The exchange of goods and services among humans has changed in recent years. The evolution of e-commerce started in 1969 with Compuserve, the first e-commerce company created by John R. Goltz and Jeffrey Wilkins, the industry started experiencing growth with many other creative apps being built to advance the means of exchange. Products like Amazon, eBay, Paypal, and Alibaba, came into the scene with diverse strategies to ease the e-commerce industry. Also, in 2011, Facebook now Meta made a significant step in incorporating sponsored posts, which opened the realm of advertisement for sellers on instant messaging apps.
The e-commerce industry through web2 technology has witnessed an advantageous shift from traditional means. Through the use of Shopify, Instagram, Facebook, Aliexpress, Amazon, e.t.c. marketers can easily connect with their potential audience and use the provided means of payments by these web2 products.
But, the iteration of the new internet - web3.0, is refining how e-commerce is being done.
What is blockchain in e-commerce?
A blockchain e-commerce system operates using a decentralized economy, where power is taken from a centralized authority thereby enhancing the p2p (peer-to-peer) mode of operation.
In web3, the blockchain is the mother tool that powers all activities to be carried out. It is a system where data is designed to be tamper-proof that is, cannot be illegally altered, it assures users of transparency and genuine data recorded.
E-commerce is a daily growing industry, with over 12 - 24 million e-commerce websites, the industry is forecasted to grow to $6 trillion by 2024. Based on growth, the industry is currently experiencing a whole lot of challenges ranging from trust failure, bad user experiences, failure of payment gateways, order limitations, breach of data, scams, e.t.c.
These challenges faced by the web2 e-commerce system are limitations to some good number of people who have directly or indirectly withdrawn from the means of exchange.
Meanwhile, the blockchain has provided a structural means of overcoming these challenges to further the growth of the e-commerce world. Here, the use of smart contracts has eliminated the centralized use of power, buyers and sellers can now enjoy the ease of transaction using a swift payment system that is also decentralized and highly preferred by the traditional system.
The role of blockchain in e-commerce
Blockchain's use in e-commerce has improved the system by removing barriers created by native web2 platforms. Below, we shall be discussing some of the roles blockchain is playing in the e-commerce system.
Increased security of data:
One of the biggest security breaches in the e-commerce world was that of 2014 when 140 million eBay users got their data stolen by hackers. The data stolen has a long list of effects on both the customer and the platform, but the use of the blockchain assures users of tamper-proof data safe. The blockchain uses a distributed ledger technology that confirms data are evenly distributed across different networks serving as nodes.
Effective mode of payment
In the web2 system of e-commerce, the use of dedicated platforms as payment gateways or traditional banks that issue smart cards for payments do have issues and the majority of the time does not favor the customer. This also has led to why some people have withdrawn their takes on buying goods and services online. The use of blockchain technology seamlessly incorporates cryptocurrencies as a means of payment. Through cryptocurrencies, traditional challenges with online and banking payment systems are solved efficiently.
Transparency and authenticity
The blockchain uses a public ledger where everyone or anyone can track the flow of data. In the e-commerce system, fraud from both sides of the platform can be eliminated as blockchain provides innovative tools whereby each item can be publicly tracked thereby validating the authenticity and enhancing transparency in the business model.
Faster order execution
To improve customer experience and satisfaction, an improvised way of how orders are taken and executed is needed in the e-commerce industry. Most blockchain technology promises a speed that rolls in thousands per second. For example, the Elrond blockchain is able to perform 15,000 TPS. With technology like this, a swift process of order execution can be taken all around the globe.
Blockchain in e-commerce connects consumers through the product they relate with. The use of NFTs in the blockchain is converting audiences into communities. It redefines how buyers stay in contact and relevance with the sellers.
Blockchain e-commerce vs centralized e-commerce
The centralized e-commerce platform will experience revolution through the use of the blockchain in the few years to come. There are more opportunities in using blockchain-backed e-commerce rather than e-commerce.
Buyers will enjoy the benefit of the low-cost transaction fees the blockchain e-commerce platform provides, blockchain like Elrond charges $0.001 as transaction fees as compared to the local payment system.
Also, blockchain uses smart contracts in its mode of operation thereby eliminating the need for third parties or consistent human interference. Smart contracts make the platform simple and easier to use for both buyers and sellers.
As compared to the latter, a blockchain-based e-commerce platform protects data through cryptography and influences a transparent report of data across all nodes.
The technological world is changing as a whole and very soon, the blockchain will catch up with many industries. While businesses are positioning ahead of what is to come in web3 e-commerce, understanding how to effectively use the blockchain to influence your business is a necessity. Combased is positioned as a central hub for web3 development services, with a focus on the easier transition of web2-based e-commerce platforms into web3, combased believes smaller businesses can also tap into the opportunities that NFTs bring to bigger brands. Services provided by combased include the launch of NFT collections, integration of NFTs in e-commerce, blockchain development, smart contracts development, custom dApp development, e.t.c. To build a successful web3 e-commerce product, you can book a service with them here.