Blockchain is one of the most powerful technological advancements of this era. It can be defined simply as a distributed database existing on multiple computers at the same time.
The distributed database is constantly growing as new sets of recordings, or 'blocks', are added to it. Each block contains a timestamp and a link to the previous block, so they form a ‘chain.’
Various forms of Blockchain are available nowadays too. An example is Steem Blockchain, a social blockchain that grows communities and makes immediate revenue streams possible for users by rewarding them for sharing content. It's among the Blockchains that can power useful blockchain-based social media apps like Steemit.
Blockchain solutions like those are making their presence felt in various domains of business, including e-commerce.
More E-commerce Businesses Are Leveraging Blockchain
Tech savvy e-commerce businesses and stores all across the world are now increasingly hiring Blockchain experts to hit it big with Blockchain technology.
The reason more e-commerce businesses are leveraging blockchain technology lies in the list of challenges being faced by the e-commerce industry that the technology can help to solve.
But what are these challenges?
Let’s look at them briefly.
Challenges E-commerce Businesses Are Facing
Understanding the challenges faced in the e-commerce sector helps to also understand the value Blockchain can add to any e-commerce business.
Among the challenges faced by the e-commerce industry are:
I. Ever-increasing competition
This is a huge challenge e-commerce businesses are facing, because the number of businesses going digital is consistently and constantly shooting up.
Access to customers, growth opportunities, revenue increases, return on investment, customer retention rate are just some of the areas e-commerce businesses struggle with amid the ever-increasing competition on the digital front.
II. Complex Store Management
Online store management is a taxing process, involving the accomplishment of many complex tasks. The list of tasks involved includes but is not limited to the following:
- Management of the supply-chain
- Logistics management
- Payments' management
- Management of all intermediaries involved
- Management and replenishment of inventory at the right time
- Streamlining and managing the entire shipping and delivery process
- Management of relationship with customers
III. Payment Data Security
The security of payment data and transactions are also a huge challenge for e-commerce businesses as the increasing number of data breaches and other types of data scams attests.
Cybersecurity attacks and data breaches definitely results in much more than the loss of money for e-commerce business owners, but also their customers faith and reputation damage.
IV. Payment Processing Fee
Traditional payment processing fees are usually very high. This eats significantly into the profit of e-commerce businesses. There are three different types of payment processing fee:
- Flat rates
- Some percentage of the total transaction
- Combination of both
With all these challenges of running an e-commerce business, you get ideas about the value Blockchain can add to your online business as the tech can help to address all those areas.
However, it's still important to know about and be familiar with the different uses of Blockchain in e-commerce in more detail. That way you will be able to better understand how the blend of Blockchain and e-commerce can change your own e-commerce business.
Key Ways E-commerce and Blockchain Create a Winning Combination
The ongoing Blockchain revolution is revitalizing the entire e-commerce industry on the global scale.
Here’re some of the ways the blend of e-commerce and Blockchain is changing online stores and e-commerce businesses for the better, boosting the future and growth of the e-commerce industry.
1. Improved Payment Systems
Blockchain is a secure decentralized financial ledger as compared to the traditional centralized payment systems that are integrated with many e-commerce stores today.
The nature of the Blockchain tech improves payment systems through the use of encrypted distributed ledgers that provide trusted real-time verification of transactions without the need for intermediaries such as correspondent banks and clearing.
That presents huge benefits for both e-commerce businesses and their customers.
2. Decentralization of Financial Operations
With Blockchain, your business and financial operations are not regulated by government. Moreover, decrease in the value of your country's currency will not affect your e-commerce business and relevant financial operation. It is so because Blockchain is fully decentralized.
3. Identity Protection and Reduction in Fraud Cases
The combination of Blockchain and e-commerce can add fraud protections to your online business. This is because it logs and authenticates the identity of transacting parties, bringing greater transparency and improved traceability of products.
It's very difficult to manipulate the blockchain, which is an immutable record that can only be updated and validated through consensus among network participants.
As a result, the chances of any financial fraud get reduced significantly, particulaly thanks to the incorporation of peer-to-peer (P2P) technology in it.
4. Speedy Transactions
Involvement of intermediaries like banks, payment gateways, merchants and more adds to the time taken to complete the transaction process.
The integration of Blockchain eliminates the involvement of intermediaries, ensuring that the transactions being carried out are between you and your customers.
That aspect of Blockchain technology improves speed and security of financial transactions significantly. The ease of use and freedom of transactions are big benefits as well.
5. Better Quality of Supply Chain Management
This is another huge benefit of blending e-commerce with Blockchain. This powerful combination makes record-keeping and tracking far much easier. Each block represents an earlier version of the data or document, enabling anyone to backtrack to see what was changed.
Blockchain also uses a distributed record-keeping system called a ledger that keeps track of changes to assets within the chain. It improves tracking of transition from one state to another, sales and deliveries, which ultimately enhances your supply chain management.
6. Cost Reduction and Inventory Management
As pointed out above, Blockchain e-commerce systems eliminate all intermediaries and ensures faster and safer transactions directly between you and your customers only. Thus, the extra costs incurred by the system get reduced significantly.
More importantly, the management process becomes more effective and easier as business owners don’t have to spend time and money on hiring new staff again.
7. Enhances Security, transparency and legitimacy
The distributed ledger technology ensures secure payment. Your customers pay you directly instead of paying to your bank or financial institution or any other intermediary.
Blockchain monitors all transactions closely and clearly to eliminate any possibility of a financial scam. Moreover, it helps you filter out genuine and fake reviews, sales effectively and launch more personal offers for your customers on your e-commerce Store.
The benefits of integrating Blockchain tech to your e-commerce business can be the missing piece that makes your business soar. Figure out your exact business needs and look into how you can embrace and apply this highly secure, decentralized distributed ledger technology. It can skyrocket your e-commerce business and help you stay ahead of the curve in the industry.