23 April, 2018
The biggest problems plaguing e-commerce sellers and consumers can all be improved or eliminated using blockchain technology. The following are just a few of the benefits blockchain can offer in the world of e-commerce:
The decentralized nature of blockchain facilitates operational efficiency, which can streamline payment processing. Smart contracts can regulate payment processing and assure customers that payment will only go through upon successful delivery of their purchase. With this approach, middlemen can be eliminated entirely—like the 2.9 percent in credit card fees for online purchases—making online shopping much more cost effective.
With every transaction recorded on the shared, immutable ledger of the blockchain, there’s complete transparency. Customers can see the entire supply chain information for any item they’ve purchased, for instance. Ultimately this leads to increased customer loyalty and trust.
Most loyalty programs are tied to specific brands or companies and don’t allow for immediate use. With cryptocurrency, tokens can be added immediately and directly to any digital wallet—and can be spent anywhere, anytime. Customers who agree to view commercials and contribute their personal data could be rewarded with cryptocurrency micropayments. Referral and affiliate programs could also be easily and securely managed through smart contracts.
Encryption and security are a huge selling point of blockchain. Consumers can feel confident that their personal information will not be hacked after using an e-commerce site that employs blockchain in payment processing.
Product IDs for specific products could be standardized across every e-commerce site through the blockchain. Consumers comparing product prices on Amazon and Newegg would know that the two laptops they’re looking at are indeed the exact same model.
E-commerce depends on electronic transactions, consumer data protection, and a complex array of logistics and processes. It seems only natural that blockchain technology—designed to excel in these areas—would be a great boon to the industry. Eliminating middlemen and processing costs is very appealing to e-commerce sellers, since the margins are thin and competition is fierce. Data security, loyalty programs, and ease of payment appeal to consumers as well, so blockchain benefits all parties involved.
Image via Flickr, by Marco Verch.