Is It Time For a Change? Centralization vs. Decentralization in E-Commerce

GAMB
4 min readJun 13, 2018

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For how long should you stick to the status quo until it is time for a new start? That is the question that is emerging more and more in today’s e-commerce. Sure, it is a powerful industry with demand rising across the globe and impressive numbers:

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But it is also an industry dominated by just a few global players that have split up most of the market between them. So the next question that arises is: does e-commerce grow because of or despite the ongoing centralization?

A comparison of a centralized and decentralized e-commerce will help us find an answer, as well as give us an idea where the focus should rest on in the future.

The profit margin

Let’s be honest: At the end of the day, turning a profit is the aim of every merchant, big or small. Nobody is in the business because they just love hassling with customers about orders that were delivered late.

Traditional marketplaces are no exception. Sure, they need money in order to, among other things, guarantee a smoothly working system or launch marketing-campaigns — but they also want to make a profit/increase their market share. This often means that merchants selling on the platform have to pay high fees without having any leverage to object (at least if they wish to keep selling their products on the platform). They literally are customers of the marketplace themselves, paying fees and commissions in order to get access to the marketplaces’ reach and exposure.

To keep the operation afloat, fees will be charged in decentralized marketplaces as well; but in contrast to traditional platforms, maximizing profit is not one of the goals. This means, that fees can be significantly lower. It can even go so far, as is the case with the GAMB project, that merchants will have voting rights and can actively co-determine the level of fees themselves.

Merchant participation

Merchant participation is a term we don’t hear very often in combination with the marketplaces driving the centralization of e-commerce today. Merchants usually can’t participate in the decision making processes concerning e.g. marketing activities, marketplace regulations or technologies used. And even though there will be sellers who will have no problem with this — not everybody wants to participate in those things — we still feel this is not the way a sustainable marketplace should work.

With decentralized, self-governed marketplaces, merchants gain access to a powerful tool: the right of active and real participation. Powered by the emergence of blockchain and its technological possibilities, we now have the tools to build a platform where transparency and equality can be more than just buzzwords. With GAMB, we want to leverage the power of the blockchain so that merchants can participate and have the power to decide what’s best for them and the marketplace itself — thus taking their future into their own hands.

The governance structure of the GAMB marketplace

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A Nobel Prize winner’s take

The Best for the Group comes when everyone in the group does what’s best for himself AND the group.

This quote, attributed to the famous mathematician and winner of the Nobel Prize for Economics, John Nash, illustrates perfectly that success does not lie in accumulating wealth in the hands of only a few central institutions — but rather in working together for the benefit of everyone.

This becomes feasible if everybody is enabled to get involved in decision-making processes — like in a decentralized marketplace. Decentralization in e-commerce will mean involving all the stakeholders in every major decision, creating a truly equal, sustainable and level playing field for everyone.

The way the world does e-commerce

Obviously, every system has its advantages and disadvantages. But as we have outlined in this article, we can see that decentralized, self-governed marketplaces in combination with blockchain technology have the potential to revolutionize the way the world does e-commerce. With GAMB, we want to give the power back to the merchants and let them be part of every major decision concerning their platform, profits and future. So we strive for a strong community that will do the best for every single individual AND the whole system.

Who we are

GAMB — The Global Alliance for Merchants on the Blockchain has made it its goal to deliver a sustainable alternative to the powers currently dominating global e-commerce. We are building the leading decentralized marketplace. By enabling merchants to actively participate in every important decision, we empower them to be more than just customers of a platform.

Author

Daniel Schnadt is Managing Director of the Gambio GmbH and has been working in e-commerce from the age of 16. First by operating several online shops and then as a contractor and consultant to various companies.

References

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GAMB
GAMB

Written by GAMB

The First Global Alliance of Merchants on the Blockchain. Supported by Gambio. The #1 Shop Software Provider in Germany.

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