Blockchain was initially introduced as electronic cash and first used to purchase pizza, so it was only a matter of time before such innovative tech would start transforming the ecommerce retail industry. Read on to find out the benefits of implementing blockchain technology in your business.
The State of Blockchain and Ecommerce
As businesses jumped into digitalization during pandemics to respond to the new normal, the popularity of both ecommerce and bitcoin grew. According to Statista, retail e-commerce sales were 4.89 trillion US dollars in 2021. Meanwhile, global blockchain spending reached 6.6 billion dollars in the same year.
What happens when these two enormous industries collide? And how can ecommerce benefit from what blockchain technology has to offer? Here are seven ways blockchain can provide benefits for your ecommerce product.
Introduce Alternative Payment Method
Cryptocurrencies are digital or virtual payment systems built on blockchain, secured by cryptography, and enabled by a peer-to-peer ecosystem. They serve as alternatives to conventional currencies and have become a more convenient, secure, decentralized, and faster payment method. Anyone can exchange crypto money using digital wallets or exchanges.
Although Bitcoin is the first association coming up to the mind, there are hundreds of cryptocurrencies. And surprisingly, Bitcoin is not even the most widely used.
Here are the top 10 most popular cryptocurrencies globally based on 24h volume on April 5, 2022 (in millions).
Cryptocurrencies are incredibly enticing for users because transactions are not monitored centrally; therefore, only people involved in the transaction can control it. There is no dependence on the bank or other authorities, so you can establish an account and perform transactions right from your home without a bureaucratic burden. Also, any purchase can occur anonymously, and there is less possibility of fraud because crypto transactions are difficult to counterfeit.
Ecommerce can benefit from cryptocurrency adoption in the following ways:
- Reaching broader customer markets
- Enabling lower transaction fees
- Improving user experience
- Reducing fraudulent chargebacks
- Ensuring anonymity
Strengthen Security and Privacy
In 2021, 51% of merchants reported security threats as the most significant challenge they faced during Black Friday and Cyber Monday. But even during not so shopping-active days, ecommerce retailers are striving to ensure the safety of both their customers and their own business. By introducing blockchain-powered transactions, shops can stop worrying about their customers’ and their own anonymity, security, and privacy protection.
For instance, with blockchain, the reverse of a transaction without the consent of both parties is almost impossible. So no party can scam the other. Also, cryptocurrency transactions involve an instantaneous exchange of money between parties, and as a result, fraudulent chargebacks or returns are drastically reduced.
Improve Supply Chain Traceability and Management
According to ISO 9001:2000, traceability means being able to track a shop entity’s entire supply chain history, details, or location. In large ecommerce shops with many customers and large amounts of orders and payments, tracing becomes particularly challenging. Messy, untraceable data may disrupt supply chain management, which in turn will hinder the delivery of products, which will, in turn, cause you to lose customers due to a bad experience.
Traceability issues can be resolved with blockchain technology. Blocks in a blockchain contain the data transaction’s timestamp and all the participant info involved. Such structure enables an audit trail that shows each step an asset has taken in its journey through the supply chain.
By documenting updates in such an organized thread, supply chain networks can create a single shared ledger, providing complete data visibility without the mediators, just with blockchain code.
Success case: Walmart tracked the provenance of food within its supply chain using blockchain in 2.2 seconds instead of 7 days by using traditional methods. In this sense, they enabled suppliers to meet dynamic customer demands and improve food safety.
Smart Contracts for Selling or Purchasing Deals
Contracts are typically signed on paper. Each party receives a copy, and for each manuscript to be notarized and approved, an external intermediary needs to serve as the contract enabler.
With a smart contract, blockchain algorithms serve as this enabler. As the name implies, smart contracts are applications that execute automatically when the agreement terms between buyer and seller are met. They are written directly into the blockchain code, which controls their execution, performs transactions, and responds to violation if it occurs.
As a result, smart contracts are less prone to unauthorized changes, human error, and conflict of interests. In B2B ecommerce, it can help secure deals so that large companies trade large quantities of products with each other safely and without wasting money and time on third entities.
Perhaps, smart contracts are still not widely used for small one-time purchases. Still, they can significantly save time and spare nerves for large B2B deals, wholesale procurements, and large purchases (like that of a car, expensive equipment, or property).
Use NFT for Ecommerce Marketing and Loyal Programs
NFTs are a form of non-interchangeable data stored in a digital ledger and can be marketed and traded. Basically, NFT tokens are digital representations of your rights to some digital content, such as photos, videos, and audio recordings. And they are quite a hit right now.
Although NFTs are widely used right now to sell art or illustrations, ecommerce businesses can also find an application of this innovation to market their goods and services. For instance, they can create collectible NFTs as part of their marketing campaigns, saying that “if you purchase my product A you will get an NFT collection A1. And if you collect all NFTs we have created, you will get product H as a gift”.
Or for instance, you can tokenize all of your products and create shared marketing campaigns with NFT businesses. Adidas, for example, released a collection titled ‘Into the Metaverse’ in collaboration with Bored Ape Yacht Club – arguably the most prestigious and exclusive brand in the Internet space. Users could purchase NFT of the official Adidas x BAYC piece of art. Alongside, Adidas created branded hoodies and tracksuits for the owners.
This way, NFTs create a sense of interactivity and trendiness, attracting user attention to your products and services.
Enable Verified Reviews
Feedback is crucial in deciding if an online shop gets new customers. The sincerity and authenticity of reviews are vital for businesses to attract potential buyers and for customers to make high-quality purchases. And blockchain has been proven in recent times to verify whether reviews are genuine or fake.
The blockchain allows for creating a trace of a reviewer, which then cannot be altered. This trace allows Blockchain to prove whether reviewers purchased from the site before submitting their reviews and check if the review was altered.
Similarly, suppose reviews are stored on Blockchain. In that case, they won’t be able to be edited without notice, and they won’t be easy to remove, so businesses won’t have the option of leaving positive reviews only.
Enhance User Trust With Blockchain Tracking
Blockchain is a shared record of data maintained by an anonymous network of computers rather than a single central authority. So blockchain users know that no one will change the logs once they are created because the change will have to be implemented on all computers from a network which is… well, challenging.
This can be used to reinforce customers’ trust in the products or services of an ecommerce business. For example, Carrefour introduced blockchain tracking to prove to its audience that its food products meet standards for ethics and general safety. Such a system allowed customers to see every detail about the product – for instance, when it was harvested or packed. This way, users could be sure that what they eat is fresh, safe, and natural.
Shopify and Bigcommerce allow their users to accept cryptocurrency payment methods in their admin panels, and Shopify has even created a beta program dedicated to selling NFTs. Microsoft, Home Depot, Whole Foods, and Tesla are among the major online retailers accepting cryptocurrencies within their websites.
The world is actively using blockchain to be ahead of the competition and entice its users with an innovative, faster, and better way to pay and exchange info. If you are not afraid of innovation and change – implement blockchain solutions into your ecommerce shop.
SapientPro team has extensive experience working with Ethereum cryptocurrency, smart contracts, and NFT. If you would like to discuss what we can offer you – please, contact us!