In any thriving economy one feature you’ll inevitably encounter are fair and open, but still competitive, marketplaces. However, in today’s ecommerce environments some feel that competitiveness has been stifled, and that markets are unfair and unhealthy from an economic standpoint. Where ecommerce is concerned, in most cases the only winner is the marketplace owner. PublicMarket is attempting to change that by decentralizing ecommerce on the blockchain, transforming the online business model, and creating a fair and more economically viable online market ecosystem.
Commerce has a Long History
You can look far back in the mists of time and see that societies have always known that a commercial commons was critical to a healthy economy. Even as far back as ancient Greece we see the grand Agora at the center of Athens, as a place of free and fair commerce that benefited all citizens. Regardless of what society or age of history you inspect, you’ll find that each prosperous society had such public markets. Even today you’ll see these markets in most societies across the globe, and those that are most open tend to provide the most fair benefits to all.
Once the internet was developed the history of commerce would be forever changed as a new type of commerce emerged – ecommerce. Once ecommerce arrived marketplaces no longer relied on local presence, but expanded to a global presence. This global presence promised to make buying and selling goods more efficient, and more affordable. The internet has certainly provided a larger selection of goods to most, but it has also created a dangerous situation in the marketplace in the form of the largest and most powerful middlemen history has ever seen.
Amazon is one such. While it filled an important role at the beginning of ecommerce, it has since increased its scope to such a point that it is now able to charge increasingly larger fees for doing little more in some cases than providing an online space for other merchants to list their goods. And it’s taking in tens of billions of dollars for providing that service.
Consider these statistics regarding ecommerce in 2018:
- The big three of Amazon, eBay, and Walmart constitute over 60% of online commerce.
- Amazon alone will control over 50% of all online sales in the next 3 years.
- Amazon alone accounted for 70% of growth in US online retail last year.
- The large majority of these marketplaces’ sales come from independent (“third party”) merchants, who bear all inventory risk and fulfillment costs.
In the west Amazon is becoming a near monopoly, and in the east Alibaba/Aliexpress is looking to fill a similar role. This means that for most people, ecommerce is controlled by 1 mammoth corporation, who has no responsibility to merchants or buyers. Their only responsibility is to make more profits to satisfy their shareholders. And since they have near monopolies they are able to add fees and costs to the commerce flow that excludes many smaller merchants while increasing costs for consumers on a growing number of purchases.
How eCommerce can be Fixed
Blockchain pioneers have spent countless hours thinking of industries and use cases where decentralized organizations built on top of transparent protocols will be able to replace the centralized monopolistic companies that dominate so much of our banking and commerce. Surprisingly given the size of the market ($450 billion in the U.S. alone), very few teams have come at the problem of ecommerce, which could be the most centralized industry of all.
PublicMarket is the team that is taking on the centralized monopolistic ecommerce marketplace. Looking to fix the broken system of economic disempowerment created by the few huge monopolies that have come to dominate ecommerce. These ultra-powerful middlemen have become more wealthy than monarchies, and more powerful than governments, using their wealth and power to control government policies that could be harmful to their workings, while also keeping wages artificially depressed and holding the keys to online sales.
The past 18 months has seen a team of technologists, entrepreneurs, operators and ecommerce masters come together to determine how blockchain technology might be used to overcome the monopolies created by the likes of Amazon. How can the excess fees and commissions be eliminated from ecommerce in a way that is immediately apparent to the general consumer.
PublicMarket is the proposed answer to those questions. A blockchain based, decentralized, open-source platform for ecommerce. It plans to eliminate commissions, and guarantee consumers can get the lowest prices on goods and services without having to sacrifice security or convenience.
There are two key aspects of the protocol that will be used to disrupt the current ecommerce ecosystem.
Decentralizing the eCommerce Stack
The very first feature of moving ecommerce to the blockchain is the decentralization of transactions. This peer-to-peer element of PublicMarket will help remove the current Monopoly Tax being charged by ecommerce corporations. It will break up the eCommerce stack and as a result healthy competition can return to markets.
The centralized eCommerce platforms were able to dominate and grow so huge because they provided two valuable services. First, they provided protections from bad actors, and secondly they were able to easily connect buyers and sellers. The problem for consumers and other merchants came from the fact that once they began to scale they established network effects, and soon they were left as the only suppliers of some services. Once that happened they were free to begin increasing prices as they pleased.
Since the beginnings of the centralized ecommerce monopolies came in the scene the world has changed. Blockchain technologies will return the competitive key marketplace functions, driving prices down, but keeping the advantages of aggregated data that allowed the monopolies to form in the first place. Think of the PublicMarket blockchain protocol as a means to keep the good aspects of network effects, while eliminating the ability to form a monopoly on top of the network effects.
For example, consider online inventory data. That data in the hands of centralized companies is proprietary. With a blockchain structure however, information about the products and prices, and who are selling them is all publically available. This is called “Public Inventory” by the PublicMarket team.
A Public Inventory like this allows any existing marketplace the ability to access and list items, but even more importantly it creates an opportunity for anyone to create an online marketplace quickly and easily. There could even be curated lists, which would allow, for example, a musician with a large online following to offer a grouping of music related products. This will allow marketplaces to compete based on user experience, rather than competing on price, or being required to collect user data and create a proprietary store using privately held inventory and user data.
Moving inventory data to the public realm is a game changer, but it isn’t the only facet of ecommerce that can be moved into the public realm. Reputation of both merchants and buyers could be added to the blockchain, making it both public and portable, allowing users and merchants to use their reputation on any blockchain, marketplace or decentralized application.
In addition, fraud protection can also be moved to the public, ensuring that everyone receives the best protection at the lowest cost. There are many other use cases where moving ecommerce data and features to a public blockchain will benefit both merchants and consumers, while dismantling the current centralized monopoly.
Incentivized Behaviors via Tokens
Another benefit of using the decentralized blockchain for eCommerce will be the creation of a utility token that can solve existing marketplace challenges, as well as allowing for user incentives and an alignment between all the various actors on the PublicMarket network, regardless of platform, marketplace or application.
The actual storefronts can use PTRN (Patron) tokens as a loyalty system to reward customers. They could also be used in other cases as an incentive to desired behavior. Or they could be distributed as a means to provide a discount to consumers, thus passing on the savings from a commission-free marketplace.
Perhaps a merchant would decide to offer tokens to customers who pay with crypto rather than credit card. They could do this since they would be saving on the transaction fees charged by the credit card issuers and other actors within that credit transaction ecosystem. Or, consumers may choose to share personal data with merchants in exchange for token rewards. This would enable data collection by merchants, even if they were unable to collect that data on the centralized private markets.
Bringing Public Markets Back and Ending Monopolistic Practices
Competition was once the lifeblood of a healthy marketplace, but it has been nearly killed off by the increasingly powerful monopolistic middlemen. Not only are these monopolies making it difficult for small merchants to thrive, they also serve to increase consumer prices, and warp the entire marketplace to serve their own interests, and that of their shareholders, rather than serving the common good.
The rise of the blockchain has given creative technologists and entrepreneurs the tools needed to bring back a healthy marketplace based on competition and fairness. This once in a generation shift will bring back a normal interaction between merchants and consumers. The intelligent application of blockchain technology to eCommerce will make markets friendly to all once more.