Tanvir Zafar

Journalist

E-commerce growth to be spurred by blockchain based package delivery system

June 12th 2018

Technology & the internet have advanced significantly over time and their advancement has made many applications easier to execute. This has influenced major growth of several industries and one of the industries that have benefited from these developments is e-commerce.

It is reported that e-commerce is a $220 billion industry. Its growth can be attributed to the growing accessibility of the internet. Ownership of phones, tablets and laptops has gone up and this coupled with growth of Web 2.0 has had proven beneficial to online retail. More people have started to prefer shopping online due to the convenience it offers. Shopping online affords customers the opportunity of browsing a shop’s inventory from the comfort of their home or wherever they are and they feel it’s most convenient. Some people may not have the time to go to physical stores and online shopping gives them the option to buy the goods they want online. While the growth of e-commerce has been significant, cross border trading has faced a few challenges which have been detrimental to the potential of the industry reaching its optimum level. One of these challenges is the delivery systems that are employed in cross border trading.

Moving packages from one country to another takes a lot of logistics and there are a number of problems that occur along the logistical chain. Different countries have different systems and the differences in those systems make communication between them difficult. They commonly communicate through locally stored spreadsheets, handwritten bills of lading, telephone calls and faxes. These methods of communication are prone to human error and may slow down the delivery of packages. Some packages may be mislabeled and end up in the wrong place. For the customer, the supplier and the company tasked with the delivery, the loss of the packages will have financial consequences. Packages are also lost due to failed handoffs, failed deliveries and lost shipments. The cost of lost packages worldwide is estimated to be billions of dollars per year and this cost is passed on to the customers as logistics brokers do not cover it. Customers wind up losing trust in the delivery system and this will have adverse effects on the e-commerce industry as a whole.

The traceability of packages is a critical factor in the transportation process. When the package moves from one place to another, it is imperative that both the recipient and the sender know where the package is and what exactly it is. Due to the absence of a standardised system, the package has to be reweighed and relabeled at every stop because there is no trust in the information provided and how accurate it is. The redundant operations of re-weighing and re-labeling create unnecessary costs and make the entire delivery system more expensive. Another part of the current delivery systems that makes them expensive is the payment systems. There is need for third parties to verify the payments made by customers and these cost money. There are also accounting overheads that need to be paid and this again contributes to making the entire system much more expensive.

The problems being faced by the industry can be, in a nutshell, attributed to inefficiency, opacity and high costs attributable to centralised, non-standardized models. By making use of the features of blockchain technology, ParcelX has proposed a much needed solution to the challenges faced by the cross border package delivery industry. A blockchain is decentralized by nature and this means a standardised system can exist on it. This will do away with the challenges caused by differences in systems. A standardised system will improve the efficiency of package delivery systems because all the parties involved will be employing the same methods. This will allow seamless exchange and passing on of information between couriers regardless of their location. The decentralisation of a blockchain also means that information entered on it cannot be altered. This will go a long way in improving the trust in the system.

ParcelX’s package delivery system will depend highly on the transparent nature of a blockchain. Transparency will offer users the chance to be able to see the progress as their package is transported. The point of entry on a blockchain is low and this means anyone invested in it in one way or the other can access and view what is on it. By being transparent, the system will give users more confidence and allow them to place more trust in their couriers. Transparency doubled with the security of a blockchain provide a highly trustable system. The blockchain also does away with the need for a number of third parties to verify different parts of the process, making the entire process more affordable and removing the extra costs forced onto customers. Transactions will be done through standardised tokens and these will do away with the need for their parties who specialise in currency exchange. Payments will be verified on the blockchain, also doing away with third parties previously needed to verify the legitimacy of payments.

Cross border package delivery systems are a core component of e-commerce and the improvement of them will allow the entire industry to grow even further. Time will tell with regards to whether ParcelX will succeed in making those much needed improvements a reality.

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