Referred to as the “engine of the global economy,” blockchain technology is well on its way to becoming the de facto technology for financial transactions worldwide. With the global ecommerce market poised to reach $135 billion by 2023, the adoption of blockchain technology for ecommerce is not only necessary, it is iminent.
Hyperbole? Hardly. As we will see, distributed ledger technology lends itself perfectly to solving the problems the ecommerce industry faces, and fulfilling the promises it holds.
Blockchain Basics for Ecommerce
Ecommerce and blockchain are both all about transactions. Ecommerce depends on them, and blockchain enables them to be made faster, safer, and with more features than ever before.
Blockchain and Online Sales
Basically, a blockchain is a distributed (or shared) ledger that allows any digital asset to be securely stored, shared, and acted upon — manually or automatically. A more thorough explanation can be found here, but what’s important to understand now is this: blockchain technology is capable of handling virtually the entire user experience, including product searches and selection, payment processing, and post-sale customer care. And that’s just the beginning.
Kinds of Blockchains for Ecommerce
Blockchains are nothing more than special databases, coupled with very sophisticated software that connects them to the outside world. But all blockchains are not the same. For ecommerce, four types are generally used. Many blockchain ecommerce platforms are on the market, but these solutions represent what is available for online retailers:
Bitcoin
Bitcoin is the first cryptocurrency, and the reason blockchain technology was created. Bitcoin is now accepted by mainstream companies, including Microsoft, Tesla, and Shopify.com. An increasing number of online stores are accepting Bitcoin as payment. Adding Bitcoin to your payment options not only opens your store to the huge cryptocurrency market, but is also a great way to start using blockchain.
Ethereum
Similar to Bitcoin, Ethereum is a cryptocurrency framework, but with certain advantages and disadvantages over its older rival. Ethereum is not as widely accepted as bitcoins, but the Ethereum network can also host other forms of cryptocurrencies, and is the most popular platform for hosting smart contracts — more on those in a moment.
Ethereum is a viable platform for ecommerce sites that need a place to run their own full-fledged blockchains.
IBM
IBM does not offer its own cryptocurrency, but it does offer a robust platform suitable for large ecommerce blockchains.
Custom
The most flexible blockchain solutions are those custom-built for the ecommerce vendor. Custom blockchain solutions can do as much or as little as you need, and can be more cost-effective to implement in the long run than SaaS platforms.
Advantages of Blockchain in Ecommerce
Cyberthreats, stifling competition, and ever changing user expectations are daily realities for every online retailer. For all but the largest sellers, the battle can not only become one of profitability, but survival. Ecommerce sites that are still standing in the years ahead will be those that adapted to these challenges early on — like now.
Although there is no shortage of ecommerce solutions on the market, blockchain technology is uniquely suited to solve many of the ills facing e-retailers. Let’s look at three of the greatest advantages blockchain offers the ecommerce industry, before we move on to see how these can be applied in real applications.
Security
Distributed ledger technology (DLT) offers the highest level of security available for online database platforms. Although there have been instances where vulnerabilities in smart contact coding resulted in fraud, there have been no verified breaches of a major blockchain backbone framework.
Since one data breach can cost an online retailer millions in revenue, and loss of future market share, blockchain offers a level of security that retailers cannot afford to do without.
Integration With Business Processes
Blockchain is not limited to processing online payments. Part of the reason for the growth of DLT is its power to interface with new and existing systems. For the ecommerce vendor, this can mean tie-ins between the online store and a multitude of internal and external systems, processes, and partners.
By providing a shared ledger that serves the company, the online store, and external entities, a wealth of opportunities becomes available for the vendor that are only possible with blockchain.
Cost Reduction
Cost reduction has become a buzzword for selling just about everything from software to socks, but blockchain delivers on this promise.
The ability to combine payment processing, inventory management, product images and descriptions, with other business processes means fewer systems to maintain, less need for IT support staff, and fewer administrative tasks to be performed.
Maintaining even a small online store is a 24/7/365 job. The power of blockchain enables online vendors to spend more time running their business and less time running their online store.
Applications for Blockchain in Ecommerce
The blockchain ecommerce marketplace is becoming an economic ecosystem in its own right. As the online sales industry continues to both grow and adopt distributed ledger technology, the number of ways sellers can serve their customers — and their bottom line — will multiply. For now, here are just a few applications for blockchain technology in ecommerce.
Smart Contracts
Smart contracts represent the most popular add-on feature of any blockchain. Basically, a smart contract is a relatively small computer program that can be stored on a blockchain, and which can automate certain tasks according to preset rules.
The power if these special blocks of code makes it easy to automate nearly any ecommerce-related process, freeing up staff to market and grow the business.
Inventory Control
One application that can use smart contracts is inventory control. By incorporating smart contracts into the blockchain, not only can inventory items be decremented from inventory as with some standard shopping carts, but replacement stock can be ordered when pre-defined thresholds are reached. A host of other functions can be automated to ensure that an online store never runs out of product, and at the same time ensuring that excess inventory is not accumulated.
Product Description Database
Making product descriptions and related images available to customers is a time-consuming and costly part of running an online store. Blockchain technology allows this information to be efficiently shared between suppliers, your online store, and with content creators.
Loyalty Rewards Software
Again, thanks to the power and versatility of smart contracts, customer loyalty reward programs can be totally automated within a blockchain. Since records of every purchase are stored in the chain, it is easy to have a smart contract offer a discount, or to issue reward points to customers as they surpass certain spending thresholds.
Supply Chain Tracking
An online store can live or die depending on the reliability of its supply chain. Not only does the store operator need to know what stock is in the pipeline and when it will arrive, but it is also crucial for them to make sure vendors are supplying the exact products ordered. The problem of fraud in the supply chain can result in inferior products being delivered, or even those with safety-related issues.
By using the blockchain to track the supply chain, ecommerce companies can ensure that vendors do not substitute products without notice, and that transparency is maintained throughout the process.
How Ignite Can Help
Ecommerce is rapidly becoming the storefront for merchandisers the world over. Just as selling online is becoming the way goods are sold, blockchain technology is becoming the backbone of ecommerce. But to capitalize on all DLT offers, you need a an expert. Partnering with a qualified and experienced technology provider is the best way to compete in the global marketplace.
Ignite provides outsource development solutions for businesses around the world. With six R&D labs located across Europe, we are well-positioned to serve your development needs. With world-class developers specialising in blockchain technology, mobile apps, and ecommerce platforms, we are uniquely qualified to take your ecommerce business to the next level.
Why not contact us today for a no-cost consultation?