How Blockchain Is Changing the Rules of the Game in Online Retail Online Shopping Ripe for Change.
A majority of online store customers have at least once had the unpleasant experience of a seller messing up their order, shipping it in unusable condition, or never shipping an item already paid for.
Every online retailer has endless stories of profit lost to customers acting in bad faith. Both sides want to derive benefit from the transaction, but they both end up losing: buyers lose trust in the store, while retailers raise prices to cover their losses.
Online shopping brought about a true revolution: now someone living in the US can order an item from China in just a few minutes, without leaving their home. E-commerce is one of the most rapidly growing areas, its development accelerating every day. In 2016, the global online shopping industry was worth over $1.5 trillion, and may reach $4.5 trillion by 2021.
According to the research companies LexisNexis and Javelin Strategy & Research, last year the American market in the online shopping industry (the second largest in the world) was worth $460 billion. Suppliers lost about 8%, or almost $37 billion, of their revenues to fraudulent activity.
The most common types of fraud are chargebacks (where the customer demands a refund) and non-card-based transactions. Stores have to spend another 5% or so on dealing with unscrupulous buyers.
Clearly, existing solutions for online retail are no longer working, and the industry urgently needs new technology. The next stage in e-commerce development, in my opinion, will be tied closely to blockchain technology. Blockchain’s decentralization, immutability, and public nature make it possible to create a much more reliable and transparent trading system.
The distributed ledger technology can speed up transaction processing, decrease costs, prevent potential risks, improve service quality, and increase user trust. In fact, blockchain provides all the tools necessary for building exactly that sort of trading system, one which satisfies all of its participants.
Blockchain Solves E-commerce’s Problems
Market needs served as the foundation for the Connectius blockchain platform, which was created to organized a fundamentally new kind of online-sales ecosystem. The platform is aimed at solving the key problems faced by both buyers and sellers.
It is universal and works for anyone who interacts with the consumers of their services through the Internet: stores, tour operators, ticket and hotel reservation systems, car rental services, etc. We gave extra thought to how the system would be rolled out and made sure that it could be easily integrated with any existing trading platform without requiring significant expenses.
Using distributed ledger technology ensures a higher level of security for payments and transactions. Blockchain entails the use of smart contracts for settling customer payments. Smart contracts can save retailers from their biggest headache: unscrupulous customers who use chargebacks and other methods to defraud service providers.
The basic principle of blockchain is that data cannot be falsified or deleted. The completion of each transaction out of millions will be documented in a corresponding entry, which would serve as unassailable proof in the event of a dispute.
The retailer’s representatives would have to difficulty figuring out whether the buyer’s claim for a refund has any merit. If it does, the buyer can be immediately refunded, no questions asked.
Users also have the opportunity to refer to an independent arbitrator to resolve the problem. Another key feature of blockchain is decentralization, which prevents leaks of users’ personal data.
In the end, blockchain’s features have an effect on what consumers care about most: the cost of services. Decreasing losses due to fraud, eliminating the middleman, and bringing down transaction processing expenses all help stores lower prices and gain an advantage over their competition. More importantly, sellers acquire loyal customers who come back again and again.
Expert opinion of Sergey Nosikov, Co-Founder of Connectius, CTO.
