Explained: How blockchain is shaping the future of e-commerce
Would you have guessed there would be a time when blockchain technology would play a critical role in almost every industry? We presume ‘no’ for the majority. However, as strange as it may seem, the widespread adoption of this new technology is clearly unavoidable. In this blog post, we will trail how blockchain is shaping the future of e-commerce.
Just before we get right into the conversation, let’s take a look at the current landscape of e-commerce around the world. Let’s begin by defining e-commerce.
What’s e-commerce? Otherwise known as electronic commerce, it is generally described as the buying and selling of service via the internet. E-commerce is further described by Investopedia, as a business model that lets firms and individuals buy and sell things over the internet.
In most cases, this business model operates across the four major market segments including Business to Business (B2B); Business to Consumer (B2C); Consumer to Consumer (C2C), and; Consumer to Business (C2B). That said, what’s the current state of e-commerce around the world?
Understanding the current state of e-commerce
The e-commerce industry is without a doubt one of the fastest-growing in recent times, thanks to the present COVID-19-induced pandemic, which has raised demand in the market. Not only that, but over the last few years, the industry has seen a steady compound growth rate, which is likely to continue in the next years.
While China is clearly the leader in e-commerce, with sales of over $1.343 billion recorded in 2020, the global e-commerce business has grown significantly.
In comparison, the year 2020 saw a total of $4.891 billion worth of retail e-commerce sales, up 46 percent from that of 2019 which stood at $3.354 billion. Interestingly, Statista predicts that online retail will continue to increase in the foreseeable future, with peak annual sales of $6.388 billion projected for 2024.
Furthermore, the global e-commerce sector was predicted to cross two trillion dollars in 2020, according to Statista's e-commerce report for 2021. However, while over two billion people bought goods or services online in 2020, Statista claimed that global e-retail sales exceeded 4.2 trillion dollars in the same year.
The global e-commerce economy is likely to develop more in the future years, thanks to a shift in purchasing power from the United States and Europe to China and Southeast Asia, among other places.
Likewise, the adoption of blockchain technology in the space is projected to have a significant impact on the future of e-commerce. How? You may ask. Well, relax, you are just about to find out yourself.
How blockchain is shaping the future of e-commerce
To say that blockchain and e-commerce are two formidable forces on their own is an understatement; when combined, the possibilities are virtually endless, as demonstrated by Reddocoin, a firm that leverages blockchain to provide complete automation in the dropshipping business.
With blockchain's increasing application across various industries, it is undeniably evident that the revolutionary technology is here to stay, and there has never been a better opportunity to experience a super-efficient business model in online retail than now.
While the application of blockchain technology in the e-commerce industry is extensive due to the numerous procedures involved, some of the more notable applications cuts across cross-border payment, inventory, product databases, and dropshipping.
While these four components make up the majority of the online retail business model, they are positioned to shape the future of e-commerce where blockchain technology is being applied.
Notably, blockchain, just like anywhere else it has been applied, helps to cut down operational costs drastically. For example, in the e-commerce business model, the use of blockchain reduces the cost of doing business because enterprises do not need to support a huge IT team, and transaction fees levied by banks can also be eliminated, resulting in more profits and happier customers.
Other notable ways by which blockchain is shaping the future of the e-commerce industry include the following;
Secure payment model; One of the challenges that have plagued the e-commerce industry over the years is with respect to payment, both on the path of the business and customers. Apart from notable issues like chargeback frauds, most online retail businesses make use of third-party payment gateway which also comes with its own risk, and even more stressful, brings about unnecessary interference, especially for such things as requesting refunds.
Blockchain technology, on the other hand, allows for irreversible transactions, and eCommerce businesses can use it to prevent false chargebacks. Not only that, but the blockchain project eliminates the need for a third-party intermediary, allowing for direct transactions between buyer and seller. Furthermore, because blockchain is a decentralized system, it provides payment options with a high level of security and transparency.
Transparency in order fulfillment journey; Although there has been a great improvement over the years when it comes to transparency in the e-commerce order fulfillment journey. However, the majority of online businesses provide limited details on the order fulfillment journey. In most cases, customers only gets to see from where the journey to where it ends.
When blockchain is used, an e-commerce platform may take their customers on a transparent end-to-end journey for each and every order. For example, a new chain will be created for each step of the transaction, providing complete visibility into the actions taken by the customers. Guess the best part of this? The entire process is automated.
Lower transactional cost; One thing that blockchain conveniently does is to cut down operational costs. Here, both the company and consumer enjoy great benefits as there is no third-party involvement.
More so, where e-commerce platforms normally charge as high as 2-3% of the total purchase made for transaction fee due to the payment gateway solution, blockchain is able to cut this cost as it enables consumers to make a direct payment. Here, there is extra coin to buy more, leading to a win-win situation for both parties involved.
Overall secure platform; Finally, blockchain technology offers advanced security in all of its forms, including data protection and enhanced security for users' personal data, among other things. Because blockchain is a decentralized system, the odds of being hacked are extremely low, and in some situations, non-existent.
Reddocoin, which not only ensures quick and efficient drop shipment for B2Bs but also leverages the improved security it provides among other services, is one platform that has been able to embrace many of these improvements in today's technology.