How Blockchain Will Revolutionise Retail & E-Commerce
Research shows that the global e-commerce market will be worth $24.3 trillion by 2025 driven by rising mobile and internet penetration and technological advancements. I was part of a panel to discuss the topic of “Blockchain Powered e-Commerce” sponsored by Arcadier, where experts from retail, loyalty and payments backgrounds spoke about the potential of blockchain technology and its immense impact for businesses and customers in the space.
The Removal of the “Middle-Men”
The fundamental transparency and security that blockchain technology offers will transform how businesses do e-commerce. For those who act as a middleman there is a risk that blockchain will make them obsolete as businesses will be interacting directly with their consumers.
Essentially, these peer-to-peer connections give the power back to the users. Imagine, for example, an online shopper who prefers not to pay until he receives his package in the mail. Only when he confirms the receipt is the money transferred to the seller. All this is done automatically, through coded instructions (smart contracts) that replace the middlemen, thus cutting costs while increasing transparency and trustworthiness.
Therefore, it is imperative that these intermediaries are continually assessing what value they add to their customer’s interactions.
Benefits for Businesses
Transparency & Authenticity
For businesses within supply chain or provenance industries, blockchain will provide a means to have data validated on its network, and the transparency will increase customer trust and confidence. Businesses will be able to access information on the movement of products and be able to track items as well as identify and gather accurate information when things go awry. Industries which benefit from this blockchain technology include food manufacturers and luxury goods where the source of the product has high importance for customers.
With the transparency of all recorded data, there is no scope to commit fraud. Currently businesses can be left out of pocket if customers falsely file a dispute with their credit card issuer and often the issuer sides with the customer. With blockchain technology, retailers can regain control with evidence to prove if the refund was legitimate or fraudulent.
The benefit of blockchain being a decentralised ledger means that customer data is less likely to be victims of a cyber-attack. Additionally, businesses utilising blockchain will be able to exchange money faster, more efficiently and more securely. This is already happening in the financial space but the potential for it to take place in other industries is enormous.
Benefits for Customers
Similarly for customers, blockchain offers numerous benefits for security, transparency and greater control over their personal data.
Customers currently have all their personal data stored individually by companies with minimal control over who gains access to it. Utilising blockchain technology, customers have the power to share their shopping history or other data with retailers safely as the information is captured and stored on the blockchain. This gives customers control over which retailers have access to their information and therefore businesses will have to compete for customer loyalty. Customers and businesses will be able to verify purchases as it is stored on the blockchain and other documentation such as warranties can also be stored and easily managed.
Blockchain technology will be able to verify online reviews of businesses thereby giving the customer power over their decision making and purchasing process. Currently, over 93% of consumers rely on online reviews to make a purchasing decision, and unfortunately not all reviews and review sites are legitimate. With blockchain technology reviews will be transparent and verifiable.
An Alternative Way To Pay
Customers will be able to make payment and accept payment directly with businesses without intermediaries using blockchain technology. This cuts down the payments process, which saves time and eliminates intermediary fees. With the rise of cryptocurrencies, there are additional methods of payments to use when choosing how to pay for next purchase.
The Consequences of Blockchain Technology for Retail and E-commerce
Any business that serves as a middleman is at risk of being made obsolete by blockchain. This is especially true for companies that cannot show how their service adds value. In a blockchain world, all companies that provide intermediary services will need to assess their level of added value to their customers’ interactions.
For businesses, the benefits of transparency, authenticity and eliminating fraudulent will be great for their bottom line, and for customers, with full data ownership, customers can now easily take all their personal data to another platform as they choose.
This is a huge shift to the current retail and e-commerce landscape, and businesses that moves fastest to this new shift will become market leaders in this space with first move advantage.
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