Blockchain in E-Commerce – A status quo in Q1 2018
Amazon.com Dec 1998 – Variety. Convenience. Competitive Pricing.
Let’s face it, e-Commerce pretty much revolutionized the manner in which society procures goods and services. Think back to the late 1990s. Our search for goods and services were no longer restricted by geographic location due to platforms like Amazon, Alibaba and Ebay, to name a few. While maneuvering these sites may have been a bit of a chore back then, the term shopping around had never held as much potential, and what’s more, we avoided the one thing shoppers hate – endless queues!
Statista.com reports that global online sales amounted to $2.3 trillion during 2017 alone with expectations of sales rising to $4.88 trillion in 2021. So here’s the question. If e-Commerce is performing as well as it has thus far, why fix something that’s not broke? To answer that, we must dive further into the murkier waters that comprise the world of online retail.
The Challenges facing e-Commerce
e-Commerce, while a huge industry in its own right, has seen a growing number of issues crop up over the years:
- Middlemen – traditional business models have always accounted for the inclusion of middlemen. A typical example would be transaction fees. Buyers don’t usually account for this as the figure is slapped on the sellers end. This amount is usually passed/included in the overall pricing of the item or service.
- Protection of consumer data – Microsoft, Google, Facebook, Sony, Disney. The list goes on and on, and while businesses try to protect data breaches against outside forces and third parties, some of them willingly used customer information for their own gain. Trust and privacy concerns signify businesses, large and small, need to invest in some form of data encryption.
- Stiff competition – We’ve come to an age where consumers have the option to choose from a variety of goods or services. Competition is great, and while it keeps innovation and creativity flowing, the downside is that if you don’t adapt, you basically die. Businesses need to invest in upgraded business models and smart technologies to ensure they’re not left behind.
- Complexities within the industry’s processes and operations – The daily running of a business can involve numerous departments. The larger the organization, the more one has to deal with on a daily basis. One of the key challenges companies face today is ensuring everything runs like clockwork.
Technology is a double-edged sword. One the one hand, it affords us endless opportunities to do more, be more, create more. On the other hand, issues concerning consumer privacy have taken the lead when it comes to hacking, fraud, phishing, and so on.
Enter the concept of Blockchain.
Blockchain – the next evolutionary phase for the e-Commerce industry
Though blockchain arrived on the scene around a decade ago, it’s taken the public a lengthy bit of time to understand the versatility it has presented us with. In layman’s terms, we’ve understood these to be open-sourced ledgers that accounts for every transaction, simplifies various processes through the implementation of smart contracts, and will basically disrupt every business as we know it. Easy, right?
The tech has been called disruptive, and while this term usually has negative connotations, disruptive, in this case, is good as it shows the disposing of outdated methods, inefficient processes and impractical plans we’ve been unwilling to let go of.
We’ve read theories and white papers, seen examples of the tech being instrumental in streamlining supply chain management, and found that it can be a useful tool that canl help save the planet e.g. ensuring eco-friendly palm oil does indeed come from verified sources, leaving Orangutans and other native creatures in peace.
We’ve managed to transform e-Commerce websites with a fancier frontend that allow us to believe the entire process has been converted to a more secure yet faster backend. What we fail to acknowledge is that with each technological upgrade we implement, we inadvertently create more vulnerabilities within the system at the same time. e-Commerce needed a secure foundation,and that’s precisely what blockchain will offer the industry through the following:
- Cost effective – The past 2 years has seen Bitcoin explode into the minds and hearts of anyone with access to daily news. As the original star of the cryptocurrency world, the cryptocurrency arena has been inundated with coins of all shapes and sizes. Bitcoin, Ripple, Dash, Monero, and so on are reshaping the way society views digital money in general. While Bitcoin may hold more value (in a traditional sense) than say Dash, Dash offers the added bonus of privacy and security when conducting transactions. But that’s just an added bonus. By transacting through the blockchain, buyers and sellers effectively remove any extraneous costs associated with a general marketplace. Zero fees just makes for a happier customer, don’t you think?
- A trustless and transparent ecosystem with increased efficiency – VeChain is a great example of a scalable and decentralized business ecosystem that allow users access to data. Smart contracts regulate various areas in supply chain management. This allows for smoother integration of of various departments with minimal interference. One must also note that trust plays a major role in building up a business and its brand. One of the ways in establishing your business as a trustworthy entity boils down to transparency. The blockchain ledger is one way of showing an honest and upfront modus operandi. Unlike traditional accounting, the public ledger is there for all to see and cannot be modified.
- Secure data storage – Data security has become a sought-after trade. Whether the information is stored locally or uploaded to the ‘cloud’ most systems contain some element of vulnerability, which can be exposed at any time. The beauty of a decentralized system is the spread of information over numerous networks. Walton RFID chips are a prime example of technology capable of transmitting essential information at every level of manufacturing, distribution and through to retail side of the business. This chip allows various bits of information to be stored. Information can be held publicly or privately depending on chip. This information is then written to the blockchain which allows stakeholders to access it should they need to.
As of March 1, 2018, Alibaba’s T-Mall platform adopted blockchain technology. As one of the largest online retailer with B2B, B2C, and C2C e-services, Alibaba’s revenue for 2017 came in at $US 17.4 billion. Alibaba’s adoption will streamline the company’s logistics process when it comes to customs, inspections, verification etc., resulting in greater efficiency and speed all round. They’re also looking at integrating blockchain in industries such as those of food and healthcare where top notch quality control is a must.
Amazon Web Services (AWS) has partnered up with several companies that have implemented blockchain technology. These include 2 of the big four auditing firms, Deloitte and PwC, Intel, T-Mobile and others. Services include Healthcare, Security and Compliance, Financial Services and Supply Chain Management.
Blockchain will effectively ensure the e-Commerce industry undergoes a radical change through:
- Airtight security
- Lower/zero transaction fees
- Elimination of fake products
- Speed and efficiency on every level
The phrase the future is now has taken on new meaning. Blockchain offers benefits to both consumers and retailers alike. So far, it looks like a winning combination that should eliminate the challenges the e-Commerce industry currently faces. Watch this space!