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Implications of Blockchain in E-Commerce

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The E-commerce industry will definitely be greatly impacted by the introduction of blockchain technology into their platforms and services by improving security, increasing efficiency and maintaining transparency in all trades and transactions


E-commerce companies have completely changed the way that we shop and go about a decision making and buying process. Shopping today would look quite different without e-commerce platforms like Amazon, Flipkart, Snapdeal and many more. 2018, being coined the year of blockchain, is seeing blockchain begin to weave its way into numerous industries, e-commerce being one of them. By 2020, a mere two years down the road, the e-commerce industry in India is predicted to be around $850 billion USD.1

A few e-commerce companies already accept cryptocurrency, such as Ebay, and there is speculation that Amazon will begin accepting payments in Bitcoin soon. As mainstream adoption of cryptocurrency increases, more e-commerce websites will want to accept cryptocurrencies as payment. Currently, about 42% of online shopping is paid for with credit cards, and the rest by Debit, cash on delivery, or other payment methods. Blockchain technology is a paradigm-shifting technology, and companies and industries will continue to use the technology to innovate and improve transaction and data storing capabilities.

How does it work?

Currently, e-commerce websites store a users’ buying behavior and share this information with vendors and suppliers. If this storing and sharing of information is done on a blockchain platform, then the user will have the benefit of deciding how they wish to share this personal information with the e- commerce platform, or choose if they want to share that information for market research purposes. They could choose to sell that information, or keep it private, stored in blocks on the blockchain platform.

Cheaper Transaction Fees

E-commerce websites charge a large amount as service fees and transaction fees that will be obliterated if blockchain technology is used on the e-commerce site instead. E-commerce companies like Amazon, Flipkart and Ebay act as middlemen between buyers and sellers. With a technology that allows for smart contracting services, middle men are eliminated from the equation. Smart contracts allow for buyers and seller to meet directly on a platform and set their own terms and conditions that are flawlessly executed through the code within the smart contract. When smart contracts have an escrow account attached to them, it’s an added benefit, since a mutual escrow account between the buyer and seller safeguards money of both parties. Technically, as there is no company facilitating transactions, just a software platform, the fees for using these services will be considerably lesser than going through a third party e-commerce platform. This model benefits both the buyer as well as the seller, because e-commerce platforms typically charge sellers a fee to list their products on their website, and buyers are mandated to pay a transaction fee. As the buyer and seller meet directly on the blockchain platform, these fees are no longer applicable.

Speed and Transparency Of Transactions

Transactions that occur on the blockchain platforms are much simpler and faster, and takes a fraction of the time that regular transactions do. Moreover, all these transactions and complete order and product history are stored in highly secure and encrypted blocks. These blocks cannot be changed, altered or manipulated in anyway. Additionally, they can never be deleted either. The blocks would form a complete history and tell the story of a product.

For example, imagine you bought a phone on such a blockchain based e-commerce platform. When you bought the phone, you would be able to see where and when the phone was manufactured, if it went through a quality testing process, and other such information. You decide to buy the phone, the transaction happens instantly, but the smart contract you sign with the dealer assures that if the phone doesn’t reach you in time, or is damaged on delivery, your money is safe, and even refund is instantaneous. Further, when you decide you have had enough of the phone, you could choose to resell it, in which case, the next buyer would have all the initial information, as well as how long it was owned before they will receive it, where it will be shipped from etc. The accessibility of this information makes it so that the entire buying process is secure and transparent.

Impact on the E-Commerce industry – The Decentralized Marketplace

The E-commerce industry will definitely be greatly impacted by the introduction of blockchain technology into their platforms and services by improving security, increasing efficiency and maintaining transparency in all trades and transactions. The E-commerce industry in India is predicted to reach about $50 billion USD within the year itself. If transactions fees and speed of buying and selling increases with blockchain technology, as it will, the e-commerce industry could exceed predictions for the next few years in terms of growth.

2017 already saw a large amount of ICO crowdfunding and VC funding, and 2018 will see the launch of numerous crypto tokens based on blockchain technology platforms that will influence the E-commerce industry. If existing platforms do not slowly begin to adopt the technology and integrate them into their own platforms, then these alternate platforms could increasingly capture more market share than existing platforms. There are too many benefits will not be overlooked by buyers and sellers. Blockchain platforms will offer e-commerce companies and developers the tools to create and build ecosystems that are safer and more efficient.

Future of Blockchain Technology

Blockchain Technology will change the way we shop and interact on the internet and in every way. E-commerce giants are already investigating ways that blockchain technology could benefit their platforms, and what the future of blockchain in e-commerce could look like. As adoption of cryptocurrencies continues to become mainstream, these digital currencies will be increasingly used for daily transactions just as credit and debit cards are now used for daily transactions. Any e-commerce website that incorporates cryptocurrencies in the payment choices will definitely have an edge over any other ecommerce website. By 2020, the global e-commerce industry is predicted to be worth around $4,135 billion USD, so the potential for blockchain technology in this industry is high3.

By Ravi Kikan, Chief Operating Officer, Panaesha Capital


  1. Tim Josh says

    Hey!!! I have read the entire article which looks really informative. This article helps me to know more about how blockchain helps the e-commerce industry and also what are the solutions we can gain from it. Thanks! for sharing this with us. Keep Posting.

  2. gracelynwills says

    Hey @Abhishek. I have read your article it was amazing and sure blockchain technology is gonna change the eCommerce industry. Thanks for sharing

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