What Is Blockchain and What Is Its Purpose?
A blockchain is a database in which bits of information (the ‘blocks’) are linked together (the ‘chain’). Since the database is shared and managed by more than one party, irregularities are easily spotted and make it a highly trustworthy system. And while blockchain technology has long been associated primarily with Bitcoin transactions, its potential is now recognized by e-commerce and other industries.
The Unique Advantages of Blockchain
- Blockchain decentralizes control and achieves consensus-based trust without the need for a central authority.
- The technology creates transparency on a fundamental level.
- It enables consumers to connect with companies or other consumers, omitting the middlemen from the process.
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 (so-called smart contracts) that replace the middlemen, cutting costs while increasing transparency and trustworthiness.
We believe that blockchain, together with artificial intelligence will significantly impact the way companies interact with their customers.
The Consequences of Blockchain Technology and E-commerce
One can scarcely imagine the level of disruption that will be unleashed in commerce, retail and on social platforms:
Any business that serves as a middleman is at risk of being made obsolete by blockchain.
First of all, due to blockchain technology and the subsequent empowerment of consumers, manufacturers and vendors will need to improve their customer experience. This requires increased customer insight. What better way to achieve that than by joining forces with consumers and other merchants on a blockchain-based platform?
In a blockchain world, all companies that provide intermediary services will need to assess their level of added value to their customers’ interactions.
The Opportunities of Blockchain Applications
Meanwhile, blockchain applications offer a whole new array of promising business opportunities for manufacturers, as shown below. We strongly encourage you to look into these – not just to see how you could apply these specific solutions, but also to find inspiration for entirely new blockchain-based business ideas.
Personal Offers and Loyalty Programs across Retailers
First of all, wouldn’t it be great if you, as a customer, would be able to share your shopping history with multiple supermarket brands, and benefiting from the personalized offers they make? And what about loyalty programs that can be used across retailers, enabling you to decide where to redeem rewards?
Both examples are made possible through the use of blockchain technology, whereby all your purchasing history and points are safely captured on the blockchain, owned and distributed by you, the user, to the companies of your choice.
Easy Access to Warranties and Receipts
Another benefit of blockchain technology revolves around storing product warranties. Most of us have experienced the frustration of having lost paper receipts and being unable to prove warranty coverage. Storing all purchase information on the blockchain would solve this problem. Manufacturers, retailers and customers would all be able to access the data, allowing proof of ownership to be easily validated.
Generating Legitimate Reviews
As far as innovative blockchain applications go, the ability to generate legitimate reviews of products and services has a lot of potential. Nowadays, we can only assume that the reviews we find online are genuine. But positive reviews might just be generated by sellers looking to increase their turnover, while negative reviews could easily be written by competitors trying to thin out the playing field. Fortunately, blockchain technology can help to verify reviews, as is shown by Zapit. This US-based company compensates both review writers and moderators, incentivizing legitimacy and claiming a win-win situation for all parties involved.
Getting paid for content creation
In another example, many online platforms pay content generators by sharing in ad revenues. But what if its users reward each other for their content? American company Steemit offers just that, by enabling its visitors to earn digital tokens for posting, voting and curating content.
Moreover, payments are made on the blockchain as well, in digital wallets. That way, no time is lost engaging the middlemen, and the tokens can be easily converted into whatever currency you wish.
Making Payments without Intermediaries
This brings us to the payment possibilities blockchain has to offer. Nowadays, the immediately available traditional currencies, such as bank checking accounts, paper and coins, add up to approximately $9,000 billion. And although cryptocurrencies make up for a mere 6% today, their use is on the rise and is expected to increase exponentially.
We mentioned the payment-upon-delivery option earlier in this article. Another opportunity is created by allowing users to make payments directly to machines. Imagine a car holding a digital wallet. Pay and it unlocks itself, without the interference of a human being. Intermediary fees could be cut, waiting periods would vanish and you wouldn’t need to pay upfront.
A Word of Warning
Should you jump onto the blockchain bandwagon now? Yes, as a matter of fact – we strongly encourage you to do so. If you don’t look into the opportunities it offers, you will be too late when the technology really takes off. After all, exploring the possibilities will make you see options that might not have been discovered yet, giving you an advantage over your competitors.
Having said that, many blockchain developments in the e-commerce industry are new. An entrepreneurial mindset is required – it is best to launch small, low-risk experiments, scaling up or branching out gradually.
How to discover the uses of blockchain technology?
So, how do you identify where to start with a small, low-risk experiment? We would advise you to analyze the customer journey and ask yourself how you can add value and facilitate direct service at every consumer touch point.
Accenture’s blueprints and design thinking workshops offer practical inspiration and guidelines that will help you identify blockchain technology and e-commerce opportunities early on. We can also assist you in launching proofs of concept, or offer inspiration by sharing examples of technological advances we are seeing and implementing across the world.
Be Prepared for the Blockchain Revolution
As we have seen, blockchain technology and e-commerce unlocks a host of interesting business opportunities in the quest for transparency, trustworthiness and cost reductions. But it poses threats as well, especially to those companies that fail to add value for their customers. If you want to remain relevant for the consumers of the future, there’s no better time to start exploring the possibilities of blockchain technology and e-commerce than the present.
Want to know more about the future of commerce? See how you can start with digital marketing personalization.