In the United States, e-commerce sales are anticipated to reach $1 trillion by 2022, according to research by Insider Intelligence. According to a different U.S. Census Bureau News study, E-commerce accounted for 13% of all retail sales in the first quarter of 2022. These astounding figures show that the e-commerce revolution is gathering steam as web3 paves the way for a permissionless and decentralized internet. We could soon see the emergence of networked, non-exclusive platforms that any online vendor or brand can utilize to fuel their operation. Instead of being bound to monolithic platforms that control sales channels, customer data, and processes, Web3 allows companies to embrace the e-commerce solutions and systems most suited to their requirements.
E-commerce has its limits even if it has seen remarkable development and success. Most platforms depend on centralized financial institutions or payment gateways for tasks like transactions, which is the main cause of the issues. Such a centralized method of conducting financial transactions connected to e-commerce is not only less safe but also less dependable. All crucial information, including transactional data, may be immediately saved into a blockchain in a web3-based e-commerce system. Most of the issues with the present e-commerce system may be resolved as a result. Web3 e-commerce is thus disruptive and has the potential to change the e-commerce sector.
What is Web3?
Let’s first take a closer look at the idea of the third-generation internet, or web3, also known as the participatory internet, before delving further into e-commerce in web3.
Web2, the forerunner of web3, contains centralized data, which implies that only a few sizable web3 development companies possess and manage it. One Ethereum co-founder developed the phrase “Big Tech” to describe these important businesses. This is completely at odds with the digital future that web3 enthusiasts imagine. To improve user experiences, Web3 is a brand-new digital world that uses blockchain technology and ideas like decentralization and token-based economies. Due to its decentralized structure, Web3 eliminates “Big Tech” and other intermediaries from the picture. This is what appeals to people about web3. Users cannot access the internet with Web3 through centralized platforms like Google, Apple, or Facebook. It has a user-centered web design that lets users own and manage their own portions of the internet.
With Web3, there is no longer a need for “trust” or middlemen to facilitate virtual transactions, and blockchain technology guarantees the security and dependability of payments. Since Web3 is not controlled by large tech firms that gather potentially sensitive data, it can better safeguard user privacy.
Features of Web3
- Information is mostly open-source and free.
- Information about transactions is genuine and distinct.
- Data belongs to each individual.
- DeFi and cryptocurrencies have taken the role of the traditional currency system.
- Transactions are anonymous, as are ownership transactions.
- Currently facing difficulties in the e-commerce sector.
Even while e-commerce is becoming more popular, it has its drawbacks. The major e-commerce difficulties are as follows:
Online Identity Verification
How can a business tell whether a customer on an e-commerce site is legitimate? Is the information they entered accurate? Do people care about e-commerce goods? How can you continue if you don’t have all of these facts? Things may get quite challenging. However, this issue may be resolved by investing in online identity verification.
Data and cyber security Due to the volume of data and information involved in e-commerce, security breaches are one of the biggest problems. Technical problems with data may have detrimental effects on the brand’s reputation and day-to-day operations.
Getting the Ideal Client
Today’s consumers have many alternatives. They spend a lot of money on research before making purchases. How can you be sure they choose you from all the other options? How do you locate the ideal buyer who will pay your price for your product? Businesses in the e-commerce sector may need help to draw in the perfect clientele.
Experience of the Consumer
A good e-commerce website must provide a satisfying user experience. Customers anticipate having the same experience as one they would have at a physical shop. Therefore, it’s crucial to consider the website’s usability, content flow, segmentation, and retail customization of goods depending on customers’ preferences.
Two facts demonstrate the significance of consumer loyalty. First, given the rising marketing and advertising expenses, getting a client might be more costly than retaining an existing one. Second, selling to an existing customer has a better success rate than marketing to a brand-new client.
These two statistics demonstrate how important client retention and loyalty are. Once a consumer has made a purchase or utilized a service offered by a merchant, the customer’s commitment is crucial. Converting visitors to paying customers is one of the most challenging e-commerce chores, and they must ensure that this consumer remains with them for the rest of their lives. The predicted sales numbers may still need to be met even if a website offering e-commerce goods may get a sizable amount of traffic, hits, and impressions. This is yet another urgent issue facing the e-commerce sector.
Analyzing competitors in light of increased competition A “Jam Study” that was previously carried out to gauge consumer awareness came to an unexpected result. According to the findings of this experiment, the likelihood that consumers will make a purchase increases the less you give them. People are sick of having so many options. You may find thousands of possibilities by doing a simple search. So how do you make a decision? Due to this, it is now challenging for merchants to separate from the competition.
Additionally, getting customers to visit their website is now more challenging than making purchases from other sellers. Most e-commerce systems depend on financial institutions or payment gateways to perform tasks like processing payments, which is the main cause of these issues. They will have direct access via blockchain, which will fix most of the current system’s problems.
As e-commerce is expanding quickly, so is the population of e-commerce consumers. On numerous e-commerce platforms, however, a growing number of individuals experience various problems virtually daily. Chatbots have been added to customer assistance, allowing for quicker request processing and ticket response. However, they are not long-term fixes. For instance, a lot of chatbots irritate and displeased clients.
Due to a lack of engagement with clients from beyond their language and geographic range, many e-commerce websites have a tendency to become stagnant. Customers who can’t communicate in the site’s primary language will search for other merchants to have a better experience. Due to varying prices and tax rates, consumers are deterred from making international purchases.
For e-commerce companies, digital marketing is becoming the norm. More businesses are relying on social media and digital marketing to boost ad expenditure. Clicks and online advertising space are becoming more expensive. For small and medium-sized e-commerce firms, this may be quite expensive. It is also among the most difficult problems.
Modern consumers fully know the significance and need to protect their data. Apple and other device makers protect the data of their customers from third parties to the best of their abilities. However, there are still issues with data privacy in the centralized e-commerce sector.
Advantages of Web3 E-Commerce for Companies
The e-commerce sector is already being impacted by Web3 and related technologies like NFTs and cryptos, and this trend is expected to continue in the future. After all, as organizations of all shapes and sizes innovate at a breakneck pace, the use cases for blockchain are growing. Let’s examine some instances from the real world to discover how this impacts the e-commerce environment.
Decentralized Banking or Cryptocurrency Wallet
On web3 e-commerce systems like Shopify and WooCommerce, cryptocurrency payments are accepted.
Markets that operate independently
Users will be able to choose what will be generated on Web3’s decentralized marketplaces. It will be a community-run market, with total user control and freedom of trade.
Trustless e-commerce powered by blockchain
Consumers will likely use cutting-edge, distributed, contract-enabled applications known as decentralized apps, or dApps, via the blockchain shortly to make purchases from online stores. These transactions will be immutable, trustless, and capable of being carried out by smart contracts, which are self-executing programs. Fraud, chargebacks, and returns will all go down as a result. Although today’s e-commerce is still mostly driven by trust, web3 will put less importance on trust since the blockchain ensures trustless transactions. Bitcoin payments for online purchases will be accepted as standard, just like credit cards or PayPal.
E-commerce loyalty incentive schemes based on NFT
NFTs are used in e-commerce to make loyalty programs profitable. Customers participating in these programs get points for every dollar they spend, which they may exchange for goods, special offers, or even larger prizes. NFTs allow businesses to provide more valuable loyalty benefits. Instead of merely providing consumers random points, companies may now give them NFT-based tokens with a predefined value.
Metaverse Consumer Experiences
There isn’t a single definition or model of the future of the metaverse, as there are many other new technologies. New technologies like blockchain, cryptocurrencies, and augmented reality/virtual reality are combined and expanded in the metaverse. The metaverse may be characterized as a continually growing universe of 3D virtual environments that have their own economy. In the metaverse, e-commerce companies have a fascinating potential and challenge to develop distinctive consumer experiences.
NFTs to Create and Profit From Communities
The Proof of Attendance Protocol (POAP) demonstrates how entrepreneurs enhance NFTs—exactly what their company concept is—shows. The main goal of POAP is to transform attendance at events into NFT assets. The POAP is represented via badges. For instance, you could instantly scan a QR code to get an NFT souvenir that gives you access to a community online.
The decentralized web version known as Web3 aims to fix the problems of earlier web versions, including Web1 and Web2. New standards in e-commerce may be anticipated with a wider choice of alternatives for consumers as NFTs continue to blossom and AR and VR gain popularity as experience-enhancing technology. Today’s firms want to be accessible to consumers whether they are making purchases online, offline, or via social media. With the connection that web3 offers, omnichannel strategies will be even more effective as firms can integrate all of their operational systems and sales channels to provide consumers with seamless ecommerce experiences. Brands can operate their applications without a single point of failure and use blockchain’s powerful technological stack due to Web3’s intrinsic decentralization characteristic. Without a doubt, Web3 will provide customers and companies with the finest online shopping experience and helps to develop shopping mall development services in the metaverse.