As consumers moved their attention and spending from brick-and-mortar stores to online marketplaces, an explosion occurred in the already burgeoning eCommerce sector.
In 2014, e-commerce sales amounted to about $1.34 trillion globally. However, Statista predicts that this number will rise to $4.2 trillion by the end of 2020 and then to over $6.5 trillion by 2023.
Another estimate finds that by 2040, 95% of all purchases will have to make online.
However, there are several problems plaguing the e-commerce sector that reduce its efficiency and restrict its expansion.
The good news is that many issues plaguing e-commerce platforms have workable solutions thanks to blockchain technology.
The Positive Effects of Blockchain Technology
Let’s take a high-level look at the most salient aspects of distributed ledger technology before we go into blockchain e-commerce.
Transactions are Quick and Affordable
Due to blockchain technology’s removal of intermediaries, bitcoin transaction performs swiftly and cheaply.
In contrast to digital currency exchanges, e-commerce platforms often charge a transaction fee of 2-6% to businesses.
Some payment processors also have set transaction fees or recurring membership fees for maintaining an account, in addition to the percentage-based fees associated with online purchases.
Extremely Open and Honest Online Marketplace
While the lack of openness in business is a problem for all retailers, it is especially detrimental to the success of online retailers. Even Amazon, the most popular online marketplace, recently deactivated a merchant’s page without explaining.
As a decentralized system, blockchain technology allows for the efficient monitoring of any fraudulent and unethical activity by any business or merchant.
As a result, blockchain technology can facilitate a trustworthy online marketplace for purchasing and distributing commodities.
Managing the Supply Chain
The term “supply chain” describes the system of companies and other entities involved in producing and selling a product.
Companies can save money and become more competitive by using supply chains with various participants. That’s why it’s important for any e-commerce firm to have solid supply chain management.
Many processes, from manufacturing to shipping to retail, make up a supply chain. Thus, even if only one phase does hack, the entire supply chain could be in jeopardy.
Consumer information and financial transaction records stored in the cloud are made more secure with distributed ledger technology. When the adoption rate of e-commerce systems backed by the blockchain rises, so does the number of security breaches.
The ability to accept cryptocurrency payments is another significant benefit blockchain technology can provide to online merchants.
Anti-Chargeback Security Measures
Chargeback fraud has plagued internet retailers ever since the industry’s infancy.
While there are many scenarios in which a customer could seek a chargeback via their bank, one survey found that 81 percent of consumers do so for convenience rather than getting in touch with the retailer directly to obtain a refund.
Friendly fraud, which involves initiating a chargeback without first contacting the seller, cost online retailers $4.8 billion last year.
Customers submit a further portion of fraudulent chargebacks who never intended to make a purchase. They make a purchase, then try to get their money back by filing a chargeback as soon as the online shop ships the goods.
Recent developments in blockchain technology hold the most promise
1.) Tokens as a Method of Security
Numerous worries about the ICO process have slowed the utility token market. Most investors acclimated to the IPO market see little profit potential in ICOs because of the lack of genuine value and murky rules around them. Many individuals only see cryptocurrencies as short-term investments because of the market manipulation risk and low liquidity.
Security tokens were introduced to counteract these problems plaguing initial coin offerings (ICOs). They combine the advantages of blockchain technology with the stake principle, which they derive from the concept of programmable equity. Unlike ICOs, they provide investors with tangible benefits like ownership and dividends. Because of its familiarity with business owners, this idea has the potential to reshape the IPO industry by providing companies with greater liquidity, efficiency, and round-the-clock access to financing.
2.) Blockchain Consortiums
The primary objective of such a group would be to facilitate cooperative efforts amongst rival businesses. Increasing the number of participants on a blockchain eCommerce platform increases its technical security and the usefulness of the data being shared.
A different kind of token is designed to address Bitcoin’s volatility problems. It fuses the anonymity, security, and transparency of cryptocurrencies with the trustworthiness and stability of traditional currencies. Their value and stability are unrelated to market fluctuations because they Pegg to a fixed amount of fiat currency.
4.) Hybrid Models
There is less trust in cryptocurrency transactions because of the absence of rules and official support. Several nations, like China and Ecuador, are exploring the introduction of their cryptocurrencies. However, because any nation’s central bank doesn’t back these digital currencies, they have little use in the real world.
Even though national fiat currencies have the upper hand in most places, the best strategy is to establish a digital bridge between the crypto and fiat economies. When expanding their reach, many businesses need the convenience of the fiat-crypto exchange. Additionally, hybrid models hold promise for practical applications like land registries and voting.
Although most B2C firms have little trouble adapting to the online space, B2B organizations are not always as quick to embrace digital innovation. Blockchain technology can assist them by facilitating the development of intricate ecosystems, such as B2B2C ones.
Several attempts to put this idea into action in recent years have uncovered several difficulties. To prevent monopolization, decentralized systems must have appropriate safeguards in place, including a business governance architecture that ensures everyone involved in the ecosystem has an equal say in its operation. However, unsuccessful attempts can reveal weak spots, paving the way for further development in the following year.
Platforms for Distributed Ecosystems
Although most B2C firms have little trouble adapting to the online space, B2B organizations are not always as quick to embrace digital innovation. Blockchain technology can assist them by facilitating the development of intricate ecosystems, such as B2B2C ones. It is powered by smart contracts that keep peer-to-peer transactions running smoothly to Facilitate the linking of rivals and the building of new business models.
Several attempts to implement this idea over the past few years have uncovered some difficulties. For this reason, it’s important for these systems to have a corporate governance architecture that ensures all ecosystem participants have equivalent rights. Conversely, unsuccessful efforts can illuminate areas for development in the coming year.