Trade and commerce went online with the internet becoming cheap and easily accessible. Sellers and buyers flocked online to execute trades of everything that was earlier only available in brick and mortar stores. It created a giant network of online stores that we today collectively call the eCommerce marketplace.
Over time, the eCommerce marketplace transitioned from choppy buying, selling, payment, and delivery processes to extremely efficient ones. And yet, there lurk a bunch of shortcomings and threats that call for the implementation of a distributed ledger technology (DLT).
Let’s see how blockchain — a DLT — can make eCommerce more efficient and safe.
- Traceability for increased credibility
Ecommerce stores have become a common hub for many companies and suppliers to fake their product’s authenticity and sell products. Blockchain makes the data related to products openly available to all. Thus, its integration into eCommerce supply chains can help buyers easily trace the products back to their origin and authenticate their credibility.
- Reducing chargeback frauds
Credit card payments on eCommerce stores are an easy way for fraudsters to get a refund even after they’ve received the product. This has long been a concern for merchants selling online. With the use of blockchain-based payments, transactions are truly irreversible, meaning, fraudsters will not be able to automatically receive refunds for orders that do not have any issues.
- Lower prices, higher profits
As contradictory as it sounds, it is true. At present, eCommerce relies on a number of middlemen who use expensive and unautomated supply chain processes. This forces merchants to increase the price of their products to attain a bare minimum from the after paying the high fees. A blockchain can considerably reduce the need for middlemen as well as streamline supply chain processes. This can reduce the cost of the process and lower fees, resulting in cheaper products as well as higher profits for merchants.
- Better payment option
Cryptocurrencies on the blockchain are borderless money and can be used from anywhere in the world to make payments online. They also are a great means for cheaper and faster transactions and have no upper or lower limit for the transaction amount. From the privacy perspective, cryptos allow anonymous transactions, providing users with more privacy from companies or government entities tracking their financial activities.
There’s no doubt that blockchain can be highly beneficial to the eCommerce industry but there are also disadvantages or rather hurdles that need attention.
- Price volatility
With the integration of blockchain, it is highly likely that eCommerce marketplaces will also offer the ability to make payments in cryptocurrencies. But at present, the crypto markets are highly volatile and the value of a cryptocurrency may rise or fall by as much as 10% to 15% within a few hours. However, there are also cryptocurrencies called stablecoins whose prices maintain a 1:1 ratio with their fiat counterparts. While most users may not want to use other traditional cryptos, stablecoins can be the short to mid-term solution for this issue.
- Operational complexity
Blockchain, like most other technologies, is not all that attractive if presented in its raw state to a common person or business. For a widescale blockchain adoption by eCommerce marketplaces, merchants, and users, blockchain companies must ensure that they create blockchain infrastructure that reduces integration and operational complexity.
The excitement, investment, and innovation around blockchain technology are increasing by the day. By offering transparency, traceability, security, and speed, blockchain technology has already shown tremendous potential for the eCommerce industry. With time, there’s a high chance that we find more competitive advantages that it can offer to the online marketplaces.