Applications of Web3.0 and Blockchain in Ecommerce

For those of you who know me, you may know my roots go deep into the e-commerce game. I’ve run an e-commerce marketing agency with dozens of employees, spent 10s of millions on digital advertising, and driven hundreds of millions of dollars in online revenue for brands that I either own or consult for.

But today’s article isn’t about my experience and where the space has been. Rather, where the industry is going, and how the blockchain is going to completely revolutionise e-commerce shopper interactions with the brands they already know and love.

You see, the blockchain is still a tool far from mass adoption. NFTs, crypto, and the likes are still not yet at the finger tips of the general consumer. In fact, with the market lower than it’s been in years, we see quite the opposite when investigating consumer sentiment. NFTs are stigmatised and offering crypto checkouts on your site has your customers wanting to run, rather than encouraging them to spend more.

Yet, now more than ever, I believe the blockchain will find its place in e-commerce brand-customer interactions. Why?

Well, you see, the power of the blockchain far extends the limited use cases we’ve seen thusfar. Throughout the 2021 rise of Bitcoin, we saw brands executing new initiatives that completely transformed their footprint and had shoppers raving for more. Yet this was a very niche market.

The gap to achieving this stands not in innovation, but rather, in accessibility.

But before we get into that, let me set the landscape a little with an example.

In 2021, decades-old streetwear fashion brand, The Hundreds, released a collection of 20,000 NFTs known as Adam Bomb Squad.

At the time, many customers knew very little about the impact the Adam Bomb Squad collection and community would have on the brand.

Yet now, they are the leaders in blockchain based e-commerce communities.

The Hundreds introduced, what we call in the NFT space, “utility”, for their token holders. Where holders of an Adam Bomb Squad NFT received special perks on their website.

These perks are ‘token-gated’, meaning only accessible by those who can sign in with their crypto wallet and verify ownership of the NFT.

And in doing so, these holders receive access to certain exclusive products, only available to members of the community. Pretty neat, right?

And they’re not the only ones — Yuga Labs did the same with their Bored Ape Yacht Club collection. Selling out their apparel completely within hours.

And in doing so, achieved the following:

1. Increased customer lifetime value, as their most loyal customers are rewarded with perks, and end up spending more than they otherwise would have. Profit!
2. Decreased customer acquisition costs: Building such strong communities of loyal customers results in raising an army of brand ambassadors who promote the brand. Profit!
   (There are multiple mechanisms in which this occurs, which we’re going to get into shortly)
3. Introduced new revenue sources: Adam Bomb Squad sold 20,000 of their passes, for a total of $10,000,000. In addition, they continue to generate revenue, as they take a cut of every resale that happens between customers. Profit!

In the traditional internet — we have a word for this: Loyalty Programs.

Yet these programs, when integrating the blockchain, unlock a new world of possibilities that have never been seen before — as users’ memberships are asset backed — by these passes that sit on the blockchain.

This allows for a number of things:

1. Capped access: We can release a set amount of digital ‘passes’, which create scarcity into these programs.
2. Transferrability: These passes can then be transferred between users.

This makes things interesting from a brand growth perspective…

Firstly, the finite supply means that once you sell x,xxx passes into your program, that’s IT! Either everyone else misses out, or they need to purchase a pass from an existing customer, on the secondary market. We code these passes so that every time a customer sells one to someone else, we can take a percentage of this sale. That means more money for the brands.

Note one important term: secondary market. Selling passes into a program like this has been very difficult to do with the traditional internet. There’s only one case worth noting…

In 1981, American Airlines released their AAirpass to recover losses due to the airlines deregulation act.

They sold 66 AAirpasses for $250,000 each, which allowed the passholders unlimited first class flights. These passes became so valued by the customers, that even AA themselves couldn’t buy back the passes for $1,000,000 each when they wanted to decommission the program.

When these passes have a secondary market (due to finite supply), the price floats based on the value the customers are receiving. We saw this with AA. And we’ve seen this with products from brands such as Rolex, Yeezy, and Supreme.

As a result, holders of these finite passes are incentivised to share the brand with friends and family. To post on social media. And to do whatever they can in order to help grow the brand and increase demand in the program, so that their pass value goes up.

And this is how our digital asset backed passes actually help decrease the cost to acquire new customers, and help your brand grow.

We’ve seen this exact theory play out, as users have set their profile pictures on social media as their NFTs in the case of Adam Bomb Squad and Bored Ape Yacht Club.

Secondly, by providing access to token-gated benefits such as discounts, exclusive access to products, and content, customers are rewarded for being a part of the program, and are provided value. In turn, these customers come back more often, and spend more. Not to mention, they are proud to represent the communities they belong to and identify with.

I fell for this too…

Being someone who’s not into fashion in the slightest, I spent an absurd amount of money on the BAYC apparel drop, simply to express my pride in being a part of the BAYC community.

So to recap, customers shop more often, spending more, and raving more about the brand they are spending their money with. Additionally, brands are creating completely new revenue sources in the form of pass sales, and pass resale commissions.

All roads hence leading to growth for the brand.

So why aren’t more brands doing this?

It’s simple… Accessibility.

You see, the accessibility challenge here is two sided.

For brands to implement such programs, they need to hire expensive blockchain developers to code these passes and integrate the token-gating functionalities on the website.

And for customers, it’s a very foreign concept to use a decentralised crypto wallet, and cryptocurrency, to purchase the pass, and then verify ownership on the brand’s website to access the benefits.

The technology just isn’t available yet for this to work in the broader markets, beyond that of just crypto fanatics.

In fact, if I was launching such a program for my brands now, I would steer well clear of even referring to the pass as an NFT.

We just saw Reddit execute on this beautifully. They recently released Reddit Avatars — images that customers could purchase to use as their profile pictures on reddit for between $9 and $99. Little did the users know that these were NFTs. Reddit merely used NFT technology to facilitate this.

And the program was a GREAT success.

Starbucks is also doing this now, with their Odyssey program.

Yet this is just ONE application of the blockchain in e-commerce. There’s so much more we can do with this…

What if you could reward your customers with loyalty points that are actually valuable outside of your website. That they can cash out for $$$, or use to shop on other websites…

What if you could link these digital assets to your products as certificates of authenticity, so that whenever a products is resold, the brand takes a small percentage, and customers are confident in the authenticity of the product? (No more rolex fakes!)

What if you could run product launches, and pre-sell digital representations of the products months before shipment, raising capital for manufacturing, instead of having to front the costs of manufacturing yourself without seeing a single dollar of revenue? And that customers can re-sell if they no longer desire the product come shipment date? AND you receive a cut of these sales?

What if customers who are part of other brands’ loyalty programs are on a publically accessible database (the blockchain), whereby you could give THEM benefits, and easily collaborate with other brands without even speaking to the brand?

There’s so much this technology allows us to do, that we simply cannot achieve with traditional ‘Web2.0’ loyalty programs.

At 3Commerce, we are building the very technology that allows brands like yours to achieve this. Where you can deploy these programs by simply installing a Shopify app, and customers can interact with your program without the need to purchase with Crypto, or even own a cryptocurrency wallet!

We will be going live with our beta soon. Let’s chat about how we can help you create such a program, increasing your revenue and LTV, all while decreasing your customer acquisition costs and positioning your brand as an industry leader.

Let’s get you on the shortlist so we can help with yours. Shoot me an email [email protected]