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D-Commerce: The Sliced Bread of Blockchain


E-commerce has brought speed, scale and a burst of options that were never possible before. Imagine what happens when decentralisation slices some monopolies and passes the jam bottle back to the small guy

Destiny is a weird thing. Post-it, Kevlar, Slinky, Laughing gas – so many inventions that find a new fate and future that was initially not remotely-near to the purpose or question at hand.

Blockchain is on its path to finding something huge and serendipitous too, and sooner or later, the world will have something that we would all wonder upon – ‘how come we were living without it till now’.

Until that missing tooth of peanut-butter makes its appearance, consider names like ApolloX, Wibson and Flipz. In fact, forget the names and peer into what they are up to. The idea of making commerce decentralised and empowering-for-individuals (and not the Big Cheese) may have sounded ridiculous till now but when you mix up data privacy with a good toss of blockchain – well, the line of ants does get rearranged.

Retail to Detail to Me-tail

Let’s first look into the very premise of a blockchain-based e-commerce marketplace. It’s been long watching, and enduring, centralised players using the possibility of wreaking unfair treatment on buyers and merchants alike. With great power, comes the temptation of great abuse too.

But the hot iron that blockchain is, it can flatten all power ladders. Now it is not hard to imagine a marketplace where no one sneaks into someone else’s data, overcharges shoppers, hold back hard-earned money of merchants, colonises an ecosystem and uses the scale as an excuse to dominate the industry in an unreasonable manner.

No Bread-Crumbs Here

If you look at Apollox (where beta version and testing are underway), its emphasis is on challenging “monopolistic intermediaries”. It plans to do that with a protocol to ease things for e-tailers and with independent web stores, marketplaces and reward mechanisms for users.

The issues it has taken aim against are unfair pricing, hidden costs, data abuse and the misuse of power. Blockchain can make it easier for merchants to access users without parting away their profits with big e-commerce platforms. At one point, it has even claimed it can decrease the costs associated with e-commerce by 40 per cent.

The use of tools like attribution protocol and payment protocol is intended as ways to bypass the dead-ends that exist in current platforms. The idea is to make connections between the right buyer and user fast and then enabling fast transactions too.

Then there was Flipz that brought in a smart e-commerce platform with blockchain smart contracts. Its co-founder Alexei Bobylev had described the initiative as an ‘a unique rating system of vendors based on blockchain technology, and transactions without commission.’ The pain points it targeted were the plight of smaller vendors while ensuring the absence of commission and intrusive ads.

It had reckoned that as much 50 per cent of the cost of a product built up thanks to the promotional costs incurred by the vendor.

To solve this, a foolproof rating system – insulated from the influence of money and bolstered with smart contracts – got devised to help users to find the best products on their own.

If we comb through the World FinTech Report 2019 from Capgemini and Efma, we will, incidentally, notice the progress and challenges of Open X, an integrated marketplace, as well.

Anirban Bose, CEO of Capgemini’s Financial Services had explained in a report announcement that- “In Open X, there will be seamless sharing of data, and ecosystem partners will be able to collaborate in a far more comprehensive way. Our research suggests that banks and FinTechs need to prepare themselves for a more radical change than many previously anticipated.”

Vincent Bastid, Secretary General of Efma (that provides insights to ban and insurance companies) had also underlined here that “In the era of Open X, ecosystem players will have to work together more effectively than they have previously.”

But what also came up is the possibility that integrated firms are likely to struggle to match the time-to-market of an ecosystem of specialists and find it challenging to meet the unique demands from customers.

A really-radical shift with the new marketplaces would be about data. Wibson, for instance, stresses that it does not collect or store data. “Wibson is a marketplace where individuals benefit directly from managing their data and making it available to buyers. It is an open, market-driven system where the buyer sets the price they want to pay and the individual data sellers can choose to accept or decline the offer based on the price, the use of the data, the company, etc.” Rodrigo Irarrazaval, Wibson Marketing Manager explains.

Splendid! What are we waiting for then? Should we not be, already, getting our milk from the sheep barn tucked in some dreamy meadows away?

No Aisles – A Different Maze?

There is no absolute decentralisation, reminds Meng Liu, analyst, Forrester attacking the very foundation of any of these off-the-rack marketplaces. “In terms of blockchain, either a consortium blockchain or a public blockchain is still centralised at a certain level. For the individual, I don’t see their data would be more easy, scalable and monetisable and secure with decentralised technologies.”

In the reckoning of Dr Rajkumar Palanna, a digital transformation expert, strong stable and trusted networks are critical for success in this new paradigm. So the ‘network effect’ is going to be again crucial for the success of such marketplaces.

As outlandish as it may sound, eventually players can distort the concept the way Facebook etc. twisted the potent powers of the Internet. Dr Palanna does not dismiss that possibility. “With the power of scaling that can be achieved by technology, it is possible that eventually, players with tech power will twist things to their favour.”

In Liu’s prognosis as well, we should already be worried about the creation of new “kings” either like tech giants who built the blockchain-as-a-service platforms or even cryptocurrency exchanges.

“There is more hype than pragmatic thought in this space.”

Saxophone Plays Ka-Ching?

Irarrazaval recognises the need for a balanced and fair marketplace that benefits both buyers and sellers and makes managing data easy. “Those are the main principles we are always working to deliver on.”

Maybe Artificial Intelligence (AI) can bring in the big answer current e-commerce space suffers from. AI can create more incremental and measurable revenue increase and cost cut, avers Liu but also notes that blockchain’s impact on the real business case is vague and more difficult to measure. “Many blockchain projects in China are having all the technologies in hand but struggling to find partners onboard or practical business cases. AI is a stronger disruptor in finance and e-commerce and can have a more direct impact on customer experience such as chatbot, facial recognition, Augmented Reality (AR), Virtual Reality (VR), which can give the customer a strong touch for emerging technologies. Blockchain is more focusing on improving the back-office operational efficiency and more relevant to B2B, which has a longer time to build trust with customers.”

D-Commerce should present us new solutions not new problems.

In the World FinTech Report 2019 that is dotted with hopes of Open X transforming industry norms and assumptions, it is also indicated that within the Open X marketplace, banks will need to enhance their integrated (traditional) model first and then focus on areas of specialized strength.

It shows that industry players are looking at two potential monetisation models for APIs (Application Programming Interfaces) – revenue-sharing (which 60 per cent of banks and 70 per cent of FinTechs think is feasible) and API access fees (supported by 46 per cent of banks and 55 per cent of FinTechs).

As to how would monetisation flow, and how ‘financial incentives’ would work while these players balance privacy and control for a data owner, Dr Palanna opines that financial incentives will come from non-traditional methods. “Every generation of new technologies will change the monetising methods. Old methods morph and new (several unpredictable) ones emerge.”

APIs, which allow third parties to access bank systems and data in a controlled environment, will be catalysts to creating the Open X marketplace, as per the World Financial Report from Capgemini and Efma. It observes that – ‘While customer data is already widely shared and leveraged in the industry, standardised APIs are not commonplace. Although requirements and regulations are complex, standardisation will help to reduce fraud, improve interoperability, increase speed to market, and enhance scalability.’

The market is gaining speed and this is the right time to pour in cognizance for the questions hidden on the top shelves for now. It was October 2018 when ApolloX front-end system beta version release came and by April 2019 ApolloX decentralised marketplace started test operation. The goal by 2020 is for ApolloX to become a fully decentralised service. Other players are making the ascent with similar speedometers. We are so close to bringing the bread and bacon home again. Past all obstacles. And confectionery houses.

However, it is a quest that will need both Hansel and Gretel to be patient, strong and stoic to temptations.

Just follow the crumbs right.

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