Our economy is shifting to a largely online buying and selling experience. It’s no secret, but here’s a handy infographic to put things in perspective:
Photo courtesy of digitalcommerce360.com
Somehow, in-person retail is still winning by a large margin, but the gap is closing every year. And this doesn’t take online marketing and research into account. According to Statista, about 82% of shoppers do online research before purchasing their product.
The point is, that the internet is the main source of information for most consumers. Most sales start online in one way or another. This also means that online marketing costs are rising as well. Facebook, one of the largest online advertising platforms, has prices based on demand. The more people are buying ads, the more expensive they will be for everyone else. Because demand is increasing, so is price.
Content creation and quality have also increased by about 50% over the past five years. Content creators are paid more, partly because of demand, but the impact of their work is diminishing. Based on a random sample of 100m posts from 2017, Buzzsumo found median shares per post have been reduced by 50% since 2015. This can be attributed to the increase in volume, which inevitably makes it harder for each piece to be seen.
Aside from huge marketplace fees and rising marketing costs, the online shopping game is changing fast. Instagram influencers used to wear clothing items and then mention the items in their photo descriptions. Now, the links to purchase the clothing items can be found directly on the photo. Your business needs to be able to keep up with trends like this. You need to be able to anticipate them as well. Stay ahead of the trends. Stand out. You shouldn’t be struggling to beat the competition. You should be the competition.
Not only are trends shifting, but Web2 shopping has developed many problems over the years. Programmers have found many ways to exploit vulnerabilities in our current e-commerce flow, causing problems for buyers and sellers alike.
Below are a few signs that your business is ready to make the change to Web3.
Sign #1: Your website has botting issues
Botting in e-commerce is a huge problem, and if you have ever seen a CAPTCHA or needed to use any other method to verify your humanity, you are witnessing the effects of botting second-hand. “Bots” are programs people create to buy products the moment they are released to the public. For example, the new Playstation 5 can only be found on sites like eBay for a huge markup. That’s because people are buying all of them in milliseconds before anyone else can.
This report by Imperva shows that “bad bots” represent around 25% of internet traffic. This number makes more sense considering there were about 4.5 billion people online during that same year. That’s equivalent to–perhaps not a billion bots–but a billion user’s worth of traffic.
Botting results in diminished customer satisfaction and lowered revenue for the company. The money that consumers spend on the price increase on a PS5 could instead be used on games or accessories. Also, fewer users will buy PS5s if they are all too expensive, further lowering the number of consumers in the ecosystem.
Using a Web3 tool such as SHOPX’s ReserveX Pass, consumers can essentially “hold their spot in line” for new product releases. With this tool, only ReserveX Pass holders can buy new products. The “purchase” button will remain inactive until the user plugs in their pass. This will completely prevent bots from gobbling up inventory upon release.
Sign #2: Your brand has an issue with knockoffs or fakes
It can be nearly impossible to stop the counterfeit industry from taking advantage of your brand. The counterfeit industry is growing every year. The tools used to create them are becoming more sophisticated, and the methods used to distribute them are expanding. One report shows about $30B lost per year in internet sales alone. And every year, the LVMH spends about $17m to combat this problem
SHOPX’s Web3 tool “MintX” allows brands to mint white-label NFTs called eNFTs. This special NFT acts as a certificate of authenticity, among other things. When customers resell your product on the secondary market, other interested buyers can verify their eNFT on the brand website to make sure that the seller did in fact buy the product from the original brand. Brands like the Real Real demonstrate how important the secondary market can be and how important authentication is.
These eNFTs provide visibility on the secondary market, which means more information about how your goods are bought and sold after they leave your warehouse. This type of information could be invaluable to your business as you scale. You may know your primary demographic. But who is your secondary demographic? How long are customers holding onto your items? Are your hot products being bought and resold at a higher price? Could you have set your price here to begin with?
Sign #3: You have a young, loyal customer base
According to Triple-A, 58% of crypto holders are below the age of 34. This makes Millennials and Gen Z the majority of crypto investors. Young people have gotten into the “thrifting” trend, and the desire for second-hand products is only increasing. Young people are environmentally-focused and want to buy sustainably. This calls back to Sign #2 and how Web3 enhances the secondary market.
Young people are deeply loyal to brands they love, and it’s a fact that keeping a customer is 5-25x cheaper than finding a new one. A current customer already knows the brand and is familiar with the products. Small updates and reminders can go a long way. On the other hand, teaching new customers can be time-consuming. Loyalty programs are proving to be highly effective in increasing revenue. Increasing loyalty programs by only 5% increases revenue by 25%.
You also have a 60-70% chance to sell another product to a previous customer. They’re also far more likely to refer friends and family. You only have a 5-20% chance to sell to a new customer.
Getting new customers always feels nice, but it’s getting more expensive, as shown above. Creating a brand loyalty program with ReserveX Passes can be a quick and inexpensive way to instantly create a fully-functioning brand loyalty program. Add discounts, perks, and more to your Pass to engage with your customers and reward them for choosing you. New ReserveX Pass drops can also be a great opportunity to keep your promotions going and remain visible to your audience.
Sign #4: You’re tired of high marketplace fees and rising costs
Of course, costs to run your business continue to rise. As inflation increases and other business owners do their best to turn a profit and make a living, it can be difficult for both large and small businesses to stay on their feet. There are fees going and coming. Marketing fees, marketplace fees, service fees, hosting fees, and on and on. Each middleman between you and your customer is another fee. A 10 %increase in fees, for example, may seem like a small amount, but add that up between 10 or 15 different types of providers and suddenly your business is struggling.
Web3 utilities like SHOPX aren’t middlemen. ReserveX and MintX are tools your business can access without having to pay fees or subscriptions.
Web3 isn’t a zero-sum game. Platforms are built to benefit the community, not to take from the community. When one platform wins, everybody wins. In Web2, when one platform wins, someone else loses. When Amazon makes billions in profit, that means someone else is not making that profit. There is a level of value creation in a company like Amazon, but much of this value is simply redistributed from small businesses and retailers to the executives at the top.
Web3 also has an amazing level of interoperability. NFTs used in one place can easily be used in another for a different purpose. The backbone of the Web3 ecosystem is congruent across all platforms. In Web2, each company is its own ecosystem. Information in one company doesn’t necessarily translate into something useful when transferred to another. Inventory data, for example, need to be re-entered each time a brand uses a new marketplace.
This sort of smooth, frictionless, borderless experience is exactly what e-commerce needs to evolve into an even more powerful economic force for the world.