After decades of carefully clipping coupons from newspapers, the 21st century brought discounts online, much in the same way that the World Wide Web led to the advent of eCommerce. Although popular services like Groupon did not eliminate paper coupons entirely, they denoted a gradual shift towards scouring the web for relevant discounts and promotions for sought after products and services. The high-flying valuation Groupon received was viewed as a turning point for commerce as it worked to tap into the cost-consciousness of consumers.
In the years since its rejection of Google’s buyout offer and subsequent IPO, however, Groupon has not experienced the widespread traction that was expected to accompany its unicorn status. If anything, it placed another barrier between consumers and merchants, inserting itself as a paid service that delivered deals directly to consumers, often to the detriment of merchants. Participating retailers and businesses are not privy to many of the analytics and data collected by Groupon, making it difficult to assess the efficacy of their outreach efforts. Enter blockchain, the decentralized peer-to-peer network intent on reducing the role of middlemen across industries.
Breaking Down Barriers
Gatekeepers like Groupon oftentimes operate very complex systems that are ultimately more confusing for users than beneficial. Take, for example, a small business that is attempting to run a promotion to bring more customers through the door. In certain cases, a business’s entire profit margin may be sacrificed attempting to drive more traffic. Furthermore, the user experience is harmed by the significant restrictions placed on coupon buyers like when they are redeemable. Hurting the overall value proposition, however, is that Groupon can profit from any coupons listed on the platform even if they are never applied, making them disproportionally benefited relative to the platform’s users.
Instead of helping businesses find more efficient means of delivering promotions and driving sales, these marketing efforts often fall short of rosy expectations pitched by salespeople. Although it doesn’t necessarily fit the classical definition, companies like Groupon act like rentiers, deriving gains without making significant contributions to stakeholders. Blockchain, however, is doing its best to bust the barriers that exist in the sector with its decentralization and democratic operational model.
Building Microeconomies With Blockchain
Already, blockchain has shown its ability to effectively reduce the need for middlemen with the advent of smart contract functionalities which act as independent third parties. Moreover, the ability to tokenize goods and services to increase cross-border transactability has shown significant traction. Additionally, its decentralized design eliminates the needs for central authorities to govern the provision of services, instead relying upon user participation for these networks to thrive.
The rise of tokenization represents a significant leap in the architecture itself, enabling the creation of new microeconomies that are designed to benefit all the ecosystem’s stakeholders instead of a single party overseeing the system. Tokenization is great because it brings real world assets and services onto the blockchain while catalyzing greater opportunities for system-wide collaboration and communication that are vital to refine and streamline processes.
As such, in an era where technology is redefining the status quo across services and utilities, the discount economy looks ripe for a takeover. One company making great strides to improve the overall value of the discount economy for consumers and merchants alike is HotNow. By building a self-contained ecosystem that runs on HoToKeN, HotNow incentivizes discount-seeking consumers to actively participate in the economy to earn tokens which are used to unlock promotions from relevant merchants.
Changing the Discount Paradigm
What started as a system designed to deliver promotions to users’ smartphones based on preferences has quickly morphed into a gamified platform that rewards the system’s stakeholders, both consumers and merchants. Cryptocurrency is the ultimate medium for exchanging value in this environment, where businesses can reward advocates for activity that’s valuable to them, and ensure that this value returns to their coffers at the end of the day. Merchants can tap into a much more targeted advertising environment that brings online consumers into offline locations for commerce. These businesses are better able to evaluate the efficacy of their promotions and measure performance, helping enhance their outreach efforts while building direct relationships with consumers.
On the other side, notoriously fickle consumers have a reason to engage with companies, promote their services, and ultimately derive remuneration that helps sustain the entire microeconomy’s activities. As their activity within the ecosystem grows, they can also borrow HoToKeNs, helping improve the fungibility of the system and the velocity of transactions that take place.
Bringing Better Transparency To Promotional Activities
One of the lacking aspects of the current discount economy is transparency. Without making critical user data available for participating businesses or giving the necessary analytics for companies to adjust and modify their incentives, opaque platforms will ultimately lose out to those that deliver real value. Instead of sitting in the middle and collecting a spread for their services, ecosystems like HotNow demonstrate that there are solutions available to provide actionable intelligence to businesses all while incentivizing consumer participation.
Thanks to their use of the immutable ledger, concepts like HotNow give businesses a clearer way to gather data on actual users, all while helping merchants forge more personal relationships with their stakeholders. With all transactions verified and recorded with blockchain, it is easier to build trust in the ecosystem, helping all users benefit while quashing the credibility problem facing the current players in the discount economy. Even though existing concepts like Groupon are still popular, restrictions placed on both merchants and consumers alike create inefficiencies which are readily solvable by blockchain-based microeconomies. Instead of focusing on how to extract value from a network, newer entrants are focused on adding value for the entire economy and spreading it throughout the ecosystem to the benefit of all participants.