Decentralization and the future of commerce

Digital commerce has transformed the retail industry, with worldwide sales amounting to $4.28 trillion in 2020. The rise of e-commerce is disrupting traditional supply chains with the promise of enabling brands and sellers to reach more customers than ever. However,  e-commerce marketplaces like Amazon, JD.com, and Alibaba, which provide the greatest reach, are highly centralized and limit the growth of the brands who sell on their platform via heavy restrictions, algorithm changes, and price wars.

Digital commerce has transformed the retail industry, with worldwide sales amounting to $4.28 trillion in 2020. The rise of e-commerce is disrupting traditional supply chains with the promise of enabling brands and sellers to reach more customers than ever. However,  e-commerce marketplaces like Amazon, JD.com, and Alibaba, which provide the greatest reach, are highly centralized and limit the growth of the brands who sell on their platform via heavy restrictions, algorithm changes, and price wars.

Centralized platforms are killing commerce

The current e-commerce business model allows centralized platforms to exert undue control and act as gatekeepers with little or no oversight. Most e-commerce marketplaces require brands who sell on the platform to continually pay exorbitant fees, sometimes up to 30 percent on each sale to reach their ‘own’ customers – customers that do not belong to the brands but the marketplace.

Centralized platforms also limit the visibility of brands and sellers, preventing them from knowing who is buying their products and running targeted campaigns to drive sales to their store pages. Instead, sellers are stuck paying extra fees for marketing and advertising services they have no control over and cannot measure the ROI.  Brands and retailers are often forced to purchase warehousing and shipping services from the e-commerce platforms they sell on, as brands who buy these services are more likely to be chosen by the algorithm as the default seller of a product (known as winning the buy box), which is essential to generating sales.

These restrictions and extra costs eat into sellers’ already razor-thin margins, preventing them from growing their businesses or expanding into new markets. In the end, the platforms win, and brands lose. As more consumers switch to buying online, there is a need for a new business model in e-commerce, a decentralized model where brands and sellers ‘own’ their customers and can directly engage with them without competition or restriction from digital commerce platforms.

Decentralization and Open commerce – A match made in heaven

From challenge comes opportunity, and the rise of open commerce is changing the face of retail and commerce today, allowing new dynamics between brands, merchants, and consumers. The open commerce revolution is poised to disrupt commerce by decentralizing control and cutting out the middlemen, or “middle-platforms” who exploit their monopoly power over brands and sellers.

The open commerce business model provides unique advantages in commerce and the retail industry, such as:

  • Decentralized control on any platform, achieving consensus-based trust between brands, distributors, and merchants without undue restriction by a central authority.
  • Transparency on a fundamental level, as no brand or seller is artificially hidden from customers or prevented from selling by an algorithm.
  • FMCG brands, distributors, and merchants can connect directly, eliminating extra costs and layers of interaction along the supply chain.

Essentially, decentralized peer-to-peer connections on an open commerce platform gives power back to brands and sellers while also providing unprecedented visibility along the distribution chain. Unlike centralized commerce, where sellers are prevented from seeing who buys a product, open commerce platforms provide brands with access to valuable data at POS, enabling marketing and sales teams to monitor the micro-consumption patterns in the market and create marketing campaigns and trade promotions that drive sales and increases revenue.

Decentralized Finance, or DeFi, is a decentralized technology that is changing finance and commerce. DeFi can make transactions safer and faster, two factors that are invaluable to the success of digital commerce. By adopting this technology, businesses in emerging markets can share and securely store digital assets both automatically and manually while seamlessly handling customer activity such as payment processing, invoicing, record keeping, product purchases, and customer care – all of which are essential to increasing sales capillarity and driving customer satisfaction.

DeFi reduces the need for e-commerce stores to act as middlemen for every transaction and eliminates the need to go through the traditional banking system, a significant advantage in emerging markets where many merchants are unbanked yet have access to mobile phones and the internet.

By adopting a decentralized business model powered by open commerce platforms, the opportunities for brands and merchants to access a wider global consumer base is significantly enhanced and presents an opportunity for forward-thinking FMCG brands to tap into new and emerging markets.

Building a decentralized future with RedCloud

RedCloud is the world’s first open commerce platform, a decentralized solution that puts power in the hands of brands and merchants. For brands, RedCloud drives the digitalization of the supply chain by enabling any FMCG brand to onboard its sellers onto a platform that provides end-to-end visibility across the distribution chain without the control and restrictions of traditional e-commerce platforms. On the other hand, merchants who sign up to use RedCloud enter a digital ecosystem and gain direct access to global brands. This provides them with more products to sell locally at better prices and, given that many merchants are unbanked, the opportunity to build a digital trading profile for the first time.

Schedule a demo today to see how RedCloud is creating a decentralized ‘sell anywhere’ economy to help FMCG brands and sellers sell smarter, buy better, and pay simpler.

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