In today’s digital age, online platforms wield immense influence over our daily lives. From Amazon’s e-commerce dominance to Meta’s control over social interactions and Google’s command over information access, these platforms have rapidly grown to dictate a significant part of our online experience. According to McKinsey, platforms are the preferred business model for seven of the world’s twelve largest companies, showing the immense success that “digital native” companies have experienced in the last few decades.
However, as these online platforms grow, the user experience often degrades significantly as companies prioritise bottom-line growth and shareholder returns over user satisfaction. A recent article in the Financial Times describes the gradual degradation of online platforms into nightmarish versions of their original vision. And that’s bad news for e-commerce.
Three-quarters of the world’s $100tn in gross domestic product is made up of traditional legacy industries — such as manufacturing, transportation, logistics, and healthcare — that have yet to be deeply transformed by technology, and this is where both platforms and e-commerce will have to do much better in the second half of the internet.
Open and decentralised platforms, free from the control of any single big tech firm, are the new approach to e-commerce that will democratise trading for the next billion businesses in the world’s fastest-growing markets, empowering rather than exploiting them.
Understanding the growth and decline of online platforms
Most large online platforms tend to follow a cycle of growth and decline, starting with a growth phase where they gain users rapidly as they present a genuinely useful solution. However, they tend to experience a decline as the focus shifts to generating shareholder value at the expense of the best user experience.
The first stage is the rapid growth stage, where platforms focus on delivering value to the user and enjoy high network effects as more people join. However, in the second stage, the platforms tend to commoditise their users to serve bigger business customers, worsening the user experience. The third stage makes the user experience even worse, as the platform extracts more value from both business and individual users/customers to maximise shareholder value, leading to fewer users on the platform until it eventually declines.
For example, the user experience for consumers and sellers on e-commerce platforms like Amazon has fallen considerably. Recent reports show that more shoppers are fleeing Amazon because of the rise of counterfeit and inferior goods sold on the platform, with critical reviews being reportedly ignored and deleted. The platform is not any better for sellers, as Amazon has been accused of using data from its marketplace to build similar products to best-sellers and then make the algorithm boost those first-party products.
This counterfeit issue is a real, concerning issue; to solve it, the world needs to move away from the chaotic supply chains of the present to open platform solutions. We need a new type of e-commerce platform that will expand world trade and connect brands and services to the massive buying power of retailers and sellers while providing a better user experience for all.
The Internet Needs Better Platforms
A significant portion of all our critical online activities today is monopolised by centralised platforms. For example, Amazon dominates the e-commerce landscape with a market share of over 37% and, according to an industry survey, has over 60% of all US consumers as Prime members, which means they do a significant portion of their shopping through the platform. This dominance by these platforms means that any decision by these platforms can have outsized impacts on users and businesses. Sellers can find themselves inexplicably banned by Amazon, a scenario that has led 93% of independent retailers, according to a 2019 survey, to report negative impacts on their revenue due to Amazon, with over half deeming the impact significant.
These realities differ strongly from the original vision of the Internet – an open-source resource designed to enable free access to information and access without any of the constraints imposed by trillion-dollar corporations. The Internet needs decentralised platforms that will mitigate the monopolistic tendencies of Big Tech and distribute control back to users and small businesses, but up until now, there was no technology that levelled the playing field for open platforms.
However, emerging technologies like AI are turning this dream into a reality. With AI, we can build platforms that optimise operations and provide personalised experiences for millions of users while providing small businesses a level playing field. We must move towards a more open ecosystem where the value created is distributed equally among participants. For example, buyers on a decentralised, open e-commerce platform should be able to see and find the sellers and products they want and search for without having to sift through tons of low-quality, sponsored products.
With a better payment system powered by the blockchain, buyers and sellers could pay for goods and services directly without incurring massive transaction fees or paying the platform a huge cut of their revenue, leading to even slimmer margins.
Open Commerce is the future of e-commerce platforms.
As the internet continues to penetrate emerging markets and more people are shopping online, we need a new e-commerce model that ensures that buyers and sellers in these markets get the maximum value from any platform they choose to trade on without being exploited. Open Commerce technology provides this and more for millions of businesses across emerging markets, many of whom could only trade offline.
Traditional e-commerce platforms like Amazon or Jumia operate on a closed system that does not allow direct interaction between buyers and sellers, meaning sellers are left in the dark about their customers and increasingly rely on advertising spend to boost sales. However, open commerce differs from traditional e-commerce because it directly connects buyers and sellers, democratising commerce access for millions of sellers.
The world’s first AI-powered Open Commerce Platform will need to be an open, transparent trading platform where retailers and distributors have direct access to a wide range of products from the largest brands and distributors and can buy directly from them without interference from the platform.
It will need to focus solely on providing technology to sellers rather than competing with them to sell products. This is in direct contrast to the philosophy of traditional e-commerce, where platforms like Amazon have faced accusations of competing within their own marketplace and launching first-party products to compete with third-party best-sellers.
The largest benefit of online commerce is the wealth of data generated across every transaction; however, most e-commerce platforms do not share this data with the sellers on their platform, leaving them in the dark without the insights needed to understand market demand and buyer behaviour. AI-powered Open Commerce platforms will give sellers access to vital transaction and market data, which will unlock new potentials for millions of sellers on the internet, allowing them to make data-driven business decisions at scale. The future of commerce is open, powered by a new kind of e-commerce, where any seller in any location can directly reach buyers across their markets and drive sales growth, while buyers can access products from the best brands and distributors, restock their stores and drive sales growth.
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