TL;DR: Web2 eCommerse platforms are facing the dimishing marginal returns as more competitors saturating the market and diminishing marginal returns in acquiring new customers. Yet both business and consumers are “trapped” inside it as no better alternatives exists. Web3 offers a forefront to grow and build from the ground up which offers much higher marginal return and a vibrant young customer base. So far, there is not much that web3 offers cannot be achieved by web2 solutions. But the opportunity is that it is young and growing. If you are interested in exploring this opportunity, consider follow us on twitter and joining our discord (link below).

Recently I have been surveying through many centralized web2 eCommerce platforms:

• Bookings.com, Expedia, Airbnb for hotels and accommodations
• DoorDash, Grubhub for takeout and food
• Instagram, Tiktok for social media venues on ads and selling
• Amazon, Etsy, Walmart, EBay, Bonanza: marketplaces for listing

The general deal is that platform will take out anywhere from 10% to 30% of the revenue from business owners as the so called “platform fee”. This can have different fancier names to justify their action such as “transaction fee”, “service fee”, “platform usage”, or other jargon to make it sound legit, but ultimately this is the “platform fee”. This is their business model; this is the trade off that individual businesses make to get their product to sell; this is also additional price customers pay to get what their want.

The platform fee model used to be a great deal. Customers can have an all-in-one place to look up the best service they want, saving time for digging around the web. Business owners can have a great way to get their products distributed to the customers that want them without paying any upfront usage, and advertisement fees. The platform specializes in attracting more customers into the platform, while controlling the quality of the businesses that gets listed in it. under this model, we could see a perfect balance in that:

Time customer saves + inefficiency/risk business to advertise out of platform otherwise >= platform fee.

Under this model, the platform justifies their value proposition by saving the overall social productivity into matching customers with best products they want

The model has been degrading heavily in recent years, though.

On one hand, as more platform providers are jumping into this area, the cost for them to obtain their customer has been higher. The reason is that platforms relies on attracting customers’ attention to continuously engage them.

• The overall existing customers’ attention is fixed(everyone only has 24 hours a day), and as more platform tries to attract attention, the cost to compete is rising staggeringly.
• The margin of growing new customer base is a lot higher as the ones that are more easily attracted to the platform has already been acquired. The cost to acquire customers who are at the outskirt of the market requires a lot more effort.

The result is that platform, to stay competitive, pushes the businesses to offer more discounts, vending out more aggressive algorithms that businesses to comply for staying on top of the recommendations.

On the other hand, as the global supply chain issue and recession gradually kicks in, businesses faces higher operation cost to maintain their existing business. Thus having less budget to put into platforms to support them.

Consumers are facing more layoffs, salary shrinkage thus are either spared with less money for service consumption or more willing to put their money into the bank for the expectation of higher interests.

The equation does not look promising on both sides. Yet consumers and businesses are still in those platforms for lower benefit margins to exploit as there is no better alternatives. All the parties are TRAPPED.

What can Web3 do?

Web3 offers a parallel world from the existing status quo, while everything is reset to start. There is less to no oligarchy, competition, and everyone is exploring. The margin has not been sealed and we have the

More importantly, the demographics that web3 houses is much younger. there is much to say about the future where the next generation of consumers are attracted to.

This is often the answer when people asking the dumb question: Why you want to do “this or that” in Web3? Isn’t there a perfect solution in web2 already?

My answer is that: Yes, web2 is already good enough, but it is aging. I would be talking with my primary school classmates in Facebook.

I would be sharing my high school life in Snapshat, I would also be posting my travels on my Instagram to let my college friends know. If you would ask me: Why you post on so many different social media? Isn’t Facebook good enough in terms of functionality? True. 100% that the facebook app has all the functionality covered. But I only have friends in my primary school there. Plus it got a blue interface that I have been known for 15+years. I enjoy the fresh looks of new product. I enjoy the different feeling and perception that different social media apps offer me.

I believe that the same argument holds true for web3 applications. Businesses can establish their brands in the new web3 metaverse. They could totally do the same in pure web2 way. But the new perception and the growing community of concentrated young consumers is not what those who could get in a pure web2 way.

If you are interested in exploring the new forefront in the web3 world, consider:

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