The Problem With Traditional E-Commerce
June 25, 2018
June 25, 2018
The Platform-Seller Relationship Is Out Of Balance
Traditional e-commerce websites, like Amazon and Etsy, thrive on the backs of their sellers. Etsy charges up 5% per transaction in seller fees in addition to twenty cents just to list an item. Online retail behemoth, Amazon, charges a monthly subscription fee of $39.99/month in addition to their per item seller fee that varies greatly depending on what services you use. They can be upwards of 20%. For businesses and side hustlers alike, these fees consistently eat into profit margins and make scratching out any kind of meaningful income on these platforms more difficult than it needs to be.
Take for example, a small boutique clothing store who wants to sell t-shirts on Etsy. Their margins are most likely already razor thin. In fact, estimates put average profit margins on retail clothing somewhere between 4 and 13%. Adding another 5% in fees, or paying a monthly fee of $39.99 per month plus fees of upward to 20% when you use FBA. Hurting the seller on what is already a small profit and stifles a small businesses ability to succeed.
The problem with traditional e-commerce is that the small, third-party sellers do all the heavy lifting, while the platforms rake in millions of dollars in fees and subscriptions which eat away at the seller’s’ ability to make money and build a business for themselves. Do these platforms provide exposure and a big customer base to market products? Absolutely, and there is definitely value in that. But it’s not proportional. The relationship between e-commerce platforms and their sellers is out of balance.
Forra puts power in its sellers
The blockchain revolution is creating more and more opportunities for businesses and individuals to rebalance the scales between themselves and the big corporations that profit from their hard work, data, and contributions to networks that allow their platforms to succeed in the first place. If you would like to sell on our marketplace please sign up here. You are even welcome to tell us anything you would like and join in our constant conversation about our platform in our discord. We are building a selling platform and want people who are serious about building an online business to do so on top of us. We are the best place to sell online because we do not charge the sellers any fees for doing so. Using blockchain technology you don’t even have to pay credit card fees.
E-commerce is one particular industry where the status quo is ripe for disruption as blockchain technology can revolutionize the way sellers interact with their buyers in the marketplace. As a decentralized application (DApp).
Using the Ethereum blockchain, Junktion will offer sellers completely secure, feeless transactions via Smart Contract Escrow functionality. Sellers will be able to track sold items for the entire life of the item and see exactly where it ends up and when it changes hands.
Junktion does not require subscription or listing fees, and we reward all transaction with our Scraps (SRC) token that will be used on our site as a way . The fees sellers will save using this service to sell their goods and merchandise will lead to a direct increase in profits without the need to increase their customer base and sell more goods. The same volume will yield more results thanks to feeless transactions.
Sellers are the lifeblood of e-commerce platforms. Their products and reputation are what drives traffic to these sites. Junktion understands and rewards that rather than charging these vital entities a fee for doing business.
Our coin will be rewarded with every transaction. You will be able to trade in your coins in for New items such laptops, and phones. Items that consumers actually want.
A Story Of The Younger Entrepreneur
A young entrepreneur decides to go into business as an online clothing business called Threads Co. She intends to sell high-end jeans and t-shirts for a younger, hip customer base. She puts together a business plan, files the necessary paperwork, acquires licenses to do business, she finds a material wholesaler and she starts producing branded t-shirts and jeans.
Based on her research, she knows she can buy in bulk and pay about $100 per pair of jeans and roughly $75 per t-shirt. She also figures with the right branding and marketing, she can sell the jeans at $110 and the t-shirts for $85.
She’s confident she knows what the market wants. People will buy her apparel, she just needs to get it in front of their faces. She could find a brick and mortar retail space somewhere, but that wouldn’t be efficient. Rent alone would be too high to make it worth it. She could also start her own website and e-store, but how would she compete with the thousands of others doing the same thing? How would she drive traffic there?
Another option would be to utilize services like Amazon and Etsy to get eyeballs on her product. She could open an etsy shop or subscribe to Amazon and use their deep customer pool to make a name for herself and her products.
Selling her products there she would make about $10 per pair of jeans (10% profit) and $10 per t-shirt (13% profit) before fees. On etsy, we would have to deduct $.20 for the listing and then an addition $3.85 to cover the seller’s fee on the pair of jeans. Leaving her with roughly $6 in profit. For the t-shirt, this fee structure reduces her profit to about $7.
Factoring in business taxes, shipping costs, Paypal and Credit Card processing fees, these profit margins will quickly approach zero or worse and make her business virtually unsustainable on these platforms. Meanwhile, these companies are making a steady stream of revenue from every sale she makes without having to do anything besides provide a pool of potential customers.
A new cryptocurrency marketplace like Etsy and Amazon emerges for the young entrepreneur
Junktion now exists as the new option for the young entrepreneur mentioned above. Junktion still provides sellers a pool of customers to which they can market their products, but it does not charge fees.
The simplest way for a business to increase profits is to reduce cost. It is always more expensive and more inefficient to try to sell more goods and/or create new customers. Junktion offers an easy way to cut costs for online retailers by cutting out transaction fees.
In the example above, if the business was selling the jeans and t-shirts on Junktion, they keep the $3-4 per item that normally would go to a platform like Etsy or Amazon where it belongs: in their pocket. This money can be used to expand the business by hiring new people, developing new products, and expanding marketing efforts.
The hard work of these sellers should be rewarded. They earned these profits and they deserve to keep them. Traditional e-commerce is out of whack. Junktion will return the power to the sellers with a decentralized marketplace that allows for feeless transactions on Ethereum Blockchain.