The distributed ledger technology known as blockchain has been the subject of numerous academic studies and conferences on information technology and business. This piece will undoubtedly add to the wealth of information already available about the advantages of blockchain technology for online commerce.
However, at the time of writing this essay (mid-year 2022), there is essentially nothing online in the way of particular case studies of blockchain use in ecommerce. Why? In what ways is blockchain technology holding back online retail? Let’s take a look at the circumstances.
eCommerce Counterfeit Problems Are More About Trust Than Technology
Property transactions have been recorded in one central location for thousands of years. Discovering the previous owners of a historic structure by consulting property records from the Middle Ages is possible. You wouldn’t even consider questioning the legitimacy of the listed owners. You have faith in the information contained in these oldÂ
registers.
But why do we need a different trust mechanism, like blockchain technology, for documenting transactions in the current ecommerce sector than for government or private registries? It boils down to distrust and the reality that most of our information is now stored electronically in databases. If there are such business owners who are looking for developing such kind of a reliable decentralized mechanism, there is a range of blockchain ecommerce platform development companies that can help them out.Whether or not this is the case, the common belief is that this information may be easily manipulated with the help of hackers or even by bribing staff.
In supply networks, the lack of trust is very pervasive. Before making a purchase, consumers seek assurance that the item they receive is genuine. There is, in reality, an undeniable issue with consumers’ ability to have faith in the integrity of products purchased online. Many shoppers have had at least one experience in which an item they purchased from an internet store was a knockoff.
This is a unique feature of online shopping, as in a traditional store, the customer may see the product up close and make an informed decision about its quality. Shoe connoisseurs, for instance, can spot a fake because of its low-quality materials and shoddy construction. You won’t buy something whose authenticity is in question if you have any reservations about it after giving it a close inspection.
Manufacturer-implemented and third-party anti-counterfeiting solutions, including holograms, watermarks, specific reliefs, and even radio-frequency identification tags (RFID), existed before the advent of blockchain. In addition to labeling and maintaining traceability of items, QR codes also make product information readily available to consumers, making them a useful tool in the battle against counterfeiting.
Does using blockchain to track products and prevent counterfeiting appeal to you more than the alternatives? Let’s weigh the costs and benefits of the possible solutions. After all, preventing counterfeiting should not be prioritized over increasing profits, sales, and happy customers. If the current anti-theft measures are adequate, there may not be a financial incentive to switch to blockchain technology.
As a result, you need to ensure your blockchain implementation is tailor-made for your company.
Potential Benefits of Blockchain in eCommerce
In the B2C, B2B, C2C, and market business models, blockchain technology can facilitate the development of “trustless” systems. Each participant in a trustless system has faith that the other participants will uphold their end of the bargain without any intervention from an outside party.
The distributed ledger technology underpinning blockchain permits the creation of systems that can function independently of any central authority. As a result, companies may establish a reliable production chain across the board. Further, thanks to the blockchain’s centralized data access, immutable data like orders, transactions, and payments may be exchanged between many modules. Data and financial transactions must be easily retrievable and auditable in today’s company environment.
There are several advantages for merchants and customers when blockchain technology is used in online transactions. Supply chain management, fraud, and transparency are all enhanced by blockchain’s use in business. Using blockchain technology, consumers may shop and track packages with greater safety and efficiency.
Since everything is open, it’s harder for someone to pull any scam or fraud.
Blockchain technology can potentially greatly improve many types of businesses, including marketplaces. Blockchain can radically alter how businesses function in the marketplace model if deployed and used by all parties engaged in a transaction.
Blockchain has the potential to impact the current market infrastructure significantly. What are some of blockchain’s advantages for organizations using this structure? What if we look more closely?
Improves supply chain management. Â
Blockchain technology allows companies to keep track of their goods and parts from when they are manufactured to when they are delivered. As a result, problems, like snags in production or quality control, can be spotted promptly and addressed. In addition, paper records, which might need to be found or stolen, are used less frequently with blockchain-based supply chain management.
Reduces fraudulent activity.Â
Blockchain technology offers an immutable, auditable ledger for recording financial transactions. This facilitates the verification of clientele and vendor credentials and the monitoring of product and monetary transactions. This aids in the prevention of chargebacks and the sale of fake items.
Increases transparency.Â
Systems built on the blockchain are open and accessible. As a result, you may be more open and honest when communicating with your clients and vendors. Furthermore, blockchain generates a transparent log of customer ratings and reviews. This is a great chance for companies to demonstrate their dedication to customer satisfaction and earn the trust of their clientele.
Provides data traceability.Â
Blockchain technology also allows for the auditability of data. Any data saved on the blockchain can have its provenance traced back through the various transactions recorded on the public ledger. With this information, companies may check that their products come from sustainable and ethical sources, among other applications in supply chain management.
Examples of Blockchain Implementation in eCommerce
If you google the headline above, you’ll get articles discussing Amazon’s patent application for a distributed ledger system (DLT) called Authenticator, which is intended to track purchases of consumer items. Notably, Amazon submitted the patent application in 2017, but the publication didn’t occur until 2020. This was done before blockchain technology’s widespread use in business to get an advantage over rivals.
Amazon’s patent (US 20200242547) is available for public inspection at the United States Patent and Trademark Office. You won’t want to read the entire patent because it’s in such dense bureaucratic language.
Amazon’s patent, taken as a whole, outlines a business platform for mapping worldwide supply chains. The use of this mapping allows for the monitoring of production and distribution processes in real-time. Manufacturers, shippers, distributors, retailers, and consumers can all sign up with the certification authority through the platform and integrate their existing or new commodity processing systems with a set of application programming interfaces (APIs) that consume and store various supply chain events (such as test reports and certificates) as products make their way through the supply chain.
The certification authority can verify supply chain node events and create a trustworthy distributed ledger. Permission restrictions can be used to manage who has access to the distributed ledger, protecting the privacy of supply chain information.
