How Blockchain Technology Can Transform E-Commerce Part 1

Rights to digital assets and access to data

Platforms such as eBay, Amazon, and Alibaba have changed the way people shop around the world. According to an article in Forbes Magazine from December of 2017 (source: https://www.forbes.com/sites/tompopomaronis/2017/12/15/e-commerce-in-2018-heres-what-the-experts-are-predicting/), 51% of Americans prefer online shopping to going to a physical brick-and-mortar store. In 2017, over 40% of millennials used voice assistants to shop online and this number is only expected to grow, which means that the e-commerce industry will be growing for years to come. There are several reasons why decentralized blockchain-based marketplaces would be very attractive to sellers.

 

Reason #1: Rights to digital assets and access to data

Every successful product page on an e-commerce website contains a lot of information about the product or products it features, including pictures, possibly videos, sales copy, descriptions of product specifications, and more. Typically, all this information is created by a merchant and creating this information is a lot of work for the merchant, yet when the merchant adds this information to a third-party website such as Amazon or eBay, the information becomes the property of the websites. Not only that, but the third-party websites can also use this information to advertise competing products. For example, on Amazon.com merchants can purchase advertising in the sponsored section and show their products when prospective buyers are looking at the pages of their competitors.

Smart marketers and platforms collect a lot of information about visitors of web pages such as time on a page, time spent reading and looking at different parts of the page, conversion rates, the sequence in which a user visited different parts of the page such as reviews, answers to questions, description of product features, and so on. All this information can be extremely beneficial to the sellers. For example, if a seller knows that most of those who had looked at the reviews have then bought the product, yet those who looked at specifications do not buy the product, it tells the seller that people are impressed by the reviews on the page and not impressed by the specifications, yet if they see reviews first, then they don’t even need to look at the specs. Based on this information, the seller will most likely redesign the page and significantly increase the conversions, yet in most cases third-party platforms such as Amazon do not share this information with the sellers, which prevents the sellers from increasing their sales in the way described in the example above.

Not only do the third-party websites not share the data with the sellers, yet allow competitors to use it to advertise their products, but they can and do analyze the data themselves and create competing house-brand products of their own.

Amazon has launched its private brand called AmazonBasics in 2009. In the beginning, it was a small line of products that included USB and Ethernet cables, DVD-R discs, computer mice and keyboards and other accessories and peripherals. The business philosophy of the founder of Amazon Jeff Bezos is that Amazon should be providing products at low prices, which it has been doing with AmazonBasics brand. When the brand just launched in 2009, Amazon was selling a 100-disc spindle of AmazonBasics DVD-R discs for a little over $18 while the main competitor, Maxell, was selling a 100-disc spindle of its DVD-R discs for $25.79. This means that Amazon started selling a product at a 29% discount. By 2016, Amazon has quietly launched 7 clothing brands for men, women, and children. These brands include Society New York, Franklin Tailored, James & Erin, and others. For e-commerce merchants that use Amazon as a selling platform, all of this means that when they start selling their product on Amazon, Amazon will be monitoring and analyzing the activity and if the seller is successful, it may start competing with the seller directly. Obviously, all of this is a big problem for merchants, which would not exist on a decentralized blockchain-based marketplace.