Customer Empowerment Through Blockchain - Assignment Solution

• Introduction

Blockchains makes up substantial aspect of Internet of Things, which enables the recording of transaction and digital interactions in secure, transparent as well as efficient manner. Blockchains are interconnected set of ledgers which are purported to offer enhanced security of the data which is being transmitted over digital networks (Allison, 2016). Three main features of Blockchains which make it differentiated from other digital protocols are recording, transparency and decentralization (Ostern, 2018). Initially, Blockchains has been used in crypto currency, such as bitcoins. However, it has not only transformed financial services, but has brought disrupted change in multiple sectors (Ostern & Cabinakova, 2019).  Some instances of segments which are being modified by Blockchains are public services, supply chains, retailing, financial services, record management and entertainment and communication (Öksüz et al., 2014). The previous research has substantially highlighted the improvements brought by Blockchain in these highlighted areas, yet the limited consideration has been offered on the extent to which consumers are affected by the technology and how their behavior has been modified (Loebbecke, Lueneborg & Niederle, 2018). The gap thus pertains to the notion that empowerment brought by Blockchain and its likely effect on online shopping behavior of consumers is not well addressed in existing research. This proposed research will thus address this gap to identify factors which could cause positive consumer behavior as result of Blockchain technology usage in retailing. 

• Research Question

• How Blockchain technology has empowered consumers through data security and privacy? 

• How empowerment through Blockchain has brought changes in online purchasing experience of consumers?

• How trust of consumers is modified through empowerment offered by introduction of data security, privacy and transparency offered by Blockchain in retailing? 

• Justification of Research

The prior research on Blockchains has highlighted many of its tech based benefits, yet limited consideration has been brought to the behavioral changes in consumers. Although, online shopping trend is increasingly popular among contemporary consumers, yet issues of data privacy and security have impeded the purchasing decision of consumers to shop online (Koens & Poll, 2018). The benefits of Blockchain offered to consumers are substantial in terms of privacy and security of digital transactions and thus there is substantial need to identify that how empowerment of consumers through Blockchain has modified their online purchasing behavior. 

• Preliminary Literature Review

It has been highlighted by Koens & Poll (2018) that features of data security, transparency and privacy are likely to substantially modify the behavior of consumers. George (2016) has defined consumer behavior as the response of individuals towards specific products and services. For instance, the process of individual decision making about spending of resources as well as about consumption of items is addressed under the facet of consumer behavior (Allison, 2016). As noted by Felin & Lakhani, (2018) the recent advancement in Blockchain technology and its vital use in retailing has brought momentous and unprecedented advancements in social as well as economic aspects of consumers’ lives, which has altered the mode of communication, creation and consumption of individuals. 

The explanation of this phenomenon has been presented by Zavolokina, L., Miscione & Schwabe, (2019) Stating that provision of secure centralized database allows enhanced security for personal information of consumers that is being shared on digitalized databases. For instance, consumers has now obtained autonomy to keep their personal and private information, even while engaging in a digital transaction (Frey, Vuckovac & Ilic, 2016). Prior to introduction of Blockchain many events of digital theft have happened over the time, indicating that consumers were at serious risk of their privacy breach. As provided by Zavolokina, Zani & Schwabe (2019) the decentralization feature of Blockchain assures greater security of data even if any device or node fails. The elimination of need to use passwords and online identities have put consumers at greater ease to make online purchases, as they feel more secure while providing details of their credit card (Frey, Vuckovac & Ilic, 2016). Moreover, the usage of public and private keys has disregarded the need of associating identity of person with his/her address, which has made online purchasing more secure than even (Scott, Loonam & Kumar, 2017).  It has been noted by Ryan (2017) that most of consumers who were not preffering online purchasing was associating it with the reason that they do not have trust on middle organizations who facilitate digital transactions. However, the introduction of Blockchain has completely eliminated those mediating organizations and by offering more secured transaction, it has generated high trust of consumers on online shopping. 

Likewise, the data transparency feature of Blockchain is also beneficial for consumers, as highly accurate database is established through it, which offers protection to information shared (Frey,  Vuckovac & Ilic, 2016). Additionally, the cryptography is also valuable for concealing the identity of user, which makes it impossible to reveal the identity of account owners. Finally, it has been provided by Schlegel, Zavolokina & Schwabe (2018) that trustless feature of Blockchain provides that there is no trust needed on third party, which creates greater ease among consumers to shop online. All of these evidences clearly highlight that Blockchain has made online transactions more secure and private, which has brought positive changes in behavior of consumers and they are more likely to make decision of shopping online.