Biggest Blockchain E-Commerce Technology Gains Over the Last Few Years
What Is Blockchain Technology and How Does It Work?
So, let’s first figure out how blockchain technology works.
Blockchain is a distributed set of blocks where every new block contains all the previously made inputs and changes.
Imagine international manufacturer using the blockchain approach. Once an item is produced, its description is stored on blockchain. And once it’s been distributed, this data can’t be hacked. This means that there is no chance to forge these product details and pass a fake product off as an original one.
That said, blockchain solutions establish a high level of data security while maintaining transparency at all levels.
This is exactly what the e-commerce industry is searching for and why 84% of companies have already put a premium on blockchain technology as PwC’s survey claims.
Kim also added that “Blockchain could just be an AMAZING thing for manufacturers and retailers online (e-commerce) and offline. Beyond payments, some practical uses that I can think of are merchandising content and customer service management and records. For example, product content can be centralized and distributed helping merchants provide accurate product information direct and answering all questions of the potential customer.”
Now, let’s explore some other major use cases for blockchain e-commerce solutions and the advantages they provide.
Blockchain Technology in Payment Methods
Payment solutions within the e-commerce sector are far from perfect. Even using platforms such as Skrill or PayPal does not mean the money transfer will be carried out fast and securely. Thus, the entire payment approach in e-commerce needs reworking.
It is predicted that in 2019, the global value of digital transactions will approach $3,453 million, which is a 21.5% annual rise. This means it will be more difficult for online retailers to manage such a volume of transactions without implementing new technologies.
Additionally, customer representatives are gradually choosing self-service over direct interactions. This implies that digital shopping systems must be supplied with best-in-class security measures to ensure data protection in compliance with effective state regulations.
When it comes to blockchain technology, secure transactions stand as a priority.
According to the 2018 Global Fraud and Identity Report by Experian, 63% of businesses fell victims to deceitful actions, while 27% of consumers grow more concerned about visible security in blockchain transactions and abandon them if they do not appear to be safe.
Blockchain-powered financial transactions can tackle this issue and put more control over payments into the customer’s hands.
The average transaction fee of common payment methods like PayPal or Stripe is 2-3%. However, lately, they have started to demonstrate a desire for higher payment processing fees. This situation puts smaller retailers at risk since they have to raise prices to stay competitive.
The benefit of blockchain-based transactions is that they are fee-free. So, this technology can smooth over the threat for small online retailers.
How? There are some ready-made payment platforms, such as ECoinmerce, that aim to build blockchain-based marketplaces by applying secure and fast transactions for your retail business model.
By using ready-made solutions such as these, all supply chain parties (sellers and buyers) can benefit:
- Online sellers have their digital store as an asset. Their ownership rights are recorded on blockchain allowing them to track all actions within the store in real time.
- Consumers get the possibility to purchase products and pay lower fees for transactions. For example, ECoinmerce provides the feature of running regular deals at profitable discounts. It is beneficial for both consumers and sellers as they can entice more clients and win their loyalty.
In contrast to the long-establishment payment processing systems, e-commerce cryptocurrency allows purchases to be made without intermediaries, chargebacks, and dishonest manipulations.
False positives are one of the most critical e-commerce problems that encourage such manipulations. Transactions incorrectly identified as fraud cost the e-commerce sector $9 billion yearly.
Blockchain allows for the generation of a whitelist that will include all trusted customers worldwide. Having such a whitelist will decrease false positives and, consequently, help detect real fraud.
Furthermore, by incorporating cryptocurrencies, the blockchain e-commerce industry is likely to attract millennials who favor P2P transactions more than other cohorts.
Sustainable Supply Chain Management
The capacities of blockchain e-commerce solutions go beyond online payments.
On a larger scale, the technology can be also applied to any multi-step transaction, including supply chain management.
Easy Shipment Tracking
With blockchain supply chain management solutions, e-commerce businesses can achieve a desirable level of transparency and traceability.
Thus, customers can keep aware of the status of current orders and trace each product back to the source, whereas supply chain stakeholders are able to monitor in/out of stocks and shipments, take timely actions to remove hitches and detect dishonesties.
See the example of how a blockchain-based track-and-trace system can be used in the process of transferring pharmaceutical goods from a producer to an end consumer:
Alibaba has already implemented a blockchain solution to enhance its cross-border trade. In close partnership with logistics company Cainiao, Alibaba aims to integrate export and import data with blockchain for e-commerce to record product provenance, shipping data, arrivals, and customs reports.
It also enables Chinese consumers to track roughly 30,000 commodities from 50 countries through the T-Mall mobile application. The e-commerce giant has also recently joined forces with PwC to leverage blockchain e-commerce technology and develop a food control system, reducing the risk of counterfeit products.
There are some ready-made software solutions for simplified shipment management. For example, consider NextPakk.
This blockchain-based service enables customers to schedule the delivery of the products within a one-hour window. This ensures that the customer will be at home and will be able to accept the package. With blockchain, all these packages can be easily tracked and the customer’s identity will be solidly protected.
However, there is also an option to customize your existing system with blockchain technology. In this case, Innovecs can help. For one e-commerce company, our engineers have successfully delivered a blockchain-backed solution for monitoring shipment routes and updating delivery statuses.
Reduced Supply Chain Transaction Costs
The blockchain technology for e-commerce used in supply chain management helps reduce costs in two ways:
- Blockchain supply chain companies are not required to appoint any third parties for facilitating complex contract negotiations.
Blockchain allows them to synchronize contract-related data across a secure network without any intermediaries that require additional fees.
- Consider companies that negotiate procurement discounts, taking into consideration the aggregate amount of purchases they make for an accurate product. In this case, it is complicated for companies to monitor the volume of purchases made across all parties in the supply chain network.
Thus, they lose the chance to save costs because they do not have the technology for effective tracking of all purchases. Blockchain e-commerce technology is a great tracking tool which consequently helps reduce costs for e-commerce businesses.
The authenticity and accuracy of inventory data is one of the problems that the e-commerce industry faces today.
Many of the inventory management systems for record keeping run outdated databases and support linear data entry. This can work well until a source document meets some miscellaneous activity.
When it happens, some companies simply write off such incidents and move on doing their job. Such manipulations with data encourage some unethical practices like money laundering. The reason is the centralization of inventory data which makes it easy to forge it.
Blockchain technology helps decentralize all data, securely store and transfer it. By implementing it into your inventory management system, you will come across the following advantages:
- Inventory records are solidly encrypted, so forging them is impossible;
- Inventory data is monitored and verified at every checkpoint; and
- Data is decentralized which means it can’t be controlled by a single entity.
Marketing Campaigns and Data Privacy
Thanks to blockchain enormous storage potential, every buyer’s journey gets recorded, assuming customers give their consent to “sell” that data to stakeholders.
Anonymity and personal data protection help improve trust and incline customers to more willingly share payment and purchase preferences.
Improve Customer Experience
With blockchain for e-commerce, retailers can track customer’s behaviour without investing heavily in data analytics or purchasing it from marketplaces.
Provenance.org is a good illustration of how this can work. The blockchain marketplace caters to the needs of shoppers and sellers. As a result, shoppers can access verified information about products, their origins, and impact, while sellers get a wider target audience able to make custom offerings.
Amazon has gone even further and suggested using its Amazon Web Services (AWS) as a blockchain-as-a-service solution for businesses to grow and scale with ready-made blockchain templates.
Increase Customer Loyalty
Blockchain for e-commerce solutions gives additional value to customers since any product information they store always remains up-to-date.
Customers’ loyalty grows as they see consistent product descriptions, certificates, and other data-certifying qualities. It is especially important when it comes to high-priced goods. Common solutions do not provide such a possibility at all or enable you to update product information manually.
In addition, smart contracts (a computer program that’s in control of the transfer of digital assets and immediate enforcement of contractual clauses) can automatically enable customer loyalty programs. With every purchase being stored, smart contracts can issue a reward or loyalty bonuses once a certain spending amount is reached.
Rohit also adds that “There’s still a long way to go before blockchain can be implemented at a scalable level. One big threat in implementing it is vaguely defined problem statement blockchain is expected to solve. The gap between expectations of execs choosing blockchain and actual use case for business often makes for multi-million dollar chronicles of expectations vs reality.”
Detect Fake Product Reviews
Customer reviews are very important. However, there are plenty of fake reviews that can easily undermine the reputation of online enterprises.
For example, according to the Harvard Business School study, 20% of Yelp’s reviews are fake. This situation shows that it is a real threat for companies and it is of great importance to find the right solutions.
To detect fake reviews, blockchain can be used. As we have already discussed, blockchain keeps pieces of information in a block that is connected to the chain of blocks with similar data. Each block must be verified by every computer in the network before it can be included in the chain. Once all parties verify the block, it can’t be then modified.
Blockchain-based review platform allows filtering out all reviews and detecting fakes. For example, Revain is one such platform, and it applies a single data source that can’t be altered by anyone. It offers reviews’ verifiability and ensures they remain immutable.
Revain uses Natural Language Understanding and IBM Watson’s Tone Analyzer to automatically filter reviews more accurately. The platform enables blockchain e-commerce companies to identify how emotional the postings are and monitor factors such as user past activity and geolocation.
Blockchain in E-commerce is Gaining Its Momentum
If not for regulatory diversity, lack of customers’ trust, and audit compliance concerns, blockchain software which Innovecs can deliver would have much wider use in e-commerce. Still, more and more companies are jumping on the blockchain train.
The blockchain e-commerce use cases such as cryptocurrency payments, inventory management, or data privacy prove that technology is beneficial to both buyers and sellers. It allows lower prices to be set, efficient monitoring of assets, privacy to be maintained, and prevention of extra charges.
At Innovecs, we build blockchain software to let businesses succeed and customize user experiences. If you’d like to understand how your e-commerce platform can benefit from blockchain and how to adapt this technology, just drop us a line.