OpenBazaar: We’re Targeting the 21% of eBay Merchants Who are Unhappy
Most individuals who have heard of OpenBazaar seem to believe that it is nothing more than the next version of Silk Road, but the development team behind the project is thinking much bigger than that. Although the core idea of OpenBazaar is to create an open, uncensored marketplace, that does not mean it will only be used for drugs and other goods that are often sold on darknet marketplaces. In fact, it appears that the OpenBazaar team sees the software as a useful alternative to legal, centralized markets such as eBay and Amazon.
Who Will Be the Early Adopters of OpenBazaar?
Since there is now a company built around the OpenBazaar network (OB1), there is also a need to figure out a viable target audience for the platform. In a recent interview with This Week in Startups (TWIS), OpenBazaar Lead Developer Brian Hoffman talked about the kinds of people who may decide to move to the new, decentralized marketplace in the near future:
“Our initial market is the kind of consumer-to-consumer market, so it is the people selling on eBay and Etsy and doing the homemade goods . . . I think the last time I saw there was a satisfaction survey for eBay 79% of people were happy. So that’s a huge number of people that are unhappy selling on eBay. This is a perfect opportunity for them to go and do something for no fees.”
Marketplace fees are a serious issue for some online merchants, but others see them as nothing more than the cost of doing business. Hoffman continued to talk about the current state of merchant fees and how they also affect the consumer side of e-commerce:
“I think average take is about 6 to 10 percent of every sale. A lot of these depend on the category and stuff like that, but that’s a pretty good chunk. You’ll notice that the prices are more expensive because of that; because they bake it into the cost.”
Creating New Options for Trusted Merchants
Another key point that Hoffman made during the interview is that some merchants are able to build up a reputation over time, which would remove the need to place customer funds in escrow. He noted:
“The key piece here is that [added buyer or seller protections are] optional though. In eBay and PayPal, a lot of that is subsidized through the fees, right? So everybody has to pay for it. I could have a thousand great transactions — no problems — and I still have to spend 10 to 12 percent take rate to those companies. For what? That’s a lot of money for huge vendors that don’t have issues.”
Building a Base for Other Decentralized Applications
In addition to creating a base protocol for decentralized online commerce, Hoffman was also asked about the possibility of using OpenBazaar to create a decentralized version of Reddit by TWIS Host Jason Calacanis. The OB1 Co-Founder did not seem entirely bullish on the idea of an OpenBazaar-powered Reddit, but he did say the following:
“I think that the underlying technologies that we’re building can be repurposed for that kind of thing. Reputation, identity, ratings, reviews; those are the kinds of things that kind of makeup what Reddit is. I think it’s kind of simple to say, ‘Oh, you can [use OpenBazaar] to build a Reddit,’ because there’s a lot more to building Reddit than [just writing the software].”
The one thing that is clear is OpenBazaar will enable plenty of new experiments in online interactions over the coming years. Much like the Internet and Bitcoin, it may take some time for this project to reach its full potential.