions of people who use e-Commerce platforms to transact business online. We are all too familiar with news accounts of compromised networks and the subsequent exploitation of private customer information for criminal ends. Numerous instances of compromising data security and integrity have resulted in devastating outcomes. Therefore, it is crucial for e-Commerce websites to have full authority over protecting their customers’ private information, including both financial and personally identifiable details. Customers should feel safe disclosing their banking information on an e-Commerce platform without worrying about their data being stolen by hackers. Therefore, these platforms must use strong data-encryption software to protect user’s private information from hackers.
Logistics management, often called Supply Chain Management (SCM), is a fundamental but critically important part of every e-Commerce platform. Whether we’re talking about agriculture, online food delivery, or an e-Commerce platform, supply chain management is essential. A product or commodity must travel a great distance from the factory through the wholesaler to the retailer to the consumer. To reach its final destination—the customer—the product must first overcome N difficulties. These include, for example, defective raw materials, production delays, ineffective vendor communication, payment processing challenges, and many others. It’s also impossible to dismiss illicit agents and intermediaries’ roles, who profit enormously by facilitating the process. Supply chain management (SCM) may be the most challenging and eventful part of an e-commerce company.
The success of every e-Commerce operation hinges on the accuracy and Efficiency of its payment transaction ledger. There are a lot of transactions that need to be safely recorded in ledgers or account books to maintain a history of every little thing that happens along the way, from registering orders from consumers to recording payment details to tracking the order through the logistics journey to delivering the item to the consumer to returning or refunding the product, etc.
Blockchain’s decentralization, immutability, and transparency make it the ideal tool for helping e-Commerce companies work around these challenges. Let’s look at how a Blockchain-based e-commerce platform might improve Efficiency in the workplace.
The Benefits of Using a Blockchain for Online Shopping
Blockchain is a distributed ledger system that eliminates the need for a trusted third party to store or manage user information, reducing the risk of compromising data integrity and security.
Data security is guaranteed on a Blockchain-based e-commerce platform.
By its design, Blockchain requires sophisticated cryptographic techniques for data encryption. Information stored on a blockchain network is always encrypted in an unbreakable way by either human or computer means. Because it uses a hashing algorithm to ensure that data cannot be altered after it has been recorded, Blockchain offers a secure system that is extremely difficult for malevolent users to compromise. Blockchain safeguards any personally identifiable information (PII) stored by a merchant on their blockchain e-Commerce platform in this approach.
Transparency in all e-commerce transactions is guaranteed with a Blockchain-based system.
Being immutable and transparent, Blockchain provides an unambiguous record of all past e-commerce transactions. The entire order lifecycle, from initial purchase to final payment and delivery, can be recorded and stored on the Blockchain, making it possible to follow each step, see any problems or gaps in the system, etc. Once again, Blockchain allows us to deal with problems like money laundering and payment theft. Thanks to Blockchain, this means we can keep an honest and error-free accounting of all financial transactions.
Operational Efficiency is guaranteed on a Blockchain-based e-commerce platform.
How can we best deal with Supply Chain’s Big Problems? Okay, the solution is Blockchain. Blockchain makes it easy to monitor any operation, as it logs every network activity related to that process. This way, everyone involved in the transaction (sellers, purchasers, and vendors) may get accurate data, estimate wait times, communicate effectively, and stay apprised of developments. This facilitates open communication and trust between sellers, buyers, and vendors. Since no central authority controls the Blockchain process, all intermediaries and unlawful activities are eliminated. (Check out our blog post on Blockchain’s potential business uses).
An e-commerce platform built on the Blockchain for making digital payments.
In addition to the preceding, Blockchain can facilitate the adoption of non-traditional payment systems, such as cryptocurrencies, as an alternative to fiat and conventional currencies. Using smart contracts and digital payment alternatives, the e-Commerce platform can provide many incentive systems, discounts, and offers to tempt people, turning it into a lucrative marketplace.
Types of E-commerce for Blockchain
Blockchains are specialized databases that work with highly advanced software to facilitate various electronic transactions.
However, not every Blockchain is the same. In electronic commerce, four distinct Blockchain variants are in use. These four options are commonly accessible to online merchants.
1. Bitcoin – Bitcoin, the first cryptocurrency, is the driving force behind the development of the Blockchain. Tesla, Microsoft, Google, and Shopify are just a few well-known companies that have begun accepting Bitcoin as payment. After that, plenty of additional stores started considering Bitcoin as an option for customer payments. Besides allowing you to get into the vast cryptocurrency industry, accepting Bitcoin as payment is a smart approach to leverage Blockchain technology.
2. IBM – IBM does not operate its cryptocurrency. However, the distributed ledger technology (Blockchain) it provides is ideal for massive, intricate online stores.
3. Ethereum – There’s Ethereum, which, like Bitcoin, functions as digital money. It has some advantages over the competition, but it also has some drawbacks. Although it has not had the same level of adoption as Bitcoin, its network can support multiple cryptocurrencies. Ethereum is commonly used for hosting smart contracts. Ethereum is great for e-commerce businesses because it gives merchants a platform to deploy fully functional Blockchains.
4. Custom – “Custom” is the most practical and adaptable Blockchain solution for online merchants. Businesses can work with a Blockchain development firm to tailor the platform to serve their needs better. In addition, it is very cost-effective, which means it may be used to increase profits over time.
A few Blockchain Technology Implementations in Ecommerce Business
Logistics of the E-Commerce Industry’s Supply Chain
The success of any given online store depends critically on its supply chain. The store owner can better plan for the arrival of new inventory and know exactly what to expect from suppliers if they have a standardized supply chain process. Regarding quality control, e-commerce platforms will use Blockchain to ensure suppliers don’t do unauthorized product swaps. Thus, the process is made clear because of the traceability enabled by the Blockchain.
Efficient Management of Identities
As more people make purchases and conduct other business online, the digital footprints they leave behind are unprecedented. Every time a customer purchases online and provides sensitive financial information, the data is transmitted to numerous web databases that may have security flaws. Retailers may benefit from blockchain-based identity by creating robust authentication processes and encrypted digital identities to safeguard customers from fraud and misuse.
Virtual Ownership
Creating high-quality photos, product videos, reviews, and other content essential to every e-commerce website is costly for most business owners. However, the e-commerce service provider is the legal proprietor. Using blockchain technology, merchants may exclusively own their online stores, product photographs and videos, and customer reviews. This ownership is recorded and made completely public via the Blockchain.
Regulation of Inventory
One area where blockchain technology can be quite useful is inventory management. By incorporating blockchain technology into inventory management, stores may track down surplus stock and reduce it analogous to conventional shopping carts. When certain thresholds are met, they can automatically order more supplies. This ensures that stock levels in the virtual shop are always optimal and that surplus goods don’t build up.
Programs to Encourage Loyalty
Thanks to blockchain technology, customers will be able to take advantage of tailored promotions and loyalty-based rewards. Blockchain can be used to simplify loyalty incentives and personalized offer systems. A blockchain-based approach stores customers’ buying habits and favored items in an encrypted database. Blockchain-based loyalty program management makes it easier and more secure to offer discounts or reward points to customers when they reach specific spending limits.
Warranty Administration
Losing paper receipts and needing help to prove warranty coverage is an issue for consumers and retailers. Blockchain technology allows merchants to safely and efficiently store warranty data, which can then be accessed and verified promptly by the retailer, the supplier, and the customer.
Practical Illustrations
Buying.com, Ikea and Nordic Store, Home Depot, Walmart and IBM, and Target and ConsenSource are just a few examples of the major retailers that have begun testing blockchain retail solutions. The retail sector faces the same old problems as other businesses. This is why many businesses in the retail sector are investigating the potential benefits of blockchain technology. Things like smart contract solutions, Ethereum-based transactions, supply chain monitoring, record keeping with hyperledger, inventory management, improved supplier connections, and enhanced medicine traceability are all on the list.
