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Product Trends

Bitcoin,Litecoin and cryptocurrency: a viable option for ecommerce businesses

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After reaching record highs year-to-date, Bitcoin and Litecoin, dubbed its “little brother”, are making big waves in the crypto-industry. Bitcoin now has a greater total valuation than payment-processing leader PayPal (PYPL) and could be seen as a viable currency for e-commerce businesses processing digital payments.

A cryptocurrency is a digital currency stored on an open and decentralized electronic payment system. Following Nakamoto, crypto-currencies have caught the attention of e-commerce industry, academia and the public at large, with Bitcoin and Litecoin being the most prominent currencies. There are dozens of such crypto-currencies, many running on large and reliable decentralized networks of anonymous computers. This wave has been enabled by an innovative computer science design named blockchain.

The blockchain supports the creation of a decentralized electronic payment system that can be trusted, although none of the system’s servers are individually trusted. The novel blockchain design relies on a combination of cryptography and game theory-based incentives. It has received much public interest on its own right.

The blockchain design enables Bitcoin, Litecoin and other crypto-currencies to function similarly to conventional payment-processing systems such as Fed Wire, Swift, Visa, Mastercard and PayPal. These payment systems are natural monopolies in that they enjoy economies of scale and network effects. Each of them is operated by an organization that determines its rules and modifies them as circumstances change. These rules include how and how much participants pay for using the system.

The innovation in Bitcoin’s blockchain design is in the absence of a governing organization. Rather, a protocol sets the system’s rules, by which all constituents abide. The blockchain carries an economic innovation. Unlike other payment systems, Bitcoin is a two-sided platform with rules that are pre-specified by a computer protocol.

No participant has the power to set or modify fees or rules of conduct or otherwise control the system. Each participant in the market place, users and miners alike, is a price taker. Users are provided protection from monopoly pricing: even if the system becomes a monopoly, there is no monopolist who charges monopolist fees.

As opposed to traditional systems, the Bitcoin system does not require trust in any entity. However, the cryptocurrency system cannot provide some services: a transaction cannot be reversed in case of error or fraud, and users who lose the credentials to their account have no way of retrieving their balance. As such, cryptocurrencies like Bitcoin or Litecoin may be more comparable to cash than to a modern electronic payment system.

PayPal has come to dominate digital payment processing space, allowing users to fund accounts by credit card or bank transfers. It’s true that cryptocurrencies such as Bitcoin or Litecoin have no built in anti-fraud capabilities, whereas companies like PayPal have invested millions of dollars in protecting customers against fraud.

Companies that took the alternative approach of creating digital currencies which were convertible to and from existing currencies, have not been as successful due to a combination of lack of competitive advantages, managerial incompetence, and dubious legality.

But this could change as Bitcoin becomes an increasingly popular form of payment. Major e-commerce platforms, such as Shopify or Woocommerce, provide more tools than ever to accept and facilitate Bitcoin payments on e-commerce websites.  The increasing number of Bitcoin transactions, no chargebacks, low to no transactional fees, no PCI compliance regulations, fast international payments and other advantages of crypto-currency, make it a financially viable payment-processing option for e-commerce businesses.

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Amazon

Brands are ditching direct-to-consumer ecommerce model

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Brands are migrating investment in site direct-to-consumer e-commerce features to merchandising efforts on major retailer platforms such as Amazon or Best Buy, a new research has found.

According to the newly-released L2 Inc consumer electronics report, over the last three years, 13 percent of L2 Index brands have removed direct-to-consumer e-commerce functionality from their brand sites.

Most notably, legacy brands Toshiba and Sony have discontinued their on-site e-commerce platforms. In the US, Toshiba now exclusively sells its products through CDW, an educational and government supply retailer, while Sony’s product pages link to a list of online retailers with product stock and price information.

Additionally, L2 observed declines in both account and live chat features on consumer electronics brand websites. These declines are likely the result of the success of Amazon’s best-in-class Prime membership program and Best Buy’s investment in unparalleled customer service delivered by the retailer’s teams of blue shirts.

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As direct-to-consumer brands look toward the future of online sales, they must weigh
the substantial investment required to compete with retailers against the possibility of using their websites as nimble merchandising platforms—conduits for third-party sales, a new report suggests.

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Amazon

Shopping trends: 72.1% of shoppers will turn to Amazon first this holiday season

Harry Suresh

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The holiday season is fast approaching and a new survey reveals insights into how shoppers will hunt for products and what trends retailers should be aware of in order to capitalize on the end of the year retail boom.

The study, commissioned by CPC Strategy and carried out by the independent research firm Survata, surveyed 1504 consumers to understand how they will shop in the fourth quarter of 2017, and specifically in regards to Black Friday, Cyber Monday and Christmas.

Holiday Sales Look Encouraging

The general takeaway from the study found that end of year sales looks promising for retailers as more and more millennials are coming of age and willing to spend significantly more money during the holidays.

Among 18-24 year-olds, 23 percent said their spending will increase. On top of this, 79 percent of Baby Boomers — the biggest spending cohort during the holidays — said they would spend roughly the same this year.

Overall, 88 percent of shoppers plan to spend the same or more this year on gifts, meaning the staggering $658.3 billion spent last year will most likely be matched and probably even surpassed.

As for individual spending on gifts, 62.1 percent said they will spend $500 or less, with 30 percent spending $250-499. Over 26 percent will spend $500-1000 and 11.2 percent will spend more than $1000.

Shoppers are evenly divided on when they will hit the stores, whether online or brick-and-mortar, in search for gifts. One-third will start holiday shopping before Thanksgiving, another third will start on Thanksgiving weekend and the following Cyber Monday, and the final third will begin their shopping in December.

Similar to last year, December 17, also known as Super Saturday, is again expected to be the biggest holiday shopping day.

Amazon Leads the Pack

What shouldn’t surprise anyone is Amazon’s continued dominance in the retail marketplace.

Of the respondents, 72.1 percent said they would search for gifts on Amazon compared to just 60 percent who said they will look for gifts in-store at big box retailers like Wal-Mart and Target. An even lower number, 38.6 percent, said they will browse these big box retailer’s online stores.

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Women are much more likely to shop in-store at big box retailers (67%) while men were fine to do their holiday shopping online at Amazon (76%). Millennials heavily favored shopping online rather than in big box retailers.

And lastly, 46 percent of holiday shoppers will use specialty retailers who target their specific demographic to find gifts and products.

Low Prices Rule the Day

When asked what the main driving force is behind which brand or retailer a holiday shopper choices for purchasing gifts, the overall price was far and away the most important factor. The next highest was brand quality, at 16.2 percent.

As echoed in other studies, the youngest generation surveyed (18-24 year-olds), were far less price conscious, with 23 percent emphasizing brand quality and 10 percent valuing friend or family recommendations (both the highest of any age group).

The oldest generation in the study, 55-64, favored product selection as the second most important factor behind price.

In addition to low prices, the survey found that “fast and free shipping isn’t just optional — it’s now the baseline for retailers.”

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Holiday shoppers also frequently used their phones to check prices while searching for products in-store — only 28 percent didn’t check the online cost. Of these price wary consumers, 32 percent checked a product’s price on Amazon before committing to a purchase, followed by Google (23%) and the retailer’s website (10.1%).

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Consumer Products

Apple granted patent for convertible headphone earcups

Harry Suresh

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Today Apple has been granted a patent that would allow it to manufacture headphones with circumaural to supra-aural convertible earcups.

According to the patent application named “Circumaural to supra-aural convertible headphone earcups “, Apple’s latest invention improves on conventional headphones by providing headphone earcups that can be converted between over the ear (e.g., supra-aural) and around the ear (e.g., circumaural) configurations, and any size in between. For example, the earcup may have an expandable cushion or telescoping ring connected to a frame system similar to a Hoberman Sphere.

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“Supra-aural headphones have earpads that are smaller than those of circumaural headphones and press on the user’s ears, instead of the head. Supra-aural headphones are therefore typically smaller than circumaural headphones and may be more suitable for daily use and travel. Because the earpads of supra-aural headphones can rest on the user’s ears, however, they can become uncomfortable after a period of time and achieve less sound attenuation than circumaural headphones,” reads the document published by the U.S. Patent and Trademark Office on Tuesday.

 

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Patents don’t always turn into products and it’s unclear if Apple plans to implement the new headphone design into upcoming devices.

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