Bitcoin

This is how DeFi could improve the e-commerce industry

Uquid

Finance and decentralized purchasing seem like an unusual combination at first. How can you save money with cash at the till? If you go a little deeper, some compelling use cases for DeFi emerge. With retail entering one of the toughest times of a generation, here are the biggest issues e-commerce is facing right now … and how DeFi could fix them.

A perfect couple?

Companies like Amazon, eBay and Shopify have changed the way we shop for everyday items. Anyone can become a retailer as exotic products can be delivered to your doorstep in a matter of hours. However, the rise of these ecommerce platforms has created some new problems and exacerbated old ones.

This is how DeFi could improve the e-commerce industry
This is how DeFi could improve the e-commerce industry

Small businesses that sell their products through these online shopping giants often pay 15% to 20% commission, which reduces profit margins. Some of these costs are inevitably passed on to customers, which means they pay far more for items than they could have paid in a decentralized environment.

Some blockchain platforms are already grappling with this problem and attitudes are starting to change. PayPal has now started implementing its cryptocurrency trading service, which means that millions of merchants will soon be able to accept digital assets as a payment method. Deutsche Bank also warned that the days of cash are numbered and companies like Visa and Mastercard have been criticized in a recent report. “They have considerable pricing power, which is bad news for retailers or consumers,” the German financial giant wrote.

DeFi comes into its own when it comes to cutting costs and eliminating middlemen for those looking to move their cryptocurrencies from point A to point B. However, there are other benefits that can be addressed by eliminating some of the issues that centralization does not. can solve.

Define loyalty

Loyalty programs are high on this list. As Deloitte recently pointed out, the tried and tested approach to ensuring customer habits needs to be dramatically reworked to warn that traditional systems are “trampled” and cannot be customized. Their report said that customers are now expecting rewards that are tailored to their personal tastes, and younger shoppers want their favorite brands to use technology that gives them a seamless experience.

“Companies need to adapt to the digital age by employing agile and flexible solutions that allow them to tailor their customer experience program to the ever-changing expectations and needs of customers,” added Deloitte.

One of the biggest flaws with loyalty programs is how isolated they can be. Many retailers have their own systems so buyers have no choice but to sign up for each one individually. This can be incredibly inefficient, especially since time-hungry consumers are likely to forego discounts if they have to fill out a different claim form.

However, DeFi could help eliminate that friction and create a world where customers only need a single address to get reward points from the places they shop. Smart contracts could also ensure that these loyalty programs are cross-border, which means a UK tourist shopping at Costco in the US can earn points just like at home. All of this can help make loyalty programs clearer and more transparent. Encouraging retailers to collaborate can also make these programs more financially viable. This is important as Deloitte describes existing initiatives as “risky and expensive”. Just as DeFi can help the world’s 1.7 billion unbanked consumers access financial services, it can also open much-needed doors to the world of e-commerce.

Giving the retailer a DeFi makeover goes way beyond discounted sneakers. Done right, the logs could also make a better deal for merchants and enable them to weather difficult economies (like those caused by the coronavirus pandemic).

Every day these small businesses face a dilemma. Smooth payments make impulse purchases easier for buyers, but can increase the level of fraud. In many cases, merchants are expected to pay the bill in the event of chargebacks. According to the Nilson report, $ 32 billion was lost to card fraud in 2019, and that problem will persist into the 2020s.

Smart contracts, smarter purchases

Uquid wants to bridge the gap between DeFi and e-commerce through Defito, a new ecosystem that introduces concepts previously not seen in retail.

Purchase mining means that every time a customer purchases an item, new tokens or coins are generated and smart contracts are used to ensure that those assets can be used for other purchases in the future. The process is automatic and immediate, and offers much-needed improvements that eliminate some of the problems currently associated with loyalty programs.

There are also features inspired by automated market makers, smart contracts that create pools of token liquidity. In this ecosystem, automated purchasing production brings together product sets that have been created by many suppliers. Customers can then connect directly to this pool and track the number of products available, as well as their price, so they can get a better deal on the items they want to buy.

Over time, these smart contracts are designed to allow merchants and buyers to connect without a middleman, reducing costs for everyone. Uquid believes that DeFi can help e-commerce companies grow rapidly and reach a wider range of customers around the world. The company is also confident that its approach could transform world trade.

One of the first places people can shop through this ecosystem is Uquid’s digital store, which sells more than 40,000 digital products such as video games, gift cards, subscriptions and mobile top-ups. The platform uses a Lightning network node, which makes transactions faster and cheaper at the same time. New products are being added every day and the ecommerce website plans to add physical items in the near future.

Physical retail is declining and retailers are innovating as they compete for attention in a crowded market. DeFi has just rocked the financial sector and could hit a shopping cart near you.

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