Luke Lappala

@lukelappala

Blockchain Will Kill Traditional Ecommerce — Here’s Why

Popular E-commerce platforms like Amazon, Ebay, and Alibaba have changed the way we live and shop. The convenience, low prices, and huge variety of available products are only a few of the major benefits that E-commerce platforms offer consumers. But at what cost? And where do we go from here?

Blockchain is paradigm-shifting technology and it will continue to innovate and improve a variety of industries. So how does E-commerce fit into this and how will blockchain help?

According to media forecasts, the U.S. online retail market alone will reach 1.2 trillion USD in 2020. While the market is growing, its main problems are beginning to emerge. Let’s take a quick look at a few of them.

Retailers

Digital assets aren’t owned by those who create them

On any given E-commerce product page, you’ll find a ton of high quality photos, product videos, reviews, and other information. Typically, these are created at great cost to the store owner, because without them, no one would buy their goods. However, ownership of everything on the product page belongs to the E-commerce platform the merchant is selling on.

Moreover, sales information and user behavior patterns stored on E-commerce platforms can also be used for unequal competition with selling similar products. For example, Amazon can arbitrarily advertise its own products and prioritize them over competition. You see this frequently when shopping for a competitor to Amazon’s Fire or Alexa devices.

High fees and prohibitive rules

To protect margins and bring in revenue, traditional E-commerce platforms take a % of the total sale revenue from retailers and often charge a per-sale fee as well. These fees vary by platform, but the range is generally 10–50% of the total sale price. Retailers build the cuts that E-commerce platforms take into the final price, which leads to higher prices for consumers and less profit for retailers. It’s a lose-lose for everyone except the E-commerce platform.

Furthermore, many of these centralized platforms cut-off direct contact between consumers and sellers. Amazon, for example, allows retailers one follow up email asking for a review and/or checking on the satisfaction of the customer. This drastically reduces the amount of relationship management a retailer can provide. To make matters worse, Amazon employs its own customer service team, who aren’t familiar with the products or company policies. This further adds to the transaction cost and could easily be done by the merchant directly.

And, if you don’t play by their rules — you’re out. There have been many cases of centralized E-commerce platforms shutting down a merchant’s access to their own page, with no indication as to why. There’s nothing like your livelihood being taken away with no explanation!

Consumers

The illusion of low prices and product selection

Prices on Amazon and other E-commerce platforms may appear low. But this is only because the other point of reference we can compare to is brick and mortar stores, which have huge costs to keep the store open, and thus need to charge a bit more for the products they sell. But as mentioned above, the E-commerce world has a ton of hidden fees on the retailer-side that end up getting passed to the consumer. No store, online or physical, is going to sell a product without making profit. So, if we can reduce the costs for retailers selling the product, we inevitably reduce the cost for consumers buying the product.

And while it seems like we can buy almost anything we want online nowadays, this is also an illusion created by comparing to your local supermarket or electronics store. Say you want a custom made [insert any product here] with a few special features or add-ons. How do you go about purchasing that on Amazon or elsewhere? You may be able to find a specialist somewhere in the world, but the costs of purchasing a one-off product would be exorbitant. But surely, there must be other people out there who want the same product as you. How do you band together to make a group buy to lower the cost for everyone involved? In today’s E-commerce ecosystem, you simply can’t.

No incentive to review, help, or share

Traditional E-commerce platforms offer no incentive for customers to leave reviews or help brands they are already advocates for. For example, Amazon recently made drastic changes to their reviews system because it was being abused by users who would charge brands an inordinate amount of money to leave reviews on their products. Why was it being abused in the first place? Because there is no incentive for customers to take the time to leave a review, answer questions, or share the page/product with their friends.

Wouldn’t it be nice to get paid for leaving in-depth reviews of a product you enjoy, or make commission from sales that were driven from a social media post you made?

Blockchain to the rescue

Blockchain will allow for decentralized marketplaces to emerge that, with the lack of a centralized team and the inherent costs, will provide lower prices for consumers and better rules for retailers. While some early blockchain projects such as Syscoin are creating online marketplaces, none have scratched the surface of tackling all the current issues the E-commerce industry faces.

Until now.

A new project called ECoinmerce has begun preparation for their blockchain-powered marketplace and platform. The platform aims to solve all the issues described above and many, many others.

For retailers, the cost of selling goods on ECoinmerce will be less than 0.1% and best of all, they will have complete ownership of all digital assets including their digital storefronts, product photos/videos, and reviews. This ownership will be recorded on the blockchain and will be 100% sellable, rentable, and tradable.

Additionally, retailers will be able to tokenize their store by launching Initial Coin Offerings directly on ECoinmerce. This will enable retailers to increase brand affinity, with loyal customers becoming early investors in their favorite projects. It will also deliver new revenue streams as retailers can sell their tokens alongside their products to maximize profit.

For consumers, ECoinmerce will allow users to buy as groups for higher discounts, auction goods to each other, and will feature merchants’ daily deals at huge discounts. Users will also be incentivized (via token rewards and/or commission) to refer friends, share deals with social media followers, and write product reviews for any goods they’ve purchased.

The project is headed by a team of experts from the E-commerce, supply chain and product development industries. They will be announcing the dates for their upcoming ICO soon. To learn more about the project or sign up for updates you can visit their site, join their Telegram group, like them on Facebook, or follow them on Twitter.

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