IDEA: Tokenization of E-Commerce

Token economy is a buzzword but the truth is, tokenization is an idea that has some future.

Just as there are activities that we do on the daily aware they have value yet they have not been monetized, there are also services that would be managed more easily if they were relying on tokens.

Think about loyalty points, miles or gift cards.

The Problem

In 2018, e-commerce is a crowded space. Even eshops that are a household name brand with loyal customers were put through the test of building digital audience on Instagram and Facebook, competing with digital native brands and influencers.

Consequently, brands are fighting each other for user engagement, pushing out tons of content so that they get at leats a shot at being noticed in the user’s feed or mailbox.

That is a copious amount of creative work, most of which does not bring any results: customers get annoyed by the endless newsletters and offers, there is often some minimum buy condition when using loyalty points, people know it is not that convenient after all.

As a result, most of the loyalty points collected by customers remain unused and even worse, if the brand’s marketing team was pushing it too hard, the resulting spam can actually damage the brand’s image.

The Idea

One idea on how to utilize blockchain in bringing the user engagement levels up is to offer some more value to the customer without too much additional overhead on the company. Very roughly speaking, some form of blockchain that can have tokens issued on it can be helpful with this, because it creates a relatively cheap and auditable way of exchanging merchant tokens between different stores that do not necessarily have any business relationship.

Essentially, on the blockchain you can have a system where the gift points can be exchanged into one another, consolidated, used in another shop or exchanged for a public cryptocurrency and if desired, in turn for cash.

This brings a lot of value back to the customer, some considerable exposure to the brand (even if the customer decides to not use their merchant tokens) and provided there is an easy out-of-the-box setup solution, it doesn’t bring a lot of overhead to the merchant.

The Risks

Are there risks in this? You can be sure of that.

While young people adopt to the new digital world extremely quickly, the laws (both national and international) are always lagging behind the reality.

One glaring problem with the concept of merchant tokens is that they are not a closed system (such as game credits for instance) because the users can exchange them for fiat, and if they do it via an anonymous cryptocurrency the auditing trail might be lost.

Nonetheless, at this point tokenized loaylty and gift points seem to be a very logical future step. Hopefully teams that work on tokenization of e-commerce will have extremely capable legal people.

Some content of this article was taken from a press release about a token e-commerce platform Shopiblock published at news.altcointrading.net on April 16, 2018.

Shopiblock is starting its pre-sale on April 28, 9:00 AM CET, read the press release for more information or go for it and read the whitepaper.