A Decentralized Amazon: The Future of Retail Becomes a Reality
As we enter a time when many industries, in particular retail, are under enormous pressure to adapt to the shifting needs and expectations of consumers — and they struggle against the crushing competitive presence of ecommerce behemoths like Amazon — companies like Shopin have emerged with a new vision for how to revitalize the modern-day online and offline shopping experience.
Combining the power of Artificial Intelligence and blockchain technology, Shopin unites retailers and their customers through personalized product recommendations on their sites, apps, and physical stores for an unprecedented and full understanding of the shopper.
Dedicated to protecting user data rights while empowering retailers and brands to scale for mass consumer adoption and provide more valuable offers and rewards to their shoppers, while remaining GDPR-compliant, Shopin is decentralizing shopper data to create a retail economy that incentivizes both shoppers and retailers to work together for the best and most rewarding retail experience possible.
Challenging Times for Retail
Many retailers are closing at a rapid rate for range of reasons, and while some of these factors are related to other external forces, real estate trends, shifting consumer preferences, etc., they all tend to share one basic foundation: low conversions as a result of struggling to understand and engage with their customers meaningfully.
In today’s retail ecosystem:
- Retailer data exists in fragmented legacy systems
- Only 7% of retailers can recognize their shoppers across channels
- 3 out of 100 online shoppers actually make a purchase
- 1 out of 10 in-store shoppers actually make a purchase
- Average return rates are at a whopping 40% (65% in season)
- Retailers experience frequent and debilitating database hacks
- Jeff Bezos is coming to eat everyone’s lunch!
Even the most tech-savvy retailers and fashion brands lack the ability to understand the totality of their customers. For example, if you are loyal to a particular brand and have purchased shoes there for 20+ years, all that retailer knows is that you like brown boots. They have zero knowledge about what else might be of interest since they don’t have access to your purchase history outside of their limited database. This cuts both ways. The consumer may have become brand-loyal to a retailer but only for brown boots, so the retailer isn’t increasing their share of that customer’s closet since they aren’t able to effectively recommend the most personalized products that shopper might be interested in. Of course one must appreciate that this purchase data is the most precious thing the retailers have, and while they want access to each other’s data, they would not want their own revealed.
The old world of retail: A retail brand is only cognizant of its own limited pool of sales data.
The new world: Retailers have a 360-view of the customer based on purchase history data.
The old world of retail: There are ample security vulnerabilities, siloed data, and none of the insights technology like next-generation Artificial Intelligence can provide.
The new world: There is no central user database, each user owns their own data, the user carries a growing pool of historical purchase data from multiple retailers, and visual A.I. engines on the sites, apps and stores of retailers receive user permission to interpret consumer data and provide hyper-accurate product recommendations.
This, in essence, is retail reinvented.
We Knew There Was a Better Way, So We Built It
By setting up a Shopin Profile, consumers automatically store all their transaction and preference information on a secure blockchain database. They can keep the information completely private or choose to share it with their favorite retail brands in return for personalized recommendations and other incentives and rewards. Consumers also use their Shopin Profile to monitor shipments, initiate returns, and share their profiles with friends and family in a unique, proprietary method.
The Shopin Profile is the first federated, permissioned blockchain system that combines value (the Shopin Token) and data (preference and transaction information) in a way that many major retailers are claiming “is the first time we have seen a blockchain solution that makes sense for retail.” Storage and distributed application processing nodes are provided by retail partners, while keys to the profile data are entirely controlled by consumers.
The Shopin Token is used to facilitate the engagement of the consumer’s attention and loyalty to bring back billions of dollars that leak out of the retailer ecosystem every day, to the likes of Facebook, Google, and popular ad exchanges. Retailers exchange tokens with consumers in return for permission to send them marketing offers, and consumers can exchange tokens for merchandise at participating retailers or transfer them into direct monetary rewards. This means that for the first time, retailers will start seeing new efficiencies in lower returns, higher conversions, and their marketing dollars will make their customers richer and more apt to spend back into the retail ecosystem.
How Does It Work?
All retailer/shopper transactions will continue to take place on retailers’ sites, apps, and even physical stores, allowing them to control the user experience and build brand equity with their shoppers. However, via the Shopin app, wallet, and single sign-on, shoppers will be recognized across the open retail web via their historical purchase data without that data ever being revealed. Retailers will be able to recognize Shopin users when they come back to their website or store and provide personalized product recommendations that align with that shopper’s style preferences. These smarter product recommendations will lead to better conversion metrics and lower abandon and return rates. Additionally, retailers will be able to market directly to relevant customers through the Shopin’s proprietary marketing platform.
The idea is to enhance the current shopping experience both in-store and on the web without trying to change consumer behavior.
To get started, shoppers are asked to participate in a fun, gamified Shopin Profile onboarding experience in the retailer’s sites, where they are asked questions about their styles preferences, fashion aspirations, sizes, style likes and dislikes. The more information they share with their Shopin Profile, the smarter our A.I.-powered recommendation engine becomes, and shoppers are encouraged on an ongoing basis to enrich their profile by uploading photos of styles they see in magazines, on the street, and in clothing stores online and offline which our proprietary visual A.I. processes and recognizes 25–36 identifiers on each product.
All of this Shopper Profile data and the consumer’s purchase history data (from the entire retail universe that they shop in) is completely private, owned, and controlled by the shopper. When a shopper enters a store, an app, or a website, and they decide to log on to their Shopin Profile, several critical things happen:
1. The Shopin A.I gets temporary access to their profile
2. The Shopin A.I. pulls inventory data
3. Product recommendations are produced in real-time
4. Product recommendations are displayed on the retailer site/provided to the sales associate or stylist at the store
So instead of showing that shopper 300 different pairs of skinny jeans, they are only shown five pairs that are really relevant in terms of size, fit, style, and preference.
The Evolution of Advertising
Over the last 24 years, digital advertising has become the largest medium in the media mix, and while it has been enormously effective, it also introduces a lot of complexity and risk, including non-human traffic/bots, viewability issues, brand safety, tracking and privacy, and GDPR compliance, to name just a few. And nearly all of retailer marketing investments flow out of the retail economy. But this must change.
Through Shopin, retailers will be able to identify relevant users who have raised their hand and are willing to engage with marketing messages, reducing the reliance on advertising with Amazon, Google, and Facebook, and instead allocating those budgets to what matters most: Shoppers!
This closed loop economy instead rewards shoppers for their time, attention, and loyalty, enabling sophisticated targeting and dynamic storytelling based on their Shoppin Profile versus pushing one-size-fits-all messaging.
The Proof is in The Pilot
Before Shopin launched its TGE, the team collaborated with two well-known fashion and home-goods retailers for a pilot program that produced groundbreaking results. Each retailer invited their registered customers to create a Shopin Profile, resulting in 719,000 sign-ups.
Based on personal shopper preferences and purchase data, Shopin was able to provide those registrants with curated recommendations, leading to a 22% lift in conversions, and yielding $14.7 million in additional sales. Of the shoppers who created a Shopin Profile, 72,000 of them invited 65,000 additional new users to go through a Shopin onboarding.
Shopin is aiming to reinvigorate the retail economy by streamlining the entire shopping experience. By deploying blockchain technology to store value, purchase, and profile data, we are empowering retailers on the open web to provide a decentralized Amazon-like experience to their shoppers with recommendations powered by A.I.
We believe the current approach to managing user data within the retail community will lead to more individual brands and retailers continuing to struggle while Amazon and other ecommerce aggregators continue to thrive at their expense.
Shopin provides another path forward, however, where retailers can all succeed by banding together and shoppers are rewarded based on the value of the data that they fully own and control.
Shopin raised more than $42 million in its Token Generation Event, which ended on April 30. Advisory Board members and participants include Block One Capital, Nima Capital, Passport Capital, Amplifi VC, Elcap VC, Tom Gonser (founder of DocuSign), the Chicago Crypto Fund, and many more.