Distributed apps, popularly known as Dapps, are applications that use blockchain as the underlying technology. Although the finance sector and cryptocurrency stole all the limelight for the potential use of blockchain in its early days, emotions around it have drastically changed today and the momentum is now very well set to take many non-financial sectors on the ride as well. eCommerce is one shining example that Dapps have already started influencing with its incredible potential. Blockchain in the retail sector is estimated to grow at a CAGR of 81% by 2023. One of the major drivers behind the growth of blockchain in the retail sector will be eCommerce Dapps. New technologies like IoT, VRWeb, and AI will also combine with Dapps to make a perfect winning combination for eCommerce. After reading this blog, you will have a clear idea of how exactly Dapp development influences eCommerce and why it is such a great idea to invest in Dapp development to significantly reduce costs, improve user experience, and generate high ROI.
Dapp Development brings Wave of Change in eCommerce
Let’s first see the pain points the eCommerce industry is currently facing.
Today’s eCommerce market is very competitive, with so many players offering similar products and services. And, apart from many new businesses emerging, many brick-and-mortar models are also moving to eCommerce, making it even more difficult to stay in the race. Also, reliance on a third party to facilitate payments during the selling process results in huge revenue losses every year as sellers have to pay a processing fee for every transaction completed. Then, there are rising concerns over the security of consumers’ personal and financial details. Compliance with stricter security regulations recently brought up by General Data Protection Regulation (GDPR) now requires sellers to set a good budget for data encryption and other anti-hacking measures, but despite that, there is no 100% guarantee of no data breach.
Managing the complexity of eCommerce selling process is challenging as it involves a gamut of operations such as supply chain, logistics, payments, customer relationships, and more. These challenges have overwhelmed eCommerce businesses for far too long, but they now see a panacea in Dapps to handle them all. Let’s see, HOW?
Dapps the Driving Force for eCommerce
Effective Logistics and Supply Chain
As Dapps are decentralized, they streamline operations and drive efficiency in logistics and supply chain. eCommerce owners can easily and efficiently manage their inventory, that too without having to pay to other resources for tracking and monitoring stocks. Dapps also avoids clerical errors, product duplicacy and risks of fraud as transaction data can’t be edited once entered in the ledger. RFID tags and IoT combine with Dapps to help keep a real-time track of products from their inception point to where they are at present.
Smart contracts remove the middlemen such as lawyers or other third parties from the equation to get the tasks completed. Smart Contracts enable e-tailers and logistics companies to enter binding agreements that will automatically dissolve if all the agreed-upon conditions were not met. A distributed ledger is the next big thing in the eCommerce industry as it will allow transparent recordings, reduced costs and efficient route information. IoT, without a doubt, is a game-changer in logistics and supply chain, but they require a high level of security to which Dapps are a perfect solution.
Trust and Transparency
Lack of transparency despite the availability of several payment systems has been a big long-standing concern for the eCommerce industry. Dapps solve this problem by leveraging blockchain technology to offer complete transparency in payments and give a great sense of security to consumers. Everything is recorded in a shared ledger and it’s next to impossible to modify them. Even the slightest changes in the transaction will aware every one of the fraud, which makes the system highly transparent and secure. Dapps offer high-security, radical visibility, and faster processing speed, along with traceability through the decentralized system. Any wrongdoing on the part of a merchant can be monitored, so consumers
Blockchain-based virtual currencies have also started disrupting the existing payment methods as they are country and currency agnostic, which lowers transaction costs for international eCommerce stores. A report from Statista shows that the cryptocurrency Ethereum was on an average used in 866.44 transactions daily in the second quarter of 2020. People are preferring cryptocurrencies due to their decentralized nature of Blockchain technology, which means there is no one central authority and only those people involved in a transaction can control the operations. Also, factors like the politics or the economy of a country have no impact on the value of cryptocurrencies. Cryptocurrencies don’t reveal the identities of the transacting parties, yet the transactions are transparent and visible in a centralized ledger.
Dependable Data Security for eCommerce Businesses
Any centralized storage such as cloud makes consumer data of an e-commerce store vulnerable to hacks. Taking into account the tips and tricks being used by today’s modern hackers, even the most well-encrypted systems can fall prey to hack attacks. With Dapps facilitating a decentralized ecosystem, it’s practically not possible to hack from a single point of entry. To trigger a double spend, hackers need to change transactional data. But even the slightest of changes in a block will change the cryptographic hash of that block, therefore hackers will have to make changes in the next block to incorporate the new hash. But as soon as they do so, they must change the subsequent block, and this must go on till the last block. In a decentralized and transparent network, such activities will soon catch the eyes of everyone.
“51% attack” is the most talked about way to break in, but it requires hackers to have more than 50% of the network's computing power. Getting over 50% of the network’s computing power is virtually impossible and also very expensive. According to the website Crypto51, renting enough mining power to attack Bitcoin would currently cost more than $590,000 per hour. Dapps are very difficult to hack, however developers must ensure no bugs in the protocol code. If there are bugs in the protocol code, developers must identify and fix them fast as loopholes can quickly become a prowling opportunity for hackers. Overall, Dapps are much more secure and compliant with the security regulations than the traditional eCommerce environment.
eCommerce businesses pay huge amounts of profits every year to third parties for payments and transaction validation. Since Dapps involve no payment processes, therefore sellers have to pay no processing fee. This significantly adds to the cost-effectiveness and lets eCommerce businesses pass on the savings to customers by offering them better deals. A win-win situation for both sellers and consumers. A Santander FinTech study shows that distributed ledger technology could reduce annual financial services infrastructure costs attributable to cross-border payments, securities trading, and regulatory compliance between $15 billion and $20 billion by 2022.
No Fake Reviews and Offers
People often tend to buy products based on (fake) reviews. But this drastically changes with blockchain-powered Dapps which verify all the reviews and eliminate the fake ones. Reviews are stored in different blocks and every block has a separate identity. This allows sellers to create a digital map of all the reviews, and no one can modify and make changes in it without letting others know about it. It also becomes very easy to redeem rewards with Dapps as you just need to put in a condition for successful redemption.
Leaders such as Amazon, Alibaba, and eBay have already started investing in blockchain research and development to build Dapps that solve all the issues the current e-commerce platforms face. Even retailers like Unilever and Walmart are thinking of blockchain-based marketplaces to sell their products. Dapps are going to revolutionize the eCommerce industry and if you don’t want to stay left behind, get in touch with our software development company in India.
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