Centralized Marketplaces are harming the E-Commerce Industry
The E-Commerce industry is huge. A study found that in 2016, all global E-Commerce sales amounted to 1.859 Trillion USD. A massive quantity of wealth is being poured into online retail companies on a daily basis, and at this rate, E-Commerce may look invincible, but this is far from the truth. While the industry is clearly doing well, it is not without its unpleasant attributes.
Most major marketplaces are actually causing harm to the E-Commerce industry. The current model for marketplaces involves overcharging buyers and unfairly treating sellers. Centralized market leaders like Amazon and EBay focus too much on making sure that their own sites grow, leading them to punish sellers by taking more money from them and forcing them to pay for services which they do not need. The problem is that these markets think they have no genuine competition. At this point, the biggest centralized marketplaces are convinced that their actions will not negatively affect their stature. They can make arbitrary rules, they can charge extortionate rates, and they can change their platform with the click of their fingers. There are no checks and balances. While governments may step in at times to ensure that matters regarding taxation and employment law are being followed, there is nobody who steps in to make sure that the platforms themselves are actually fair to the consumer.
Arbitrary rules and guidelines
Take a look at this example from Amazon. In 2016, the retail giant chose to start banning or sanctioning erotic fiction. At first glance there seems to be nothing wrong with this decision, if Amazon wishes to keep the products sold on their site friendly to all ages then this makes perfect sense. This only becomes a problem when you consider the fact that, despite their ruling, Amazon still sells the books from the ‘50 Shades of Grey’ franchise. This means that they are not keeping true to their own rules. Their reasoning behind banning other forms of erotic fiction derives from their intentionally vague guidelines regarding questionable content. Under the subheading of ‘Offensive Content,’ they state ‘What we deem offensive is probably about what you would expect,’ Essentially, this sentence means nothing. Offensive content is not an absolute term, so why would Amazon pretend that it is? The only answer is so that they can use their discretion to make decisions without ever having to provide legitimate reasons.
It should be reiterated that the problem here is not with the banning of offensive or erotic content, the problem is with the fact that Amazon can change the rules whenever they wish. We all know why 50 Shades of Grey, or books like A Clockwork Orange are allowed on Amazon’s marketplace while others are not: money. Centralized marketplaces can out-rightly choose what content they want without ever having to explain why.
The example provided may seem like a niche situation which doesn’t apply to most marketplace sellers, but the point is that if it can happen to one type of content so easily, it can happen to any. They care only about making money and have no regard for the creation of a healthy ecosystem. This is a problem that all centralized marketplaces have.
The issue of trust
In a more generalized situation, consider how much places like Amazon and EBay charge their sellers. Not just are sellers forced to pay excessive amounts of money to upload products, but their profits are also siphoned away. This is because centralized marketplaces know that there are no viable alternatives for sellers. Store owners often choose to set up a shop with these large marketplaces because it allows them to develop a trusted brand. One of the biggest hurdles any small business owner has to overcome is to be viewed as trustworthy. The average consumer already trusts Amazon and EBay so when somebody sets up a shop on those platforms they automatically earn the trust of their audience. This is why people avoid setting up their shops outside of a marketplace.
Centralized marketplaces know how important it is for new sellers to earn trust, so they exploit this. They keep their rates and fees high because they know that it won’t harm their own finances. Sellers have nowhere else to turn to so they simply accept the costs. This issue also affects buyers too. Store owners begin to set the prices of their products higher so that they can turn a respectable profit. This punishes buyers by forcing them to purchase goods at extortionate rates.
The Bait and Switch
Naturally, these problems are harming the E-Commerce industry, as well as the livelihoods of sellers all around the world. What’s worse is that this is only a small portion of how centralized marketplaces damage the industry. One of their largest injustices lies in the way they initially attract customers. These marketplaces lure both buyers and sellers into using their platforms through the act of heavy discounts and free services. These perks are often available for just long enough that users can experience the positive aspects of the market. However, once the perks are removed, users often feel inclined to continue using the platforms at full price because they have seen how useful it can be for them. This may not sound like much, but this level of social engineering is something that we, as a society, should be taking a stand against. E-Commerce marketplaces are clearly taking advantage of buyers and sellers by doing this, but because of how common it is people assume it is just normal behavior. In actuality, this is an abhorrent tactic which should be out-rightly banned.
How can a Decentralized marketplace solve these problems?
The problems raised so far have only regarded centralized marketplaces. This is because the act of centralization in E-Commerce is damaging to the industry as a whole. Platforms which are used by such a large amount of the public, but yet are only run by a minuscule number of people will naturally be riddled with flaws. Perhaps one of the largest problems too is that people feel there are no other options available. This needs to change. Buyers and sellers can do better than the likes of Amazon and EBay. Many of the problems these marketplaces have caused can be solved through the use of a decentralized alternative.
Clear, legitimate, and fair rules
A decentralized platform pulls its strength from the fact that all members of its ecosystem are important. This means that many of the rules and guidelines regarding the sale of goods can be decided (or at least discussed) by actual users. Buyers and sellers would have the ability to consider the guidelines on the marketplaces because the marketplace would actually value them.
Trust can be provided without the need to pay extortionately for it
Centralized marketplaces exploit the fact that sellers want to earn the trust of their potential customers. To achieve this trust, centralized marketplaces force sellers to pay a small fortune for features such as listings and top results. A decentralized marketplace would not engage in such behavior. Sellers would be able to get their stores and products listed without the need to pay huge rates. The fact that the marketplace would be run by and for the average user means that nobody needs to jump through uncomfortable hoops.
No more bait and switch
The abhorrent use of bait and switches in centralized marketplaces would no longer be a factor to consider. This is because a decentralized marketplace would focus on the creation and maintenance of a healthy ecosystem. You cannot have a healthy ecosystem if you are trying to socially engineer your users.
The future of E-Commerce
While the E-Commerce industry is performing financially well now, this could all change if people don’t start adopting fairer methods. Centralized marketplaces can only take the industry so far before users begin desiring a decentralized alternative. People no longer want to be exploited; they are looking for a system which actually treats them with respect. This is what decentralized marketplaces such as ApolloX are offering.