"There has been a lot of buzz surrounding cryptocurrency and blockchain, as they are expected to generate potential high sums of money. Recently, more attention has been focused on the applications of blockchain technology across other industries, such as logistics, agriculture, education, real estate, gaming technology, commerce, and particularly, the finance industry."
In China, however, blockchain technology is giving new opportunities to the social e-commerce, a rising form of e-commerce due to the penetration of the social media network in daily lives.
Around 2014, traditional e-commerce traffic was monopolised by Taobao, JD, and other e-commerce giants. This leads to high costs for small and medium-sized companies to attract customers and operate their business.
Merchants have to find cost-effective ways and explore new channels for traffic, such as social networks, to facilitate social e-commerce. Pinduoduo is one of the most successful social e-commerce companies that emerged from WeChat traffic.
Nowadays, blockchain technology will provide a new opportunity for social e-commerce.
Social e-commerce is the integration of social media and e-commerce. Using social media such as WeChat and Weibo as communication channels, users are encouraged to buy products by liking and sharing others’ contribution.
At present, social e-commerce like Pinduoduo and Xiaohongshu are using the system developed and provided by technology companies such as Youzan and Dodoka.
In September 2018, Dodoka published its white paper on public blockchain, which thought to build a social e-commerce network. The RRV Token is used to stimulate and optimise the internal ecology while at the same time realising the traceability of the products.
What social e-commerce problems can be solved with blockchain?
Today, blockchain technology is mainly used in the social e-commerce industry for product traceability, logistics supervision and community incentives, which is consistent with the traceability, non-tampering and general certificate attributes of blockchain.
At present, there are three main problems in China's social e-commerce.
1. There are 80 million employees in social e-commerce, and the annual transaction volume is about RMB 1 trillion. The huge potential market is requiring more practitioners. How to absorb more practitioners into the social e-commerce industry will be the first problem.
2. The second problem is the lack of supply chain supervision. Social e-commerce has few brand effects, and it is difficult to maintain the trust built through social interaction on the internet.
Currently, there are two types of social e-commerce: shopping platform and the shopping guide. On the shopping platform like Xiaohongshu, the traffic flow and the supply chain are under control. However, the supply chain is not under the control in a shopping-guide-oriented platform. As a result, it is difficult to control product purchasing and upstream quality, and there is a risk of inferior products which will reduce the trust of consumers.
3. The third problem is the relatively simple model to attract consumers through low prices and a shopping score system with many restrictions. In the social e-commerce context, rating of goods are conveyed through the interaction of consumers in social networks. How to increase customer referential ratings to attract more potential consumers is a question that social e-commerce needs to solve.
The blockchain features that are compatible with social e-commerce
For example, Dodoka has been trying to motivate consumers to share, recommend and purchase using the Token incentive method. Token differs from the integral system in its "pass-through" function. In the previous e-commerce consumption integral system, points could only be used for the exchange and purchase of items inside the store or platform, which had limited appeal to users. Token allows users to buy things in any store (node) on the whole public chain, which extends the usable credits spectrums and has stronger circulation properties. The future spread of Token in the secondary market can also improve the income expectations of merchants and consumers.
With regard to the supply chain, Dodoka uses blockchain technology to record all circulation links in the product ordering process from the origin to the consumers on the chain, to ensure the authenticity of the products and to make the whole process open and transparent.
System service providers are offering public blockchain technology services at social points
[Public Blockchain: a blockchain that can be read by anyone in the world. Anyone can send the transaction, get the effective confirmation, and participate in the consensus process.]
In traditional e-commerce, Alibaba and JD had their first contact with blockchain technology to use the feature “traceable and non-tamper". They are trying to fight against counterfeit goods with blockchain. For example, JD developed the JD Blockchain Open Platform and applied blockchain technology to supply chains, public welfare and anti-counterfeiting traceability.
Compared to JD and Alibaba, which have strong research and development (R&D) capabilities, social e-commerce is small and lacking in R&D strength. Therefore, social e-commerce needs to build "cyber communities" with technical services by system service providers.
At present, social e-commerce is mainly based on WeChat, a large social media app in China. The establishment of a WeChat-based public chain provides a good user base for the business development of social e-commerce. WeChat users can become potential consumers and community members.
For this reason, users of public chain set up in the WeChat system will weaken the public chain attribute because they are limited in the WeChat network. Secondly, social media are strongly controlled by national policies, which can create many uncertainties regarding the operation the structure of the public chain.
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