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How will web3 e-commerce impact the business landscape?

web3 and e-commerce
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E-commerce sales in the U.S. are expected to surpass $1 trillion by 2022, says a report by Insider Intelligence. Another report by U.S. Consensus Bureau News claims that e-commerce accounted for 13% of the total retail sales in the first quarter of 2022. These impressive numbers point to the fact that we are witnessing an e-commerce revolution that is gaining momentum as web3 lays the groundwork for a permissionless and decentralized internet. We might soon witness the rise of interconnected, non-exclusive systems that any seller or brand can use online to power their business. Web3 empowers brands to adopt e-commerce solutions and systems best suited for their needs rather than being tied to monolithic platforms that control sales channels, customer data, and operations.

Although e-commerce is experiencing tremendous growth and success, it has its limitations. The problems are mostly due to the fact that most platforms rely on centralized financial institutions or payment gateways for operations like transactions. Such a centralized approach to undertaking e-commerce-related financial activities is not just less secure but also less reliable. In a web3-based e-commerce setup, all vital information, including transactional data, can be stored directly onto a blockchain. This could eliminate most of the problems that exist within the current e-commerce system. Thus, web3 e-commerce can be considered disruptive with transformative outcomes for the e-commerce industry.

What is web3?

Before we dive deeper into e-commerce in web3, let us first look at the concept of the next-generation internet – web3, which is also sometimes referred to as participatory internet.

Web2, the predecessor of web3, has centralized data, which means that it’s owned and controlled only by a small number of large players. These large corporations are sometimes called “Big Tech,” a term coined by one of the co-founders of Ethereum. This is the polar opposite of the digital world web3 enthusiasts envision. Web3 is a new digital universe that uses blockchain technology and blockchain concepts such as decentralization and token-based economy to enhance user experiences. Web3’s decentralized nature removes “Big Tech” and any such intermediary from the equation. This is what makes web3 appealing. Web3 is not a platform where users can access the internet via centralized platforms like Google, Apple and Facebook. It is a user-focused web architecture where individuals can own and control their parts of the internet.

Web3 removes the need for “trust” or intermediaries facilitating virtual transactions, and blockchain technology ensures that the transactions are secure and payments are reliable. Web3 can also protect user privacy better since it is not dominated by big tech companies that collect potentially sensitive data.

Web3 characteristics

  • Information is mostly free and open-source
  • Transaction information is unique and authentic
  • Every person is the owner of their data
  • The central monetary system has been replaced by DeFi and cryptocurrencies
  • Transactions and ownership transactions are anonymous

Challenges in the present e-commerce industry

Though e-commerce is exploding in popularity, it has its own limitations. Here are the top e-commerce challenges:

  • Online identity verification – How does a retailer determine if a buyer visiting an e-commerce site is real? Are the details entered by them correct? Are they really interested in e-commerce products? How can you proceed if you don’t have all these details? Things can get truly difficult. However, it is possible to solve this problem by investing in online identity verification.
  • Cyber and data security – Security breaches are one of the greatest challenges in e-commerce as it involves a lot of information and data. A data-related technical issue can have severe consequences for the brand’s image and daily operations.
  • Attracting the perfect customer –There are many options for shoppers these days. They do expensive research before buying anything. How do you ensure they choose you from the many options available to them? How can you find the perfect customer who will buy your product at your price? Attracting the perfect customer is not easy within the e-commerce industry.
  • Customer experience – A successful e-commerce website must provide a positive customer experience. Customers expect an experience similar to what they would have in a brick-and-mortar store. So, it is important to consider the website’s navigability, the content flow, segmentation and retail personalization of products based on shoppers’ preferences.
  • Customer loyalty- Two facts prove the importance of customer loyalty. First, acquiring a customer can be more expensive than keeping an existing customer, given the growing marketing and promotion costs. Second, the success rate in selling to an existing customer is higher compared to selling to a new customer. These two facts show how crucial customer loyalty and retention are. Customer loyalty is essential once a customer has made a purchase or used a service provided by a retailer. They must ensure that this customer stays with them for the rest of their lives.
  • Converting shoppers into potential buyers – Converting visitors to paying customers is one of the most difficult e-commerce tasks. A website selling e-commerce products may have an impressive volume of traffic, clicks and impressions but not the expected sales figures. This is another pressing concern within the e-commerce industry.
  • Competitor analysis with growing competition – A “Jam Study” was once conducted to test the knowledge of customers, which had a surprising conclusion. As per the results of this experiment, the less you offer customers, the the greater the chance they will purchase something. People are tired of all the choices available. A simple search for something will give you thousands of options. How do you choose then? All this has made it difficult for retailers to stand out from the crowd. It has also become difficult to get shoppers to visit their site instead of sealing deals with other retailers. These problems are mostly due to the fact that most e-commerce platforms rely on financial institutions or payment gateways for functions like processing payments. Using blockchain will give them direct access, eliminating most of the current system’s problems.
  • Customer support – As e-commerce is rapidly growing, the number of e-commerce users has also increased exponentially. However, an equally rising number of users face diverse issues on various e-commerce platforms almost every day. Although customer support has been augmented with chatbots that enable faster request processing and ticket response, these are not sustainable solutions. For instance, many chatbots make customers feel annoyed and dissatisfied.
  • Cross-border e-commerce – Many e-commerce websites tend to be stagnant because they lack interaction with customers from outside their linguistic and geographical range. Customers who don’t speak the site’s main language will look for alternative retailers to get a better experience. Users are discouraged from buying across borders due to differences in pricing and tax rates.
  • Marketing budgets – Digital marketing is becoming a standard for e-commerce businesses. More companies are turning to social media and digital marketing to increase ad spending. The prices of clicks and virtual advertising space are rising as well. This can be very costly for small and medium-sized e-commerce retailers. It is also one of the biggest challenges.
  • Data privacy – Today’s customers are well aware of the importance and need to protect their data. Apple and other device manufacturers are doing everything possible to protect their users’ data from third parties. However, data privacy is still a concern in the centralized e-commerce space.

Benefits of web3 e-commerce for businesses

Web3 and associated technologies like NFTs and cryptos are already impacting the e-commerce industry, and this trend will likely continue in the future. After all, blockchain’s use cases are expanding as businesses of all sizes and scopes are innovating at lightning speed. Let us take a look at real-world examples to see how this affects the e-commerce landscape.

Decentralized finance or crypto wallet

In web3, you can use cryptocurrencies to make payments on e-commerce platforms such as Shopify and WooCommerce.

Decentralized marketplaces

Web3 will create decentralized markets where users can decide what they want to get produced. It will be a community-managed market that will allow for freedom of exchange and give users complete control.

Blockchain-based trustless e-commerce

In the near future, consumers will likely buy products from online shops using innovative, contract-enabled and distributed apps called decentralized apps or dApps over the blockchain. These transactions will be immutable, trustless and executable by self-executing codes called smart contracts. This will reduce fraud, chargebacks and returns. While trust is still the main driver of e-commerce today, web3 will place less emphasis on trust as the blockchain guarantees trustless transactions. E-commerce payments with cryptocurrency will be the norm, and it will be the same as using credit cards or Paypal.

NFT-based e-commerce loyalty reward programs

NFTs are used in e-commerce for monetizing loyalty programs. These programs reward customers with points for each purchase, which can be redeemed for products, discounts or even bigger bonuses. NFTs enable companies to offer more valuable loyalty rewards. Companies can now issue NFT-based tokens with a predetermined value to customers instead of just giving them random points.

Customer experiences in the metaverse

With many emerging technologies, there is no one definition or model of what the metaverse will look like. The metaverse is an amalgamation and extension of many emerging technologies such as AR/VR, blockchain and cryptocurrency. The metaverse can be described as a world of virtual spaces in 3D that are constantly expanding and becoming their own economy. E-commerce brands have an exciting challenge and opportunity to create unique customer experiences within the metaverse.

NFTs to build and monetize communities

POAP or Proof of Attendance Protocol shows how innovators are expanding NFTs, which is precisely what their business idea is. The core idea behind POAP is to turn participation at events into NFT assets. Badges visually represent the POAP. For example, you could scan a QR code in real-time to receive an NFT memento that will allow you access to an online community.

web3 e-commerce


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Blockchain applications in web3 e-commerce

The foundation layer of web3 is built on blockchain technology that leverages the undermentioned benefits of web3 e-commerce :

  • Inventory control – By incorporating blockchain into inventory management, retailers can reduce inventory items as with standard shopping carts and order replacement stock when certain thresholds have been met.
  • Digital ownership – Even though a store owner pays a lot for high-quality photos and videos, apart from other information essential to an e-commerce website, the ownership belongs to the e-commerce platform. On the other hand, with blockchain, retailers have full ownership of all digital assets, including the digital storefront, product photos/videos, and reviews.
  • Loyalty reward programs – Blockchain allows customers to receive personalized offers and loyalty reward programs. Blockchains can securely store data about customer preferences and purchase history. This allows personalized offers and loyalty reward program automation within the blockchain.
  • Identity management – As more people use online channels to transact, the digital footprints that they leave behind are incomprehensible. Retailers can use blockchain technology to create strong customer authentication mechanisms, along with encrypted digital identities. This will allow them to improve identity management and protect individual identities from misuse and theft.
  • Supply chain monitoring- E-commerce companies can track the supply chain using blockchain technology. It allows them to ensure vendors adhere to the agreed criteria and not substitute products without prior notice. Transparency is maintained throughout the process.
  • Warranty management- With blockchain, retailers can store warranty information easily and efficiently. Customers, manufacturers, and retailers will all have access to the data. This allows warranty information to be easily accessed, validated and verified.

Benefits of blockchain technology facilitating e-commerce in web3

More transparency

Blockchain technology allows organizations to operate in a decentralized way. The technology relies on peer-to-peer networks or nodes responsible for validating and carrying out transactions. Once the validation is done, each node retains a copy of the transaction’s record. Thus, a blockchain network manages transparency by keeping a copy of each transaction’s record.

Enhanced security

Blockchain offers better security than any other platform or record-keeping system. Each transaction is recorded using the consensus method, and the transaction is then encrypted and linked with the previous transaction by the hashing algorithm. Each node on the blockchain has a copy of each transaction and its history, enhancing security. As a result, hackers cannot compromise transaction data.

Lower cost

For most businesses, cost-cutting is a top priority. Organizations no longer have to pay intermediaries or third-party vendors to verify trading partners. You won’t need to look through so many documents to finalize a transaction. Everyone will only have one copy, and it will be permanent.

Improved traceability

It is not easy to trace goods in traditional e-commerce, which can lead to many complications, such as theft, counterfeiting, and loss. Blockchain allows all parties to track products and ensure they are not lost or stolen during the supply chain.

Speed and efficiency

In the old days of paperwork, transactions were slow and time-consuming; they were susceptible to human error and required third-party intervention. The blockchain streamlines and automates the process, increasing efficiency and speed. Every transaction record is stored in a single digital ledger that can be shared between all parties. It is easier to trust one another without having to use multiple intermediaries. Clearing and settlement can also be done faster.

How should brands prepare for web3 e-commerce?

What can brands do to prepare themselves for the shifting sands of web3?

  • Token gated commerce – First, you need to get people excited about blockchain and NFTs. Token gated commerce is a direct link between these technologies and e-commerce, and gives customers a reason to buy your NFTs and invest more loyalty in your brand.
  • Metaverse experience – You are familiar with the impact of personalized retail experiences on buying behavior. The metaverse will be no different. Metaverse experiences, such as product previewing with customization that can be paired with customer avatars, will give customers a reason to interact with your web3 presence.
  • Gamify your shopping experience – Engaging a younger audience in the game means simply dipping your toes in the pool. You can use NFTs to unlock parts of your shopping experience. This will make it feel more interactive and generate buzz without feeling like traditional advertising.
  • Accept cryptocurrency payments – Accepting crypto shows statistical advantages in creating large order value – at a minimum among crypto enthusiasts. You can also build trust with your customers by accepting cryptocurrency payments.

What is the future of web3 e-commerce?

Web3 will profoundly impact how e-commerce will work in the future. Let us discuss the implications and how they will impact selling products online.

  • Token gating for retail –  When a brand operates in a decentralized way, consumers tend to feel that they are part of it, thanks to NFTs and dApps. As Forbes notes, “The value of an NFT isn’t just in the asset, it’s also in what the buyer gets from the asset—and that is where you can start to build brand loyalty.” Future retailers will be able to succeed by offering loyal customers digital ownership through customer avatars and token-gated commerce.
  • More investment in the direct-to-customer (DTC) model – Web3 will bring decentralization to companies that can build individual relationships with their customers. More e-commerce brands have realized that investing in the DTC model can facilitate building direct relationships with customers, which will help them remain relevant longer to a wider customer base.
  • Omnichannel marketing – Customers enjoy engaging with brands across multiple channels. Omnichannel marketing increases customer retention with 90% higher retention rates than single-channel marketing, says a report by Omnisend. Web3’s personalization is what may make omnichannel marketing unique for consumers. They will experience enhanced personalization through AI-powered customer avatars. Web3 will also enable higher quality personalization at scale, which could lead to higher retention rates over the long term because consumers prefer brands that are “knowledgeable.”
  • Customer acquisition – Marketers can access the internet without being restricted by gatekeepers. Better yet, advertisers will be invited in by consumers. Web3 will become less advertising-like and more collaborative in nature. Newer channels, such as streaming audio or in-game advertising that were not as prominent in web2 will be points of acquisition for potential customers within the web3 ecosystem.
  • B2B payments – B2B e-commerce is gradually becoming more like B2C. For example, Shopify plus allows you to use B2B strategies, such as custom pricing options, alongside more traditional B2C features, like personalizing purchasing experiences. Web3 is democratizing the way consumers interact with brands. We expect the lines between B2B and B2C buying to continue blurring in the times to come.
  • The supply chain – Logistics, shipping and the supply chain are undergoing revolutionary changes with blockchain technology gaining steam. Blockchain promises to revamp these areas by increasing transparency in the supply chain as well as potentially lowering logistics costs. You can create shared food system records to create supply-chain transparency. Similarly, you can monitor food freshness to ensure that consumers are aware of it.
  • Consumer engagement – Consumers may become more comfortable with NFTs and crypto-based incentives with time. To encourage platform participation, many games have started to offer NFT- or crypto-based incentives. UniX allows gamers to earn points by simply engaging in virtual games. At the same time, non-gaming brands are becoming more involved in gaming by offering NFT collectibles to encourage players.


Web3 is the decentralized version of the web that promises to address the flaws in legacy web versions, like web1 and web2. With AR and VR becoming more popular as experience-enhancing technologies and NFTs continuing to boom, new standards in e-commerce may be expected with a wider range of options for customers. Modern brands want to be there for customers no matter where they shop- online, in-store, or via social media. With the connectivity web3 provides, omnichannel strategies will be even more efficient as brands can link all their sales channels and operational systems to provide seamless e-commerce experiences for their customers. Web3’s inherent quality, decentralization, allows brands to run their apps without a single point of failure and benefit from blockchain’s robust technology stack. Web3 will undoubtedly provide the best e-commerce experience possible for consumers and brands.

Want web3-based solutions to offer an enhanced user experience and make your e-commerce business stand out? Our web3 experts are ready to give you out-of-the-box solutions and help you materialize your vision!

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Author’s Bio


Akash Takyar

Akash Takyar LinkedIn
CEO LeewayHertz
Akash Takyar is the founder and CEO at LeewayHertz. The experience of building over 100+ platforms for startups and enterprises allows Akash to rapidly architect and design solutions that are scalable and beautiful.
Akash's ability to build enterprise-grade technology solutions has attracted over 30 Fortune 500 companies, including Siemens, 3M, P&G and Hershey’s.
Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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