Blockchain: The Solution to E-Commerce’s Billion-Dollar Problems
EMarketer reported that in the last two years, Chinese cross-border e-commerce rose from $57.13 billion to $85.76 billion, with a quarter of China’s total population, or one-half of all digital buyers, shopping through either direct-retail foreign sites or third parties providing this channel. Accenture and Alibaba’s research arm Alizila predicted that China’s cross-border B2C market will reach $20 trillion by 2020.
E-commerce is said to be the fastest growing sector of retail in the world. Boston Consulting Group reported that the six major markets in e-commerce are Germany, Australia, USA, Brazil, UK, and China. Asia accounts for up to 40% of the revenue generated by cross-border e-commerce, thus making the region the global center of e-commerce.
The cross-border package delivery system is a vital tool of the trade. Consumers from all over the world depend on these systems to move and attain a diverse array of goods from one place to another. Locations can range from being local to going beyond international borders.
In China alone, cross-border transactions are estimated to reach $1.32 trillion in 2018. Traded products range from cosmetics to electronics, and even household goods. Cross-border delivery caters to the needs of people from all walks of life. As the rate of cross-border trading increases, it is important that the courier industry is able to grow with it in order to sustain the growth.
But when one takes a look at the current courier ecosystem, it is highly evident that the industry is currently being hindered by a series of challenges. The current methods being employed by courier companies are outdated, hampering the industry’s ability to keep up with the rapidly growing demand.
Issues affecting cross-border e-commerce providers
At a meeting of the United Nations Conference for Trade and Development, some of the problems currently affecting cross-border e-commerce providers were found to be:
- Different e-commerce providers interact through spreadsheets that are locally stored, handwritten bills, telephone calls and faxes. Such methods of communication are prone to generating inefficiency and error as they cannot be accurately tracked at all times. As demand in the industry continues to grow, it becomes very hard to keep track of all communication.
- The traceability of a parcel’s information is lacking, leading to redundant tasks such s re-weighing and re-labeling. Such tasks make the process longer while adding extra costs that could be avoided.
- Failed deliveries and lost shipments occur within the current system. In a system struggling to keep up with demand, such errors will increase. This will lead to the loss of billions of dollars per year, as well as a damaged reputation for the industry. Consumers are often the ones who bear the brunt of failed deliveries and lost goods.
All of these problems point to a much bigger problem in the industry – the centralized, non-standardized models that the industry is built on. These models are responsible for the inefficiency, lack of transparency, and alarmingly high costs that are experienced in the e-commerce cross-border trading industry. Courier services are unable to meet demands on a system that is designed to fail. There are no other centralized solutions that will be able to take the industry to the level it needs to be. But decentralization can.
Blockchain technology offers security, transparency, and traceability – three features the e-commerce industry is in dire need of. ParcelX took note of what blockchain can do for the industry and developed technology that could make this next step happen.
ParcelX, a delivery provider based in Asia, is known as the “Airbnb” of cross-border parcel delivery. The company’s core aim is to create a cross-border parcel delivery system where everyone involved – the sender, receiver, and the service provider – can participate freely and they can also be trusted fully. The company has also developed a currency system that will incentivize those who adopt the network. Everyone involved in the ParcelX ecosystem receives equal benefits, along with an assurance that delivery and reception of a package will take place securely and successfully.
Currently, the cross-border delivery system is far from where it needs to be, but as blockchain technology makes its way into the industry, so do increased efficiency and transparency. Reduced costs within the system would benefit the industry greatly, with all parties experiencing these benefits greatly.
DISCLAIMER: Opinions expressed by Coinschedule Blog contributors are their own.