One of the greatest renditions of technological advancements can be seen in the form of blockchain technology. It is a revolutionary step to decentralize control and eliminate the interference of middlemen and third-party organizations. Blockchain technology is often used in terms of Bitcoin transactions.
However, with the increasing popularity of the system, it is being used beyond cryptocurrency management as well. In recent years, blockchain technology has affected the e-commerce industry to a great extent.
What is Blockchain Technology?
Blockchain technology is a decentralized database that can be accessed by anyone using an internet connection from anywhere in the world at any given point in time. It consists of data in the form of blocks. The blocks are automatically added, verified, and updated chronologically forming a chain in this database. It is a digital ledger that shows real-time updates to everyone.
Blockchain comes with unique advantages which make this technology stand apart. Some of the exceptional characteristics of blockchain include the following:
Blockchain ensures the transparency of information at all times. Every user can view the last updates on the blocks without any interruption or tampering.
Blockchain includes cryptographic keys to add the data in the blocks. These keys are known as digital signatures or hash. A hash secures the block in the chain and prevents any data alteration to the previously added blocks in the future.
The technology is decentralized and hence allows its users to connect using a peer-to-peer network.
Obstruction of data in a blockchain requires miners to solve a complicated mathematical equation. The mining process demands a huge amount of capital and labor investment. Hence, it is nearly impossible to hack blockchain technology.
Since its inception, blockchain technology has been the foundation on which Bitcoin transactions stand strong. With the other sectors understanding the advantages of using blockchain technology, it is now becoming a necessary adoption to revolutionize their operations. E-Commerce is one of the many sectors that is significantly impacted by blockchain technology.
E-Commerce Industry and its Current Challenges
The e-commerce industry is one of the most competitive players in the global economy. Introduced in the 1960s, e-commerce brought a revolutionary way by creating marketplaces online using electronic data. It enables buyers and sellers to engage in interaction and conduct business transactions online. The e-commerce industry has always seen steady growth with global markets predicting the industry to grow up to USD 599.2 billion by 2024.
The onset of the Covid-19 pandemic has brought a huge increase in the sales of the e-commerce industry. With huge profits, comes huge challenges. Thus, the current e-commerce industry faces intense competition amongst its players. Every player in the industry competes to gain the maximum market share by applying the latest business practices. Some of the other challenges faced by the e-commerce industry in the present days are:
- Existence of middlemen to complete business transactions.
- Protecting the hefty consumer data from hacking.
- Complexity and huge costs in managing the supply chains and logistics.
- Keeping in mind the different issues prevalent in the e-commerce industry, blockchain technology has come to its rescue as a smart solution.
Impact of Blockchain on E-Commerce
Blockchain comes with multiple forums for the e-commerce industry to upgrade its operations. Some of the major impacts that blockchain technology has on the e-commerce industry are:
Showcasing Credible Reviews
The e-commerce industry stands on the online reviews by its customers. Online reviews are always taken to be believable by the general customers. However, there is no way to verify if the positive reviews on a company’s profile were posted by a legitimate customer or the seller himself.
Blockchain ensures verification of all online reviews and eliminates any comment that is tampered with. This creates integrity on the business front and builds trust amongst the consumers.
Security of Data
Security is another name for blockchain. It is commonly known as a Distributed Ledger Technology (DLT) that is difficult to hack. Data on a blockchain network is safe from any hacking, tampering, and alteration by third parties.
This level of security helps the e-commerce industry safeguard the personal and financial information of its customers and save huge amounts of costs.
Loyalty Reward Programs
Blockchain can capture the buying history and preferences of consumers securely on its database. This enables the customers to receive personalized offers from the companies.
Customers benefit from such loyalty reward programs that are automatically generated within the database. Blockchain can also issue rewards and discount offers to the customers if they cross their spending threshold on certain products using this data.
Transparency in Supply Chain Tracking
A reliable supply chain is one of the biggest assets of an e-commerce firm. Ideally, companies incur huge costs to track the inventory in stock, reorder levels, and orders from their suppliers.
Blockchain can ensure smooth tracking of this supply chain as transparency is a key factor of this technology. Hence, suppliers cannot change the terms that were initially agreed upon as the technology can identify any such changes made.
Payment made easy
Traditional e-commerce operations include several middlemen and processing fees which makes it costly for the customers to shop. Using blockchain, e-commerce can introduce various offers on digital payments through cryptocurrency.
This can eliminate the traditional methods of payment including banknotes and cash. Moreover, using blockchain can enable the removal of all intermediaries in the payment process, thus making it simpler.
Blockchain is a secure decentralized system ensuring real-time verification of data. It is a transformational step to streamline the work processes and bring efficiency to the system.
Using blockchain can help the e-commerce industry keep a better track of their day-to-day transactions, production levels, employees, latest market trends, and emerging competitions. This can ensure the smooth functioning of the industry in this ever-changing economy.
Blockchain technology can bring a new dimension to the e-commerce industry and change its look completely. While the global market is getting competitive every day, the e-commerce industry is expected to face drastic growth shortly.
Staying relevant to the market and its consumers with the latest technology like blockchain is the only way to achieve excellence in the rat race.