BuyCo.io has realised a decentralised ‘collective purchasing’ marketplace using permissioned distributed ledgers and smart contracts.
The initiative removes most of the costs associated with centralised e-commerce like Amazon and Alibaba, freeing up to as much as 15% margin on cross-border trading & transactions. Furthermore it allows groups of people and companies to self-organise and collectively purchase directly from suppliers in a truly peer-to-peer fashion through something they have termed ‘dCommerce’: decentralised commerce.
This is a proof of concept implementation.
The proof of concept version has some of the characteristics that BuyCo will eventually have, but also lacks some important functions and checks. BuyCo Services Ltd, Block Stars Ltd and Outlier Ventures Ltd do not guarantee any funds deposited in the proof of concept version. The state of the proof of concept implementation can be reset at any given moment at the discretion of BuyCo Services Ltd, at which moment all funds held on behalf of users will be returned.
Collective purchasing is when a group of people get together to procure goods or services from one or more vendors on an ad hoc or ongoing basis. The large bulk of collective purchasing happens through what are known as ‘buying cooperatives’ or ‘procurement coops’ which can be made up of consumers, retailers or wholesalers. They do so with the explicit aim of sourcing more competitively both on price, terms and service. Whilst levels of commitment vary it is generally with the ambition of repeat business on both sides.
Traditionally, buying cooperatives are time and labour intensive to setup and run, whilst BuyCo.io allows you to set one up in seconds with ordering, supplier management, governance, escrow and payment processing, all fully automated through smart contracts built on Ethereum blockchain technology. By handling all transactions outside of the traditional banking system on a distributed ledger, they dramatically speed up payments to suppliers improving liquidity for the benefit of all parties.
The approach further builds upon the culture of the Sharing Economy but is better aligned to the principles of the traditional cooperative movement where BuyCo’s put the needs of their members first before a third party. It is possible to setup and run a BuyCo entirely for free with revenues planned to be generated from associated services such as trade financing and insurance.
Unlike Amazon, BuyCo.io doesn’t retail goods themselves. BuyCo.io is the creator and operator of code that connects suppliers quickly and efficiently to buyers with minimal friction and expense. This means they remove any potential for channel conflict entirely.
BuyCo.io has openly published a detailed whitepaper and working proof-of-concept to demonstrate it is possible today to build a partially decentralised collective procurement tool. The proof-of-concept leverages the Uphold platform to remove friction around crypto-currencies, by using pegged currencies familiar to users and making it easy to transfer money into and out of BuyCo’s using conventional bank accounts.
The team believes to have clearly proven decentralising collective procurement through the use of blockchain technology brings huge efficiencies to the market whilst broadening its appeal to new user groups. Importantly it lowers barriers for a long-tail of potential users to enter, and offers a new form of digital commerce, ‘dCommerce’, that could disrupt large parts of the e-commerce market none more so than Amazon and Alibaba.