Interview: How A Blockchain-Based Platform Aims To Turn The E-Commerce World Into A Decentralized Amazon
In this interview, founder and CEO of Shopin, Eran Eyal, discusses how his company creates a universal shopper profile and cryptocurrency to improve the e-commerce and in-store experience, while allowing brands and their customers to control their personal data
As Amazon corners the market on using customer data to personalize the shopping experience and provide targeted advertising, smaller retailers can struggle to compete. Shopin aims to change this, enabling decentralized shopper profiles built on the blockchain to help retailers better understand and target their customers, as well as giving shoppers the opportunity to control their own data.
In a podcast interview, Shopin's founder and CEO, Eran Eyal, spoke to PSFK founder Piers Fawkes about how his company aims to turn the retail and e-commerce web into a decentralized Amazon of sorts by implementing shopper profiles and a cryptocurrency. Ultimately, Shopin aims to not only provide optimized shopping experiences via scannable QR codes linked to a shopper's unique profile, but also even work to give back advertising revenue to the users themselves.
Piers: Tell me about the broader trends you see impacting retail today and the trends that you're leveraging in your work.
Eran Eyal: The industry is moving very much towards visual artificial intelligence—trying to create better matching identification of what customers are looking at in order to bring them closer to the product and to create a greater chance for sale.
We're also seeing a lot of CRM work, a lot of diving deeper into data. On the converse, at the same time, we see GDPR compliance shutting down the avenues of data that existed before. Retailers being very scared because Amazon is eating the world.
There's over 60 actual separate companies run by Amazon in the fashion space. The retailers are in a bind. If you look at the statistics, even the central retailers can identify their users across multiple channels and devices. 85% of retailers are inconsistent with their messaging across different channels.
If you look at the basic statistics, 1 out of 10 people purchase at the store. Three out of a hundred people are purchasing online. They convert online. It's not a good situation. Returns are 40 to 65% for the average multi‑brand retailer or even for just a large retailer.
They are being shredded left, right and center. They've gotten into a stage, some of them, where they don't know where to turn. They've tried some things like behavioral marketing. They don't see a rise of more than three to four% in increase in transactions from most behavioral marketing.
Now with the GDPR compliance, the avenues of data increasingly are being shut off. All of these underlying trends in the industry form a large nemesis that is mobilizing at a speed they've never seen before. With all of this, they're trying to find some technologies that can help.
The technologies point towards greater personalization, whether it's in the physical stores to offer a more personal experience, or whether it's online. Retailers' lack of presence on data and also the fact that they are classically not great technologists complicates matters.
Say you have your customer's data—what are you going to do with it? How can you keep it safe?
You know what the biggest problem is? It's not necessarily that customers aren't trusting the retailers or the data. Most customers aren't even thinking about it. Actually, it's that the retailer doesn't even know how to approach the customers properly to gather the data.
They're in fight or flight mode. Why are retailers going bankrupt each month? This must point to some systemic problem. The issue is lack of presence of accurate data. The retailers are not great technologists. They're impartial plasmas.
Do you think that there's an opportunity to use Blockchain technology to solve this issue?
Sometimes, you realize that when you're in the system and you step out of the system, you can't see the forest for the trees. You realize that your greatest challenge is actually the biggest opportunity. The data problem is where the opportunity lies.
Retailers need to approach it in a different way. The GDPR compliance comes at the same time as the Blockchain technology and some of the big revolutions that are occurring right now. The compliance offers the opportunity for a great reform: If the retailers stop their massive addiction to hoarding data and give it back to the rightful owner, the user would finally have all the data.
Now, when the uses comes to their websites and has all the data, if there was a good system that enabled a greater understanding of the retailers' products on the on‑site and in physical stores, something that could connect to the users' status somehow to show the right thing at the right time, that could create a data ecosystem in a distributed world like Amazon has done.
What do I mean by this? Have a look inside Amazon. If you look at your hand and you imagine that each of your fingers is a retailer, and your palm is your user profile and you close it as a fist, that is the purchase data ecosystem of Amazon.
Retailers in the wild will never share purchase data with one another. Purchase data is the golden goose. It's the thing that tells you not just how much a person spends on something, but what they bought and whether or not they returned it.
There's so much hidden data that exists inside purchase data. It's the one thing that's never been available in the mass before. 15% of America's e‑commerce is generated from the product recommendation bar at Amazon, which is powered by purchase data. Jeff Bezos says that 89% of the company's revenue is due to personalization based on purchase data.
Just because you saw a picture of me with a cat doesn't mean I own that cat. It could be my girlfriend's cat. Maybe I have a dog. If you had access to my purchase data, you'd know that I'm buying dog food. You'd know to show me dog food ads. This is the world of Amazon. Not only do they know how to show you the right thing at the right time, they know how to show you the right adverts to lead you to the right purchase, based on that initial seed of purchase history. Purchase history is an oracle.
In the world of Blockchain and things like that, we talk about needing oracles and seeds of truth. The only seed of truth that you can truly get is purchase data. There's no way retailers would ever share their purchase data with one another. They'll want each other's purchase data, but they'll never share it.
We looked at this kind of ecosystem, and we thought to ourselves, considering that the retailers are still sitting on own sides of the distributed web, what if you had one user profile, and you gave the data back to the user? Wouldn't that create a new paradigm of understanding? The answer is very much yes. We've actually tested and proven that.
Outside of that, you have two big issues. Retailers will never put all this purchase data into one database. Their argument will be, “If Uber couldn't keep the data safe, if Yahoo couldn't, if Adobe couldn't, if Lord & Taylor couldn't, who are you that you can keep this data safe in one big database?”
I don't like that. Putting it on Blockchain means that the user is the only person who has access to that data.
You're saying give the customer the data. Why is Blockchain safe?
Each user sits with their data separate on the Blockchain. There's no central database where the users are all together. You have one database, and you get access to all the data. Each user sits there perky on the Blockchain. You don't have the ability to hack them.
The second thing that what we discovered when we started speaking to the retailers was, “I would like to have my competitive data but I'm not willing to give my own.” I'm wearing a pair of AllSaint jeans and a Sandro T‑shirt. This is what an average person looks like, multiple products from multiple retailers. None of the retailers know how to sell you each one of those other products or what the price points are, or what the styles and fits you're wearing are because you find them from different places.
What we do is put an artificial intelligence product recommendation engine on the website of the retailer. Our engine in real‑time looks at the inventory of the retailer next to the user's data and shows the right recommendations.
The retailer never sees the customer's data but has access to the full Livingston brick of understanding of who they are. It is an intermediary to show the right recommendations at the right time. The retailers don't want the data, what they want is the result of the data.
So there's a system that checks out the customers data—their purchases, their preferences. Then the retailer can make product recommendation and curate prices?
100%. All those things—pricing, recommendations—come to life because you understand for the first time. You understand the user by their purchase data, which is something that before existed only inside an ecosystem like Amazon.
Now people can have it in the free distributed world where there's nobody who owns the data, except the users. There's nobody who's going to create cross competitor brands against you. Nobody's going to take a massive margin disenfranchising your business in the long‑term.
How does that play out for the users?
We know that we can convert the users much better when they're up on the website with the retailer. Our goal is creating a single sign‑on, universal shopper profile for an entire distributed Web with the user owning his or her own data. If the user owns their data, wouldn't the user be the best person to advertise to, and get to come purchase the data just like on Amazon?
What we do at Shopin is provide a cryptocurrency. We actually allow the retailer to send adverts directly to users' phones, and get paid the advertising revenue. 85% of the rhetoric for tasking revenue goes to the user in the form of a shopping cryptocurrency that users can come spend back with the retailer. Normally, all the billions of dollars in advertising would go to Facebook, Google, never to be seen by again by the economy.
With what we're doing, for the first time is not only allowing for better targeting, but also give users the advertising money. We've seen that instead of a 3-4% increase in funds from the number of transactions like with behavioral marketing, the increases are approximately 22%.
What are some other benefits this system provides?
There's tons of other benefits to the user. This data basically creates a profile. You can walk with it into a physical store. You can now show a QR code. The person with an iPad could look at it and say, “You know what, I'm going to show you the 15 or 20 items that actually matter to you in your size, in your style, in your fit. Forget about looking where there's 30,000 items that are going to confuse you. I'm going to bring them all to you and the purchase data from online.” For the first time, you can start to marry the two—give people experiences that bring the retailer and the user closer together.
Explain how a retailer can use Shopin.
Quite a few retailers have already committed to come on board, which is really exciting. We're not talking about moms and pops. We're talking about big retailers, some of the biggest in the world.
The way they view Shopin is for the first time they have a partner. I don't have them by the short and curlies. It doesn't have an agenda that is counter to their agenda. Their agenda is our agenda. We are just there to help them and to co‑create with them.
We don't want their money initially. The first three months of pilots is totally on us, on the house. We'll pay for the integrations. We'll pay for everything. We're here to co‑create to figure out how to make this work at scale. Then we all live together as partners.
For more from Eran, see PSFK's podcast. For more about how brands like Shopin are empowering customers to use their own data and helping more retailers to compete, see PSFK's report The Shopper Marketing Debrief.