Can blockchain make group buys better?
I am a mechanical keyboard geek, so that means I am frequently eyeing group buys online. These can be on some big well known sites, and some smaller oversees operations. It has me wondering if new ideas and technology can make the experience better.
I know you must already be rolling your eyes because I mentioned the possibility of blockchain improving something. I bet it is how people felt before the dot com boom. While much of the hype didn’t pan out, a lot of huge industries came from it. Elon Musk gained his fortune that bankrolled Tesla and SpaceX from Paypal. A simple idea of handling purchases online.
For those of you who aren’t aware of blockchain technology it can be summed up as a publicly accessible ledger of all transactions of a certain system. Seems simple enough, but there is power in “putting it all out there”. There is also a function in the Ethereum technology that is called “smart contracts”, which essentially gives a better way to create a contract between untrusted agents.
An example of this in a group purchasing situation is a team I am working with, who is building the Avalon Platform. Their goal is to create a better Group Purchasing Organization or GPO that will leverage the power of the many for a better buying experience. Thinking of it like a Groupon is a little too simplistic, so let’s go into the differences.
Using the blockchain in a GPO allows for a new relationship between the consumers and the seller. With the Avalon token you can remain anonymous and still be a part of a powerful group. This yields benefits like special offers, discounts, and much more. That does not mean that the seller is left loosing out on valuable data to help them shape their business. While data is much maligned in the popular media it has a function for shop owners of all sizes. Imagine owning a pizza shop and pizzas randomly disappeared with money left in it’s place. You would miss out on customer engagement, finding out what favorites are, and even learning of special requests like pineapple. Running an online shop without data can be a crippling experience.
Okay so data is important, but I also want to protect my integrity and security. With this platform you remain anonymous, but general data about the group is compiled for the shop owners in exchange for them giving a discount. As the shop owner you may be concerned with the changes you would have to make to be involved in this process. The great thing is that the platform isn’t asking them to accept cryptocurrency, only that they support the GPO by offering special discounts.
It sounds possible, but how does this improve the overall experience?
Mechanical keyboards being a niche market means that a lot of the custom components for them have to be designed and manufactured in small batches. This means that it is a risky proposition to make new products like custom keycaps without first having orders. So naturally organizers gather orders until they hit a threshold, then they pay a manufacturer to build their products which are then shipped out. Now you are left spending hard earned money on something new for your setup, but left waiting for months and months for the products to finally arrive at your door. It can be a stressful process, and like Kickstarte sometimes they fall flat and you are left with nothing to show for it.
So what can we do differently? A platform like Avalon would allow users to vote for new products with their Avalon token (AVA). Then something that could be implemented would be setting thresholds for purchases, much like Kickstarter, but allowing for the organizer to benefit from them more immediately. A smart contract would be created and a portion of the token would be converted to pay for manufacturing before the GPO ended. That way the early adopters to the buy would get their product sooner. Theoretically with the blockchain an escrow type wallet could be setup that would allow money to be collected and manufacturing to start immediately. Since it wouldn’t be in the manufacturer or the organizers personal wallet you would drastically limit the “take the money and run” situations that arise.
Like any process liquidity and trust shortens timelines and creates an overall better experience.
Have you ever been involved in a group buy like Massdrop or Kickstarter? What did you like about that process? What would you change? Technology and community allows us to have a greater affect on the world around us. What will you do to make a change?
