Multiple blockchain-based start-ups are proposing ways to solve the problems of traditional e-commerce. We look at some of them to decide how competitive they could be
In our previous two articles on the evolution of retail, we traced the development of giant e-commerce entities like Amazon, Alibaba and eBay, and showed how blockchain solutions were changing the rules of how e-commerce operates.
In this article, we investigate some of the clever ideas that startups are bringing to the table and consider how competitive these may be.
Most of them are still in the development stage, and It is too early to tell whether any of them will be successful. But they are developing the technology for others to take up later.
A quick disclaimer: These companies have been randomly selected to give an idea of what is out there. This is not an endorsement of any of them.
Teky aims to create an ecosystem that brings together three industries: technology, e-commerce and education. The project has been in development since 2016 and had a successful ICO at the end of 2017.
The e-commerce part is represented by the MEK.store which sells smart-tech toys and gadgets, using a drop-shipping model, with distribution centers in China and the USA. The target market is the tech-savvy and millennial, particularly in Asia Pacific which has the highest demand for so-called STEM (science, technology, engineering, maths) toys. The MEK is the e-commerce token to be used for all purchases.
The education and e-learning part is represented by the TEKY Technology Academy, which teaches programming, application development, robotics, 3D and other high-tech courses to children aged 4 to 17. This is done through Lab chains, school partners, franchisees and an e-learning platform. Payment for training is with the MEK token.
According to their calculations, “The “crypto nation” with a population of over 15m coin owners, and a net worth of over $151B, is still in the early stages of development with high consuming demand.”
Teky aims to provide both products and education to this “crypto nation”.
Blockscart is a start-up based in Europe, planning to provide a platform where you can buy and sell items or services using cryptocurrencies as payment. The platform has been developed on the Waves blockchain.
It is a fees-free service for those using the internal BLXS coin. A hedging system will guarantee the price of the BLXS as at time of the sale. Sellers have the option to be paid in USD tokens, via the Waves DEX (decentralized exchange). They can also use the Waves Payment Plugin to accept BLXS on their own websites. There is a mobile app which gives access to the decentralized exchange and mobile wallets for a variety of coins. The plan is to add 50 different cryptocurrencies to the platform.
This is a peer-to-peer shopping model. One of the unique features is a secure yet private internal messaging service that allows for direct communication between buyers and sellers. There is an automated escrow system in place to protect both buyers and sellers — this is the only service for which there is a fee. There are no restrictions on what you sell or on geographic location.
Security is a key feature. The platform holds no payment information, no private keys and no possible way for a hacker to access your funds. The payment gateway has special security features and is constantly monitored.
Blockscart says that they have created the “trading platform of tomorrow” — combining current technology and paradigm-breaking blockchain.
BlockMarket is a decentralized marketplace set up on the Syscoin platform that promises 100% uptime.
Syscoin users (and developers using the platform) will be able to create and manage their own online stores through a web-portal, using either a desktop or a mobile device. They will be able to sell “anything, to anyone, anywhere on earth, without middlemen, credit card fees, or interference”.
They can make use of an encrypted instant messaging service, instant transactions (ZDAG), escrow services to secure payments and resolve disputes, and can accept payments in Syscoin, Bitcoin or ZCash. Buyers will be able to search listings, set filters and view sellers’ profiles and ratings. Proof-of-shipment is via a video, hashed and included in a data field within the shipping notification transaction.
A special Syscoin “Identities” feature will allow users to encrypt personal information, including shipping addresses. Inactive users and outdated data will be removed from the blockchain through a pruning mechanism. There is a decentralized governance system on the platform, managed through the masternode method.
BlockMarket advertises that they are “similar to eBay or Amazon but without corporate gouging, political interference, downtime or maintenance fees”.
Beam is a global payments acceptance platform, with built-in support for smart contracts. It is combining mobile phones and blockchain technology to provide an easy-to-use and fast system for retail payments.
The current retail economy has multiple inefficiencies. According to a McKinsey report, $1 trillion is lost every year to C2B payment processing. Beam aims to remedy this wastage. Merchants using the Beam network have completely eliminated fees processing fees. Payments can be made in fiat or cryptocurrencies without exchange fees being charged.
Currently, users can tap their phone against a point of sale terminal (such as a credit card machine) to make payments. This uses NFC technology, with one device passing information to another. The long-term goal is to remove the need for POS devices altogether — something that apparently neither Apple nor Google can do with their current systems. This will represent an additional saving for merchants who currently pay rental for these devices. Beam can also use Bluetooth or QR codes to recognize the customer.
In addition, the retail economy is inefficient because no-one really understands the customer. Retailers, manufacturers, suppliers, brands, malls — everybody has a fragment of the customer’s data and generally, no-one is prepared to share it. In addition, payment services like Visa, Mastercard, and PayPal and marketing tech giants like Google and Amazon take control of customer information and monetize it. As a result, according to McKinsey, misdirected advertising and poor demand planning leads to a further waste of $3.5 trillion.
The main focus on the Beam system is the sharing of data. All stakeholders, including the customer, retain ownership of their own data. All are incentivized to share it. This sharing and the associated rewards will be controlled by smart contracts.
The Beam technical network already has 750,000 users in 5,000 stores. Because it can integrate into existing POS devices, it is technically linked to a further 400,000 stores. It has already executed over 4.3 million smart contracts with total throughput in excess of $250 million. It has been operating in Sweden, Australia and the UAE, and the plan is to expand into Netherlands, Portugal, Spain, South Africa, Singapore and New Zealand. Beam has been ranked №5 in the Top 50 most promising startups in Europe.
Beam markets itself as “the future of retail”.
Nauticus is a Melbourne-based fintech company. It is developing an exchange that will launch with 100 crypto and 7 fiat currencies. This is so that investors don’t need to register on multiple exchanges to exchange currencies. The internal Nauticus coin (NTS) is an integral part of the crypto-banking and eCommerce ecosystems.
The exchange will power the eCommerce platform, providing a secure online payments system and wallet. Users and merchants will be able to send and receive payments — “like PayPal but with much lower fees and live market rates”. Instant payments will be possible in both fiat and cryptocurrencies. The platform will allow for peer-to-peer funds transfer and contactless payment methods via NFC, QR, Apple Pay and Android Pay.
The company promises ultra-low listing and payment fees. There will be a blockchain-based rating system to build trust and reliability. This rating system will be more detailed than traditional sites, allowing for review of the entire supply chain and components of a product.
The Nauticus project is concerned about responsible citizenship and sustainable ethical business practices. This is shown by the following:
· Portion of the NTS coins will be donated to The Salvation Army Sponsor a Child Program and to The Ocean Cleanup
· The blockchain mining center will be run on renewable energy, and its location will benefit a struggling community in Malaysia or Indonesia
· Some of the profits will go to community infrastructure such as water and sanitation and towards education
· The eCommerce platform will have blockchain verification of the supply chain so that consumers can choose ethical and sustainable products.
Their goal is to partner with major retailers who can verify their own supply chains and offer consumers ethical products.
The Nauticus exchange is launching in 2018, and the eCommerce platform is planned for 2020.
Are blockchain-based startups solving e-commerce problems?
The major problems that have been identified in the current e-commerce model are the following:
1. The time and cost of cross-border transactions
2. Security of payments
3. Order fulfillment and transactional risk
4. Ownership of data
5. Ownership of customer relationships and vendor-IP
It is clear from reading the plans of the startups we have selected that they are addressing these exact problems.
· Blockchain technology and the use of cryptocurrencies allow for instant cross-border transactions.
· Cryptocurrencies don’t need bank clearances and intermediaries, so fees can be dramatically reduced.
· Peer-to-peer payments and secured wallets prevent fraud.
· Blockchain technology that records and tracks all transactions and supply chain activities ensures dispute-free order fulfillment and lowered risk for both buyers and sellers. This is often backed up by blockchain-based rating systems for participants.
· All participants and especially customers own their own data. Many of the companies are putting systems in place, mostly driven by smart contracts, that will allow participants to monetize their own data. There are incentives for them to share the data with whoever they choose. The major e-commerce and marketing monoliths are no longer in charge of this information flow.
· Peer-to-peer relationships between buyers and sellers are facilitated by the platforms, but they don’t try to own the relationships.
These companies are geared towards the new generation of tech-savvy, mobile and often environmentally-conscious customers.
They are providing an increasing number of places where cryptocurrencies can be used for day-to-day shopping. This will bring current crypto owners into the e-commerce space and will also grow acceptance and usage of cryptocurrencies for new users.
Time will tell which of these companies will be successful. It’s clear, however, that all of them have dreams of being the Amazon or Apple or PayPal of blockchain.
Read the full series on the evolution of retail through e-commerce and towards blockchain: