Blockchain technology is in its infancy stage within the ecommerce industry and has produced mixed reactions. Some ecommerce sellers are excited about the benefits of blockchain, others do not properly understand it, and some are sceptical of its applicability in the ecommerce sector. Nonetheless, blockchain technology is all the buzz right now.

What is Blockchain?

Blockchain is a data-sharing technology which is highly transparent, reliable and secure. Blockchain records transaction data in the form of blocks. Each block contains three elements- a cryptographic hash of the previous transaction, a timestamp and transaction data. Each block is securely linked to the previous block using cryptography, forming a chain.

What are the benefits of using blockchain?

In blockchain technology, each block contains data from the previous block; as a result, blocks cannot be modified easily, which ensures a high degree of security. Moreover, blockchain is a peer-to-peer, distributed ledger technology which means all stakeholders can access its data, maintaining transparency.

What is the impact of blockchain on fulfilment centres?

Logistics and supply chain management rely on timely and accurate data sharing. Blockchain has the potential to streamline logistics operations by sharing reliable data quickly. At the same time, blockchain can help ecommerce businesses overcome challenges related to data handling. Let us look at the benefits of using blockchain in fulfilment centres:

1. Inventory management

Blockchain can also make inventory management efficient. Blockchain technology gives ecommerce sellers data on consumer demand, which they can use to forecast demand and maintain optimum inventory levels. It also helps track when inventory needs to be replenished.

By forecasting consumer demand and maintaining inventory accordingly, ecommerce sellers can reduce storage costs and the chances of inventory becoming obsolete.

2. Efficiency and speed

Through blockchain, you can automatically create a digital record of every transaction. Blockchain negates the chances of human errors through its digitized system, ensuring speed and efficiency in the fulfilment process.

3. Transparency

Blockchain technology ensures clarity by increasing visibility into various steps across the supply chain, such as procurement, production, and distribution. All stakeholders can access the data at any time.

4. Traceability

Tracking shipments (inbound and outbound) is essential for the logistics sector to deliver orders faster, and ensure that inventory is received in a timely manner. Blockchain helps trace and track all shipments in real-time across the supply chain.

5. Payments

Blockchain allows warehouses, manufacturers, and suppliers to create a record of every transaction that takes place. Moreover, blockchain makes the process of clearing invoices simple and reliable.

What are the challenges of adopting blockchain in fulfilment centres?

The major hurdle in the adoption of blockchain technology is a lack of understanding about its meaning and usage. Once ecommerce businesses thoroughly understand the software and how it functions, they can wield it to their benefit.

Blockchain has yet to be adopted by many ecommerce businesses. However, most ecommerce sellers have developed an interest in the meaning and usage of blockchain in logistics. While blockchain technology was not designed to streamline processes in fulfilment centres, it can be a great addition to an ecommerce seller’s technological ecosystem.

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