Liberating eCommerce: Public Market & the New Commercial Commons
Open, fair, and competitive markets are essential to a thriving economy. Today’s marketplace platforms, however, are unhealthy, unfair, and anticompetitive. Buyers lose, sellers lose, and society loses — only the marketplace owner wins. Public Market is using blockchain to decentralize and transform the eCommerce marketplace business model and create the conditions for fair and affordable online commerce.
Ever since the early days of civilization, societies have understood the need for a “commercial commons” — spaces where the trade of goods can be freely conducted for the benefit of all.
In ancient Greece, the grand Agora stood at the heart of Athens, providing buyers and sellers from across the empire with a place to meet and conduct their sales. Across the globe and throughout the eons, such “public markets” have been a hallmark of prosperous societies. Governments have historically provided the basic infrastructure as a public good, understanding that open trade is vital to the maintenance of a healthy local economy.
The internet represented a new moment in the history of commerce. With the advent of eCommerce, markets could be global for every consumer, promising to make the buying and selling of goods better and cheaper. While the internet has fulfilled its promise to increase the breadth of goods that consumers have access to, it has also given rise to a dangerous side effect: some of the largest and most powerful commercial middlemen the world has ever known.
Marketplace platforms like Amazon filled an important role in the early evolution of online commerce: connecting buyers and sellers and protecting them against fraud. Today, however, they have become extraordinarily lucrative monopolies, charging ever-increasing fees on the sale of goods they generally never touch while raking in tens of billions in profit.
Here are some stats:
- The big three of Amazon, eBay, and Walmart constitute over 60% of online commerce.
- Amazon alone will control over 50% of all online sales in the next 3 years.
- Amazon alone accounted for 70% of growth in US online retail last year.
- The large majority of these marketplaces’ sales come from independent (“third party”) merchants, who bear all inventory risk and fulfillment costs.
With Amazon becoming a de facto monopoly, online commerce is effectively controlled by a single corporation whose sole responsibility is to its shareholders. This means that they must maximize the profit from each transaction, amounting to a “Monopoly Tax” that puts many independent sellers out of business while increasing the price that consumers pay for a growing percentage of their purchases.
In the blockchain community, enormous intellectual energy is spent on devising ways to replace centralized monopolistic companies with decentralized alternatives built on top of transparent, open source protocols. Despite the promise of the technology and the size of the eCommerce market ($450 billion in the US alone), surprisingly few teams have yet to take on the most obvious of all centralized, monopolistic middlemen.
I’ve spent the past 15 years of my entrepreneurial career working on issues of systematic economic disempowerment — first in the broken economies of war zones and refugee camps, and later by creating new economic structures via alternative currencies. Yet each of these initiatives has ignored the real elephant in the room: the fact that in today’s economy, a select few unbelievably large monopolies have become more powerful than governments. They use that power to suppress wages, extract rents, and even control government policy. Amazon is the king of them all.
Over the course of the last year, I’ve built a team of some of the best entrepreneurs, operators, and technical minds in eCommerce to answer this essential question: How can we use blockchain to eliminate commissions from eCommerce markets in a way that is immediately adoptable by a mass consumer audience?
After a year of working in stealth, my team and I are thrilled to formally announce Public Market: a decentralized, open architecture for online commerce. Public Market eliminates commissions and ensures that consumers get the lowest possible prices without having to sacrifice convenience or increase risk.
While we’ll share more in the coming weeks and months, we want to preview two of the most important and disruptive aspects of our protocol.
Decentralizing the Marketplace Stack
The first critical element of our protocol has to do with how blockchain allows us to remove the Monopoly Tax from eCommerce, which in our case means to ‘break apart’ the marketplace stack and return healthy competition to its essential functions.
The monopolist platforms we’re setting out to challenge didn’t get as big as they are for no reason. They grew so large because they solved two important problems of eCommerce: how to connect buyers and sellers, and how to protect them from bad actors. Unfortunately, their centralized approach to solving these challenges created a scenario in which, once they established network effects, they were left as the only providers of these services, free to charge ever-increasing commission rates.
The world has changed. Blockchains now allow us to return competition to key marketplace functions while still maintaining the advantages of the aggregated data that created monopolies in the first place. You can think of the Public Market protocol as a structure that keeps societally beneficial aspects of network effects, but eliminates the ability to build a monopoly on top of those network effects.
Take, for example, inventory data. Previously, information about available items was proprietary to the centralized platform. With blockchains, we can now make information about what products are for sale, and by whom, public and transparent. At Public Market, we call this part of our protocol Public Inventory.
Public Inventory not only allows existing marketplace applications the ability to access and list those inventory items, but creates the opportunity for any person or publisher who aggregates attention online to build a storefront from a curated selection of Public Inventory products. As such, online storefronts will compete on the merits of their user experience, expertise and ability to build an audience rather than their ability to amass a proprietary store of inventory and catalog data.
Inventory data isn’t the only essential piece of eCommerce that we can move from proprietary to public. Reputation, previously owned by the platform providing the score, can be replaced by public ledgers that create an immutable record for both buyers and sellers that can be portable from marketplace to marketplace. Fraud protection, meanwhile, can be moved from being provided only by a centrally-controlled monopoly to a marketplace model in which competition ensures that everyone receives get the best possible protection at the lowest possible price. And this is simply the tip of the decentralized eCommerce iceberg.
Using Tokens to Incentivize Behavior
Another revolutionary aspect of our public protocol for decentralized eCommerce is the utility token at the center of Public Market. The Patron Token (PTRN) solves for existing market challenges and provides incentives and alignment between actors across the Public Market ecosystem.
Storefront applications built on the Public Market protocol use PTRN tokens as rewards to incentivize beneficial behaviors for all parties. In particular, PTRN rewards can be used to reduce the end price of goods to the consumer, effectively redistributing the savings from the commission-free marketplace.
Additionally, a storefront application may offer token rewards to consumers who choose to pay with debit or crypto instead of a credit card, which can reduce payment processing fees. Consumers may also choose to opt into sharing their data with sellers in exchange for token rewards. Sellers then have the ability to get data on their buyers and even market directly to consumers, something they are prohibited from doing on private marketplaces.
An End to Private Monopolies and the Return of the Public Market
Competition in eCommerce has been stifled by the rise of the monopoly middleman marketplace. These monopolies increase the prices paid by consumers, make it harder for independent sellers to thrive, and warp entire markets to their own benefit rather than towards the common good.
Today, the tools for transformation are finally at our disposal. Blockchain represents a once in a generation phase shift in economic and social organization. By intelligently applying blockchain tools to marketplace eCommerce, we can reduce prices and return fair practices to an industry that shapes all of our lives.
If that’s a mission that interests you, sign up to follow our progress at https://publicmarket.io/.