Payment processing in e-commerce is an obvious use for the blockchain. Done correctly, it has the potential to eliminate a tremendous amount of friction and cost. While removing the ~3% transaction fees charged by current payment processors would be substantial, payment processing is just the tip of the iceberg on how the blockchain can benefit the entire e-commerce ecosystem.
In addition to payment processors, there are several other middlemen who make money on unnecessary friction. Blockchain technology has the potential to remove these fat cats from the equation altogether. There are gigantic middlemen profiting from the friction in affiliate networks, influencer marketing, e-commerce advertising, supply chain, and shipping just to name a few.
For example, take Rakuten, the $12 billion market cap parent company of Ebates and other e-commerce properties. Earlier this week, they announced Rakuten Coin, a private blockchain-based token. Unlike a fully distributed solution, the end consumer and store owners won’t fully benefit from Rakuten’s solution. Rakuten, by this ploy, is merely switching one form of friction for another … boo!
Two of my favorite thought pieces on this topic were written by Louie Bacaj, the head of growth engineering at jet.com. Read Part 1 and Part 2 of his series and you’ll get an even better idea of what’s possible.
Stay tuned … this won’t be the last you hear of e-commerce on the blockchain from Engine. In addition to being huge blockchain fanboys, we are actively working on several proofs of concept for our e-commerce platform.