18 Stats That Show Why eCommerce Is A Massive Opportunity For Blockchain
Public Market is motivated by a relatively simple belief set:
First, we believe that fair and open commercial exchange is a bedrock of human society.
Second, we believe that the “e” in eCommerce fundamentally downplays the size of the market opportunity: online commerce is increasingly eating offline commerce and is simply becoming the way that goods are bought and sold.
Third, we believe that the value of fair and open commerce has been fundamentally compromised by centralized, private monopoly marketplaces who are warping markets to their own benefit.
Fourth, we believe that the underlying architecture of marketplace commerce can be decentralized in a way that guarantees that the value created is captured by the actual buyers and sellers of the goods.
Over the past few weeks, we’ve shared the foundations of our vision for a decentralized marketplace commerce protocol, as well as our thoughts on what it will take for decentralized apps to break into the consumer mainstream (and why eCommerce holds such potential to be one of those killer apps).
Today, we want to show you the numbers behind why this is one of the biggest market opportunities in the world.
On the size and growth of eCommerce, and growth as a percentage of total commerce
- $453 Billion: Total US eCommerce 2017 (Source)
- $2.3 Trillion: Total global eCommerce 2017 (Source)
- 14%: YoY growth in US eCommerce (Source pg 44)
- Under 3%: YoY growth in US offline commerce (Source pg 88)
- 13%: eCommerce as a percentage of overall US commerce (up from ~8% in 2012) (Source pg 46)
- 10.2% — eCommerce as a percentage of overall global commerce (up from 8.6% in 2016) (Source)
What they mean:
eCommerce is massive and it’s eating “offline” commerce. More people are shifting buying behaviors online and even in-store experiences are increasingly showrooms for digital shopping. These effects are going to be exacerbated by both generational and global forces, as generations of people who grew up attached to mobile devices come into financial maturity.
On Amazon is dominant. But its market position and growth is dependent upon independent sellers.
- 44% of all US eCommerce sales happen on Amazon (projected to reach 50% by 2021) (Source + Source)
- As of 2013, Amazon sold more than its next 12 online competitors combined (Source)
- 52% of units sold on Amazon come from 3rd party sellers (projected to reach 70% by 2021) (Source + Source)
- International third party sales are growing by 50% YoY (Source)
What they mean:
Amazon’s market dominance is both startling and growing. However, the majority of its eCommerce growth comes from independent (“third party”) sellers. To understand the most important dynamics of the industry, we have to understand what is happening with them. Are they content with the platform and its policies? Do those policies enable them to run healthy businesses? Or are they hoping for a better alternative to come along?
On the existential threat Amazon represents to its independent sellers:
- YoY growth in large sellers on Amazon’s marketplace: 5% (Source)
- Decline in small sellers (1–5 employees) on Amazon’s marketplace: 84% to 74% (Source)
- Percent of sellers who say that Amazon competing with them directly is their top concern: 40% (Source)
What they mean:
Two very important gauges of seller satisfaction can be gleaned from the transformation of in the size of sellers and their concern about direct competition from Amazon.
The number of small sellers as a percentage of the total is shrinking while the size of the largest sellers is growing. This is not simply a question of marketplace competition weeding out underperformers, but is a direct result of the exorbitant 15–40% commissions that shrink margins and force out all but the largest hyper-efficiency sellers.
More concerning than even the hyper-conglomeration of the Amazon marketplace is the fact that sellers small and large are increasingly in active competition with Amazon itself as Amazon offers more than 70 private labels. These labels take every advantage of Amazon’s trove of proprietary consumer data, making it extraordinarily hard for marketplace sellers to compete, and marching Amazon ever further on the path to full retail monopoly.
In short, Amazon’s competition with its own sellers now perfectly represents the monopolist scenario investor Chris Dixon described in his seminal essay “Why Decentralization Matters.”
On the network of decentralized actors in eCommerce who could be better mobilized:
- # of sellers on Amazon’s marketplace: 2,000,000+ (Source)
- # of stores/sellers on Shopify: 600,000+ (Source)
- Anticipated spend on US affiliate marketing in 2020: $6.8B (Source)
- % of online orders generated through Affiliates: 16% (Source)
- Growth in content publishers’ participation in affiliate networks in the last two years: 175% (Source)
What they mean:
While Amazon’s consolidation continues, there is a massive distributed network of actors who could be re-organized to provide a decentralized network bulwark to that power. Public Market believes these actors include both existing online sellers, big and small, as well as an even larger network of digital attention holders, including influencers and publishers. These attention holders are currently monetizing through affiliate networks to drive sales, and yet affiliate marketing is a notoriously frustrating, low margin business. Public Market believes that these distributed networks of affiliates hold far more potential in a larger decentralized commerce ecosystem.
In summary: marketplace eCommerce is one of the world’s biggest markets, with a monopolized middleman, a bunch of unhappy sellers driving the core growth, and a network of decentralized actors waiting to be better mobilized. The time for a decentralized alternative has come.