Interview: Building Better Retail With Blockchain
SHOP founder John Wantz, keynote speaker at PSFK’s CXI 2018 conference, and CMO Jamie O'Shea introduce their new anti-Amazon platform that lets consumers control and monetize the data they share with brands
Data and privacy are front-page news these days, thanks to Mark Zuckerberg and Facebook under fire. The largely unregulated practices of tech companies and e-commerce giants like Amazon have led to a scenario in which consumers—not to mention smaller businesses—are losing out.
SHOP founder and CEO John Wantz, who will be speaking at PSFK’s CXI 2018 conference, saw this imbalance in the marketplace. His solution is a new platform that, using blockchain and cryptocurrency, puts the power of data sharing in the consumer’s hands while giving independent brands a chance to build better relationships with their customers.
Ahead of the conference, John and SHOP’s CMO Jamie O’Shea sat down with PSFK founder and editor-in-chief Piers Fawkes to talk about blockchain’s retail potential and explain how consumers benefit when data is decentralized.
Piers Fawkes: John, what’s happening in the marketplace that led to the decision to launch SHOP?
John Wantz: It began with realizing that the death of branded manufacturers is closer on the horizon than I think anyone believes. The rate in which Amazon, Walmart and Target are pursuing private-line development is atrocious.
Amazon, particularly, is able to sit in the middle of branded manufacturers and consumers and see all the intelligence around what products are performing well, and what types of consumers have what type of purchasing affinity.
Then they’re able to pretty much manage a game of arbitrage of removing brands that sell well and perform well by increasing rates and fees, consuming any and all data about a shopper that is interested in that brand’s product, and then ultimately rapidly integrating the supply chain for private-line development.
Right now, Amazon has something like 63 separate LLCs. They are brands that are selling apparel on Amazon that are actually owned by Amazon. They’re a big centralizing incumbent that is here to optimize shareholder value and to continue to forward Bezos’s space shuttle budget.
The goal is to increase shareholder value. At this point, the amount of stress that they’re creating on the retail ecosystem between CPG and apparel is becoming so exhaustive that private-line development, whether it’s CPG or apparel, is the number one mandate there. They are relentlessly looking to use all of the information that they’re able to acquire by sitting in the middle between brands and shoppers, and quickly eradicate branded manufacturers out of the puzzle.
The same week that Nike finally gave in and started selling on Amazon, which is something that was thought to never happen, it was found out that the supply chain partners—the manufacturing and supplying partners for Nike—and Amazon signed a direct deal. They’re not covering their tactics very well, and they’re moving very hard into commoditizing all brands.
The idea we’re working on is a cryptocurrency token called SHOP that will only be accessible and usable by shoppers who buy from brands direct. We’re creating a protocol that sits on top of a blockchain so that this information about shoppers can never be centralized again. We’re deploying a digital wallet that allows for our SHOP token to be handed out and gifted and embedded into a shopper’s wallet so that they can then buy products from brands direct.
Creating a new money supply like a cryptocurrency and then using the value of that currency to hand to consumers so that they can be able to have a direct exchange with a brand is something that hasn’t been done before.
What’s happening in that digital wallet is all of the information about that shopper, we don’t store any of that. They store it locally on their device, and they’re able to hand that information directly back over to a brand. A branded manufacturer has a shot at getting access to data about a shopper that they’ve never dreamed that they could have, while increasing their topline sales and developing a direct relationship with the shopper.
Piers: So shoppers on an apparel brand.com, they find the products. When they buy the products, the payment mechanism shares information within a private blockchain. Help me understand the customer journey there and the benefits.
John: It’s a public blockchain, and the information that the shopper stores locally in their device is about them, their fit preference, their transaction history, their demographic—information that we want to make it really easy for brands to take action on.
We have some partnerships and ad networks coming on deck to help propel some of the opportunities for brands to better leverage their shopper data. It would be applicable information that would enable a brand to continue to grow meaningful loyalty with you ongoing, or to go out to target people like you.
We’re not going to make it laborious for shoppers to give us information. We’re going to reward them and give them some of our SHOP tokens just for providing some of that information. Thereafter, they’re able to use those SHOP tokens to buy from brands that use the wallet on that apparel site.
If I’m a shopper, the SHOP wallet and token captures all of my personal data and enables me to control the access to it within the wallet. I have settings that I’m able to adjust when I’m out there shopping. I’m able to control how much of my personal data is shared with any brand whose site I visit, who is integrated with the wallet and able to interact with me in that way.
When I go to buy, let’s say I’m going to Nike.com. If I show up at Nike.com with my SHOP tokens in my SHOP wallet and they recognize me, they are immediately enabled to access my data. Based on the value of that data, they’re able to reward me for sharing with them by giving me back some SHOP tokens or personalizing my experience, or some kind of personal rewards that can be worked into the scheme there.
The brand gets all kinds of constantly updated shopper data about me that I’m commissioning out and monetizing personally, instead of allowing others to do it for me. They’re then able to take all that business intelligence and process it in whatever ways they see fit. As a shopper, I’m able to get paid or get discounts for sharing that information. It’s building a loyalty layer there.
Piers: As we record this conversation, Mark Zuckerberg is being grilled by Congress about the trade of data that Facebook users don’t understand. Obviously, people have even more concern about the use of data. This is a safer, more secure method you’re suggesting. Is it less complicated?
John: We’re going to make it simple. All the consumer needs to understand is that there’s information that they’ll recognize is theirs. They own and control that data, and if they’re willing to hand that data over to a brand or an app, they’ll get an economic reward or discount for that data. They don’t need to understand blockchain. They don’t need to understand GDPR. We’re going to handle all of the data security, and all of the brokering and economics of who can access their data.
One thing to mention is as a corporate structure, we’re actually a co-op. Our fiduciary responsibility is on behalf of our members. Our members are brands and shoppers. We’re 100% economically motivated internally to ensure that shoppers perpetually own and control their data.
This isn’t a place for us to try to trick everybody into a new PayPal so that we eventually then become the incumbent. We’re decentralizing it from the onset using public blockchains and allowing for all the shopper data to stay locally on their devices, and then just pass it over to brands that are operating inside of the system.
Jamie O’Shea: It’s basically total data empowerment for the masses. The way that we’re going to launch this to the public is going to be in such a clean and simple interface with such clean and simple messaging that a 50-year-old woman in Nebraska should be able to use it and not have to understand anything about cryptocurrency, blockchain or even really much about data online, because the average person doesn’t understand very much about data online.
Our core messaging is going to be, “Own your data. Monetize your data. Get paid for sharing your data.” We’re going to be working aggressively with brands to connect them to this network so that they can receive that business intelligence through the wallet and the interactions with these shoppers.
Piers: That’s great. What’s your launch date?
Jamie: We’re releasing 10% of our tokens on May 14. Right now, we have some institutional investors coming in early to get a discount. Then we’re going to open up our token release to the public on May 14.
At that point, the wallets will be live. Shortly thereafter, when we then issue out the tokens to everyone who signs up and creates a wallet, you can then start using the wallet on one of the first marketplace apps that we have partnering with the co-op.
The intent is to grow the co-op, to grow the brand members and to grow the shopper members so that, over time, there can be an economy-of-scale influence in the market to where a mass of brands and shoppers maybe could start to renegotiate how their data is being held or how their value is being commoditized in other retail marketplace environments.
Piers: If I were a brand or a retailer reading this, what would I do next? How would I get involved?
Jamie: For brands right now, we have a program coming online where we’re going to be developing brand tokens. All of the use cases and the throughput of data exchanges that we’ve discussed have been oriented around just the SHOP token.
We think of the SHOP token as a platform token. It could facilitate all of the general data exchanges between a brand and shopper. Now, if a brand wants to have more of a direct data relationship with you in the form of loyalty where, for example, there’s some information about your Nike fit ID or your Nike+ Running information—stuff that’s specific to a brand—that we want to store in a shopper wallet, then we need to introduce a brand token.
The Nike token is what could access your data, but also the Nike data that’s stored in your wallet. We see brand tokens as being an opportunity for brand, manufacturers and shoppers to be able to maintain ongoing direct relationships one-to-one. The brand tokenization program is going to be launched here within the next week.
We have a funnel of pretty meaningful brands that we’re talking to that recognize that, as an entity, they represent value. That’s what a cryptocurrency is. It’s a representation of value and utility.
If we can convert a brand into a representative store value, as it’s referred to, we think that a brand currency makes a lot of sense in retail. The new money supply that gets created by a cryptocurrency token will afford discounts and fund direct-to-consumer relationships for these brands.
Piers: You’re saying that this is going to level the playing field? Or how would you describe it?
Jamie: The intent here is to reset retail economics. Right now, we’re thinking about a 10-year liquidity over the token. Over the next 10 years, we would be distributing the token to acquire shoppers and to acquire brands.
The goal here is to acquire enough brands and shoppers that would allow for brands to ultimately bypass the existing incumbent marketplaces. The goal here is to impact Amazon’s threshold and leverage over brands.
John: Our protocol that we’re making publicly available is going to enable developers to create the centralized retail apps and e-commerce experiences. It will be a very easy environment for them to build in, on a very robust platform with an existing economic model.
Jamie: The net net is we just need retailers like the Macy’s and the Kohl’s of the world, the tier 2 and tier 3 retailer and marketplaces like Wanelo or Shop Spring, to be able to adopt the wallet. If they adopt the wallet, shoppers are able to reclaim their data, own their data and be able to be forgotten. We’re looking really closely at the GDPR regulations that are coming out.
We think we’re going to be able to mirror market expectations in some time of GDPR standards. Handing that leverage back over to shoppers is our number one mandate, and then bringing brands along and tokenizing them so that they can then propel themselves into direct relationships with shoppers is the plan.
John: It’s a funny coincidence that this whole Facebook thing blew up right at the moment that it did because we’ve been leading this “Own your data” charge for a year now. It happened to coincide with almost our exact launch point. The fact of the matter is that the general public doesn’t think about that too much. Now, it’s front page news everywhere. It’s brilliant timing with us going out with this message.