In a world where e-commerce retail spend in the US alone has surpassed $1 trillion, hitting all-time highs in 2023, the future of how we shop is being rewritten. The convergence of blockchain and AI is enabling experiences that were once impossible.
Last week, at the Boys Club /brandnew Summit, Vivien Zhang, Founder & CEO of Solaire, and I explored the infrastructure powering onchain commerce, emerging consumer behaviors, and the macro trends transforming retail.
Imagine a wallet that becomes the most powerful CRM tool for brands and creators, providing a direct line to their customers. Picture a social feed as a storefront that creates shopping experience so dynamic, every transaction tells a unique story. Envision a frictionless experience to set up a storefront, with instant settlement, proof of authenticity, and ownership.
This is the future that crypto enables.
TL;DR: If you only have 5 minutes, here's what you need to know:
Ethereum's EIP-4844 and the rise of smart wallets are set to drive more on-chain commerce by reducing costs, improving scalability, and enhancing usability. These developments will make it easier for brands to adopt Web3 technologies and for consumers to participate in on-chain transactions.
Innovative solutions like Farcaster Transaction Frames and Solaire's Consumer Digital Wallet are showcasing the potential for dynamic on-chain experiences and authenticated resale. These tools empower users to effortlessly engage with brands, make purchases, and resell items, all within a seamless and secure environment.
The e-commerce landscape is booming, with platforms like Shopify and Stripe processing billions in transactions. Simultaneously, the resale and second-hand market is thriving, driven by Gen Z and millennial consumers who prioritize sustainability and value. Brands that adapt to these trends and incorporate Web3 strategies will be well-positioned for success.
On-chain transactions are becoming increasingly prevalent, with stablecoins like USDC seeing significant growth in everyday transactions. As crypto rails become more widely adopted for payments, particularly in e-commerce, brands that embrace these technologies will be able to tap into new revenue streams and customer segments.
Web3 wallets are evolving beyond simple storage solutions and becoming powerful CRM tools. By leveraging these wallets, brands can gather valuable customer insights, create targeted experiences, and foster deeper relationships with their audience.
NFTs are more than just digital collectibles; they are a technology that enables unique capabilities for revolutionizing the retail experience. From authenticated products to immersive brand experiences, NFTs offer a wide range of possibilities for engaging customers and driving loyalty.
As brands collect more consumer data through Web3 solutions, maintaining privacy and trust is paramount. Transparency, user control, and responsible data practices will be key differentiators for brands looking to build long-term relationships with their customers."
The Infrastructure Powering Onchain Commerce
Ethereum's EIP-4844 is a game-changer for onchain commerce. In simplistic terms, by introducing blob-carrying transactions, EIP-4844 reduces the cost of using Ethereum and improve scalability, particularly for L2’s [1]. Adding the rise of smart wallets powered by "wallet as a service" (WaaS) into the mix, we now make it easier for brands to adopt Web3 technologies and for consumers to participate in onchain transactions [2].
We’re already seeing this through Farcaster Transaction Frames, Coinbase Commerce, and Solaire's Consumer Digital Wallet - showcasing dynamic onchain experiences and authenticated resale.
Farcaster Transaction Frames enable users to pay or sign transactions from their wallet within a social feed, opening up a world of possibilities for engaging onchain experiences [4]. For example, the Piñata Hat store, built using a custom ERC-1155 smart contract, allows users to buy hats at full price or watch an ad to receive a discount coupon NFT, which is transacted onchain [4].
Solaire's Consumer Digital Wallet empowers users to effortlessly receive and resell authenticated physical objects, while allowing brands and creators to capture the secondary economy [6]. By leveraging Solaire's wallet, brands can tap into the growing resale market and establish a direct connection with their customers, gaining valuable insights and fostering long-term loyalty.
The E-Commerce Boom and the Rise of Resale
The e-commerce landscape is experiencing unprecedented growth, with platforms like Shopify capturing 10% of the US market share and processing $9.3 billion in GMV on Black Friday and Cyber Monday alone [7]. Stripe, another major player, processed $18.6 billion on these two days and handles 1% of global GDP [8]. This growth is not limited to large platforms; small and medium-sized businesses (SMBs) account for around 44% of US GDP [9], as the long standing backbone of the economy.
Simultaneously, the resale and second-hand market is thriving, with offline transactions valued at $96 billion in 2021 [10]. Gen Z and millennial consumers are driving this trend, with 62% seeking secondhand items before making new purchases [11]. Re-commerce companies like The RealReal, Poshmark, and ThredUp are expected to comprise 18% of the clothing industry by 2031 [11].
The Power of Web3 Wallets and NFTs
As onchain transactions become more prevalent, with stablecoins like USDC seeing significant growth in everyday transactions. Circle reported facilitating 595 million USDC transactions from January through the end of November 2023 [13].
Web3 wallets are evolving beyond simple storage solutions and becoming powerful CRM tools. By leveraging these wallets, brands can gather valuable customer insights, create targeted experiences, and foster deeper relationships with their audience. The potential for wallets to become the most powerful CRM tool for brands and creators cannot be overstated.
Imagine a scenario where a customer purchases a limited-edition product from a brand's onchain storefront. The product is authenticated using an NFT, which is automatically deposited into the customer's Web3 wallet. This wallet now becomes a hub for the customer's interactions with the brand, storing purchase history, preferences, and exclusive rewards. The brand can use this data to create hyper-personalized experiences, such as early access to new product drops or invitations to VIP events.
NFTs, often associated with digital collectibles, are a technology that enables unique capabilities for revolutionizing the retail experience. From authenticated products to immersive brand experiences, NFTs offer a wide range of possibilities for engaging customers and driving loyalty. For example, a luxury fashion brand could create a series of NFTs that grant holders exclusive access to a virtual fashion show, complete with behind-the-scenes content and the ability to purchase limited-edition items. By leveraging NFTs, brands can create unique, memorable experiences that foster a sense of community and loyalty among their customers.
Opportunities For Founders Building Onchain Commerce Experiences
As the world of e-commerce continues to evolve, there are numerous opportunities for founders to build innovative solutions that leverage the power of blockchain and AI to create seamless, personalized, and secure onchain commerce experiences.
-
Web3 Data Lakehouse: Brands often struggle to gain a comprehensive view of their customers due to data silos and fragmented information across various platforms. This lack of a unified customer profile hinders their ability to deliver personalized experiences and targeted marketing campaigns. One significant opportunity lies in the development of a crypto native data lakehouse that aggregates onchain and offchain data for customers. By combining transaction data, customer preferences, and purchase history from various sources, founders can create a comprehensive view of each customer, enabling brands to deliver hyper-personalized experiences and targeted marketing campaigns.
-
Onchain Fraud Detection and Prevention: As onchain commerce continues to grow, so does the potential for fraudulent activities. Traditional fraud detection methods may not be sufficient to address the unique challenges of onchain transactions. A massive opportunity exists to develop sophisticated fraud detection and prevention solutions that leverage AI and machine learning algorithms to analyze onchain transaction patterns, detect anomalies, and prevent fraudulent transactions in real-time.
As the infrastructure for onchain commerce matures and consumer behaviors evolve, we can expect to see a surge in innovative retail experiences that blend the best of web2 and web3 - which, one day, we may just call the internet.
This is the future that crypto enables: A hyper-personalized, engaging commerce experience that foster long-term customer relationships.
If this article resonated with you or you’re interested in chatting all things onchain commerce, I’d love to connect @jarrodbarnes on Twitter/Farcaster or jbarnes850 at gmail dot com.
Sources:
-
[1] “EIP-4844”
-
[2] "Coinbase introduces embedded, smart wallets for developers”
-
[5] “Coinbase Commerce FAQ’s”
-
[8] “Businesses process more than $18.6 billion on Stripe over Black Friday and Cyber Monday”
-
[10] “Value of the online and offline resale market in the United States from 2015 to 2021”
-
[11] “ThreadUp 2023 Resale Report”
-
[12] “Resale Continues to Rise: Global Secondhand Sales to Hit $350B by 2027”
-
[14] “Implementing Web3 CRM: Wallets Are the New Email Address”