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Web 3 is establishing the foundation for the permissionless and decentralized internet. With the growing trend of Web 3, we are witnessing a massive revolution in the e-commerce industry by utilizing blockchain technology.
Web 3 empowers e-commerce brands to avoid dependence on centralized authorities and regain control over sales channels, customer data, and business operations.
Moreover, the utilization of Web 3 technology helps brands to eliminate the current challenges that are associated with centralized systems.
In this blog, understand how Web 3 empowers the e-commerce industry and what is the best way to implement blockchain technology into online shopping platforms.
What Is Web 3?
Web 3 is a new digital world that utilizes the power of blockchain technology, such as decentralization, a token-based economy for enhancing the user experience. Web 3 removes the participation of centralized bodies such as big corporations, governments, etc.
For enabling virtual transactions, Web 3 eliminates the requirement of intermediaries by using blockchain technology and ensures the security and reliability of all transactions. Additionally, Web 3 protects user privacy by not being dominated by a big corporation that potentially collects users’ sensitive data.
Characteristics Of Web 3
- All the information on the platform is mostly free and open-source
- Unique and authentic transaction information
- Every individual is the owner of their data
- DeFi and cryptocurrencies have replaced the central monetary system
- Anonymous transactions and ownership
Challenges In The E-commerce Industry
Despite the surge in revenue growth, the industry faces the following challenges.
1. Cyber And Data Security
Security breaches are one of the significant issues in electronic commerce due to the involvement of a lot of information and data. Data loss or misuse can greatly impact the brand image and business operations.
2. Attracting Loyal Customers
Customers nowadays have many options to shop from different eCommerce platforms. However, attracting an ideal customer ready to buy your product at your decided price is hard to find due to extreme competition.
3. Customer Experience
A successful platform must be able to deliver a positive user experience on its platform.
Brands must focus on website navigability, segmentation, retail personalization, content flow, and other essential aspects that can help eCommerce brands improve customer experience on their platform.
4. Online Identity Verification
Real customer information is important for brands that can help deliver a personalized platform experience, product delivery, offering customized offers, etc.
Online identity verification is a great way for brands to ensure that the customer identity is real and is not generated by bots or scammers.
5. Customer Support
There are numerous queries from customers that brands need to resolve to retain customers. However, many brands face a great challenge in resolving every query of their massive customers.
Brands can overcome these challenges by implementing chatbots on their platforms. The chatbots can resolve queries that are most repetitive and easy to resolve.
Blockchain Applications In Web3 E-commerce
The implementation of blockchain technology in electronic commerce helps businesses to empower their platform with the following blockchain applications:
1. Inventory Control
Retailers can reduce inventory items with standard shopping carts and order replacements stock with certain thresholds by incorporating blockchain into inventory management.
2. Identity Management
Retailers can utilize blockchain technology to create strong customer authentication mechanisms and protect their digital identity by incorporating encryption into their systems.
Managing user identity with blockchain technology will help businesses improve identity management by protecting them from misusing and theft.
3. Supply Chain Monitoring
Implementing blockchain in online shopping platforms can help businesses bring transparency to their supply chain management. Blockchain creates shared and transparent records of transactions that can be accessed and verified by all the participants in the supply chain.
4. Digital Ownership
Managing user identity with blockchain technology will help businesses improve identity management by protecting them from misusing and theft.
5. Loyalty Reward Programs
Blockchain enables businesses to reward their customers with personalized offers and rewards points. Additionally, businesses can store data about their customer preferences and purchase history on the blockchain servers. Also, using smart contracts can help businesses automate their loyalty reward programs.
6. Warranty Management
Blockchain technology also helps retailers simplify their warranty management system by enabling data access to customers, manufacturers, and retailers.
Also, blockchain technology simplifies accessing, validating, and verifying warranty information.
Advantages Of Web3 E-commerce For Businesses
Decentralized technologies like NFTs and crypto are impacting the e-commerce industry significantly. The multiple use cases of blockchain in this industry offer the following advantages.
1. Crypto Wallet
Web 3 provides users with a crypto wallet that customers can use to purchase online products and services from different eCommerce platforms.
2. NFT-Based Loyalty Reward Programs
The loyalty program rewards customers with assets such as NFTs for each purchase that can be redeemed for products, discounts, or bigger bonuses. Companies can use NFTs to empower their loyalty programs to drive engagement to their platforms.
3. Enhanced Customer Experiences
Businesses can leverage the use cases of Web 3, such as Metaverse, to enhance the platform experience for their users.
With Metaverse, brands can create their virtual world where users can interact with and perform activities such as exploring the virtual world, online shopping, interacting with other users, etc.
4. Decentralized Marketplaces
The decentralization in the marketplace will enable users to freely explore the online marketplace across different platforms and let them decide what they want which will be finalized based on the majority of the votes.
5. Blockchain-Based Trustless E-Commerce
Implementing blockchain in electronic commerce will bring trust among customers as it will make transactions immutable and self-executing, reducing fraud, returns, and chargebacks.
Moreover, in the near future, payments with cryptocurrency will be the norm and the same as using credit cards or PayPal.
6. Communities Monetization And Creation
Businesses can utilize the proof of attendance protocol to expand their community. The core principle behind the POAP is to turn participants into NFT assets.
At first, the users need to scan the QR code, and after then, they will receive an NFT memento which will allow them to access the online community.
The Future Of Web 3 In E-commerce
There are numerous ways Web 3 will impact the future of the this industry. The major of them are mentioned below.
1. Customer Acquisition
The core focus of Web 3 will be collaboration compared to advertising. Moreover, customers can access the platforms without being restricted by centralized authorities.
The encouragement of collaboration will lead to the engagement of influencers for brand promotion across different streaming channels, strengthening the Web 3 ecosystem.
2. B2B Payments
Web 3 is democratizing the way consumers interact with brands. Moreover, Web 3 further narrows the gap between B2B and B2C online shopping platforms.
For example, Shopify Plus allows customers to use B2B strategies such as custom pricing options, along with incorporating traditional B2C features such as personalizing purchasing experiences.
3. Omnichannel Marketing
Compared to single-chain marketing, omnichannel marketing leads to an increase in customer retention by over 90%. Implementing Web 3, in addition to omnichannel marketing, helps businesses personalize their experience even further.
Moreover, businesses can enable high-quality personalization at scale with AI-based custom avatars.
4. The Supply Chain
Blockchain technology helps businesses to empower their logistics, shipping, and supply chain systems by bringing transparency and lowering logistic costs.
5. Direct-to-customer (DTC) Model
Direct to-consumer model is an excellent way for businesses to build customer relationships. Companies can use this model to generate customer loyalty to their brand and expand their customer base.
Due to the elimination of centralized authorities, brands can freely establish strong customer relationships and retain them for a long time.
6. Better Consumer Engagement
Rewarding consumers with NFT or cryptocurrencies are a way to generate their engagement over online shopping platforms. To encourage user participation, many businesses are utilizing games to offer NFT or crypto-based incentives to their customers.
Uni X, for example, allows gamers to earn points whenever they engage in virtual games. Conversely, non-gaming brands reward their users with NFTs to drive engagement over their platforms.
How Can Brands Prepare For Web 3 E-commerce?
Brands can prepare for Web 3 in the following ways.
1. Gamification
Brands can leverage the power of NFT to unlock parts of their shopping experience. NFT is a great way to engage a younger audience by rewarding them once they complete basic tasks on online shopping platforms, which can drive better customer engagement and a rewarding shopping experience.
2. Token-gated Commerce
There is a requirement to bring excitement among your customers about blockchain and NFTs. Token Gated E-commerce is a great way to create a direct link between decentralized technologies and e-commerce, encouraging customers to buy your NFTS and engage more with your brand.
3. Metaverse Integration
Metaverse can extend the better platform experience by offering customers a virtual shop to interact with and make real-time purchases.
Offering a real-world experience with the metaverse can significantly impact customers’ buying behavior on online shopping platforms.
4. Accepting Cryptocurrency Payments
Facilitating users with an option to make payments with cryptocurrency is another way to enhance the shopping experience on eCommerce platforms. Try to integrate popular cryptocurrency wallets to allow users to pay with cryptocurrencies.
Technology Stack To Develop Web 3 Based E-commerce Platform
The following tools are well suitable for building an online shopping platform powered by blockchain technology.
| Frameworks | Colony, DAOstack, OPENLAW, Syndicate, Orca protocol, TRIBUTE, Compund Governor |
| Contribution and reputation | GITCOIN, SourceCred, RabbitHole, GOVRN, COINVISE |
| Frontend & analytics | Tally, DeepDAO, Boardroom. |
| Treasury management | Parcel, Multi safe, Gnosis Safe, |
| Content product | GitHub, Medium, Mirror, Radicle |
| Compensation | OPOLIS, Sablier, Superfluid, Roll, Disperse, Smart Invoice, Coordinape |
| Knowledge management | Notion, HackMD, Roam, GitBook, Gsuite Obsidion |
| Governance and voting | Snapshot, Paladin, Tally, Everest, Sybil, boardroom |
| Access | MintGate, Unlock, Collab.Land |
| Discussion | Discord, Telegram, Twitter, ROCKET.CHAT iscourse. |
| Identity | IDX, ENS |
| Databases | The Graph, CouchDB, MongoDB |
| Programming language | Solidity, Vyper, Rust, Python, C++ |
| Smart contracts | Truffle, OpenZeppline, HardHat, Infura, Alchemy, Quicknode, Ganache, Pinata, Metamask, Geth, Chainlink |
| Wallets | Binance, Trust Wallet, Meta Mask, Coinbase, WalletConnect |
| Order and payment processing | Paypal, Square, Stripe |
| Fulfilment and shipping | ShipBob, Shipstation |
| E-commerce platforms | Bigcommerce, Woo-commerce, Shopify, Squarespace |
| Order and inventory management | Cubana, Order Desk, Inventory planner, Zentail |
| Customer service and Support | TalentPop, Simpler, Gorgias |
| Returns management | Returnly, Loop Returns, Happy Returns |
Steps To implement Web 3 In E-Commerce
Blockchain implementation involves several steps. Here’s a high-level overview of the process:
1. Identify Use Cases
Try to identify specific areas that can help business operations with blockchain technology. The common use cases with Web 3 include product authentication, supply chain management, secure transaction, and customer data privacy.
2. Select The Blockchain Platform
Brands must identify a suitable blockchain platform to empower their business operations.
Consider the following factors such as security, scalability, consensus mechanism, and smart contracts for identifying a suitable blockchain platform.
Ethereum and Hyperledger Fabric are the best blockchain platforms for integrating with online shopping platforms.
3. Partner With A Blockchain Development Company
The easier way to implement blockchain technology to existing platforms is to employ a blockchain development company.
Try to find a reliable blockchain development company by exploring their portfolios and checking their reviews from past clients regarding their development and communication process.
A suitable blockchain development company must have expertise in developing different blockchain-based use cases such as Smart Contracts, Cryptocurrencies, NFTs, Metaverse, etc.
Here is a detailed guide on how to hire blockchain developers in 2023.
4. Design The System Architecture
System architecture determines how data will be stored, accessed, and shared across the network.
When designing system architecture, define the roles and responsibilities of participants and their interactions with platforms, including suppliers, customers, manufacturers, and logistics providers.
5. Develop Smart Contracts
Smart contracts are self-executing agreements that automate transactions based on predefined rules. Try to identify areas of improvement in business operations that can benefit from smart contracts, such as payment settlement, order fulfillment, or dispute resolution.
6. Integrate With Existing Systems
Integrating blockchain with existing systems will ensure smooth data flow and interoperability between blockchain and legacy systems.
Try to integrate blockchain with existing systems like payment gateways, inventory management, and customer relationship management (CRM) platforms.
7. Implement Customer-Facing Applications
The next step is to develop a user interface and application to enable customers to interact with Web 3 platforms. The application will facilitate users with features including transparent reviews, authentication, product traceability, etc.
8. Test and Deploy
Testing every platform aspect is crucial to eliminate technical issues. Conduct comprehensive testing for smart contracts, system interactions, data integrity, etc.
After the completion of testing, deploy the system to the production environment.
9. Educate And Train Stakeholders
Provide training and education to relevant stakeholders, including employees, suppliers, and customers. Help them understand the benefits of blockchain technology, how to interact with the system, and any new processes or protocols involved.
Another essential aspect of Web 3 implementation is providing training and education to relevant stakeholders on operating the platform, including suppliers, customers, and employees.
10. Monitor and Maintain
Testing of every part of the platform is crucial to eliminate technical issues. Conduct comprehensive testing for smart contracts, system interactions, data integrity, etc.
11. Stay Updated And Evolve
Staying updated with the latest development trends in blockchain technology and the online shopping industry is crucial to remain competitive.
Try to explore new use cases and opportunities by utilizing the power of blockchain technology.
Conclusion
Blockchain technology has significant potential to revolutionize the e-commerce industry by addressing various challenges such as transparency, trust, security, etc.
By implementing Web 3 in online shopping platforms, businesses can achieve enhanced supply chain visitability, streamlined processes, customer trust, and transaction security.
However, while implementing blockchain, it is crucial to carefully plan the system architecture, select the appropriate blockchain platform and precisely integrate it with existing platforms.
Partnering with a reliable blockchain development company is a must-have step that can help you empower your platforms by leveraging the power of blockchain technology.
Contact Idea Usher if you are looking for a company that can help you, from implementing blockchain technology to developing your e-commerce platform from scratch.
Our team comprises app developers to blockchain developers experienced across different industries and experts in developing customized apps and implementing the latest technologies such as AI, Blockchain, AR/VR, etc.
Consider scheduling a free consultation call with our team to understand how we can help you establish and expand your business.
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FAQ
Q. How will Web3 affect eCommerce?
A. Web 3 will affect the industry in various ways such as improving supply chain management, bringing transparency in the transaction process, NFT based loyalty reward programs, etc.
Q. What are the applications of Web3 in eCommerce?
A. Inventory control, Identity management, digital ownership, supply chain monitoring, loyalty reward program, and warranty management are some of the Web 3 applications in eCommerce.
Q. How does blockchain impact accessibility and traceability in e-commerce?
A. Blockchain helps businesses to track the movement of products and payments and identify customers and suppliers by offering them a secure and tamper-proof way of recording transactions.
