Benefits of using Blockchain in Ecommerce
Since I have extensive experience in ecommerce development and research knowledge of Blockchain, I would like to shed some light on the benefit of the integration of ecommerce and blockchain.
While blockchain is touching each and every sector such as health, education, food, identity etc., ecommerce cannot remain isolated. People are getting more busy day by day and hardly have time to visit a shop to make purchases so ecommerce is a helpful alternative, however consumers are equally concerned with the quality and the source of the product. Is there any way the user can verify the product and justify the price they pay? YES, it’s possible using Blockchain technology. Blockchain doesn't only verify the products you are buying, it also helps you to pay in a convenient and cheaper way.
The following are the key benefits of using blockchain in an ecommerce world:
- Product verification and supply chain management: Products we are buying through ecommerce sites come through different sources that may or may not be genuine. How can we make sure that the product is genuine? What if we can tag the product as BLOCKCHAIN VERIFIED in the website? I think it works. Behind the scenes, we need to run supply chain management using blockchain, meaning that when the product is harvested from the field, its information needs to be saved in Blockchain. Similarly, all the transit points of the products also need to be logged into blockchain. Providing a link in the product page of the ecommerce site will give details of the product supply chain process. This process will not only benefit buyers but it also helps farmers to understand the actual route of the product they are selling, skip the mediators, and save more money which they actually deserve.
Technically, I would say we should provide an API that talks with the Blockchain server by passing product identifier (SKU) which returns the product info extracted from Blockchain. We have already developed this kind of API and its called Platform as a Service (PaaS).
- Orders verification and regulations: Some of the ecommerce businesses are regulated by the government which means sales of the products are controlled by laws. For example, in a few US states, ecommerce sites can sell alcohol to the end user within limits. Cannabis is also legalized in Canada and some parts of the US, but again, there are certain limits. If the sales of such items are recorded in Blockchain, there will not be any confusion or doubt to regulators and they can easily perform an audit trail.
Shipment: Shipment is a major part of ecommerce business, however it is handled by third parties. Whether we purchase a single jacket or a wholesaler purchases 1000 jackets, it reaches the buyer’s hands by passing through several stages and responsibilities. If the shipment is going through the hot desert and the temperature inside the container cannot be adjusted, then the jackets inside may get damaged and damaged jackets will reach the buyer. But who is responsible for the damage jackets? Is there any valid proof to claim the loss to the concerned parties? Not yet. But now we can make sure we know who is responsible for this damage by using Blockchain and IoT. IoT devices detect the container’s inside temperature and it sends the data to blockchain and blockchian records it. Once the temperature is recorded for each second into Blockchain, we can easily figure out at which location the items got damaged and who is responsible. In this way, we can make the shipping business more reliable which is also a major part of the ecommerce.
- Payment: We often use credit or debit cards and PayPal or ewallet as methods of payment when we purchase something from online shopping. Yes, it has made our job a lot easier but one cannot simply ignore the pain behind paying a payment fee per transaction to the payment service provider. Well, some of the lucky people of this world are getting rid of this problem by getting cryptocurrency to use in orders. Many countries like the US (Not all states), Canada, Finland, and Australia are legalizing the use of bitcoin in transactions. I wouldn't say the use of bitcoin is free but we pay a very minimal charge like $0.03 to $.07. Because of lower transaction fees, people are interested in using crypto as a payment method.
- Data Security: Currently in ecommerce, all customer and products information is stored in a centralized server. If the server is failed because of some reason, the whole system will be halted causing a single point of failure. A hacker could try to steal customer data from unsecured ecommerce web sites and and the information will be misused. To overcome this problem, blockchain can be a reliable alternative. It is not easy to hack a permissioned blockchain so if we can integrate and operate an ecommerce system with blockchain, we can assure to our customers that their data is in a safe place.
I believe we can improve the performance of the ecommerce site using blockchain as well. Let’s say if a site has 10,000 customers and a million products? Yes, this is something we need to handle smartly.
Conclusively, Blockchain is capable of transforming the ecommerce industry and helping to gain more trust from customers and regulators. As Blockchain is immutable, scalable, and distributed in nature, so every business wants to use it, however we really need to figure out whether or not blockchain is suitable for your business. I have seen huge uses of blockchain in health, education, art, banking, egovernance, supply chain management and many more.