In mid-May an e-commerce retailer (Alza) started to accept Bitcoin (and a bit later started to sell Tesla, too) which produced a lot of positive publicity for them. I even wrote about it here.
Living in the country of origin of this company and a country with a pretty active crypto and anarchist scene I just came back from a presentation where they shared their experiences.
In this post you'll learn how it went for them, what problems they had to deal with, how they implemented it, some data as well as some potential fraud ideas they might have to deal with.
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Why did Alza start to accept Bitcoin?
When something new happens in Alza it's usually because there was a demand for it from their current customers. So it was the same with Bitcoin. Many people (numbers are unknown) asked them if they can pay in Bitcoin or whether they'd consider accepting it. So as there was a demand they decided to go for it.
Implementation process
They created a small "Quick Implementation" team who was in charge of getting this done and the founder of the company was leading the team.
As the name of the team suggests, they wanted to do it quickly. And they did.
They had a deadline of 3 weeks.
So in 3 weeks, this huge e-commerce store went from accepting Fiat only to accepting Bitcoin.
The team was in charge of everything, from technical implementation and architecture, picking the right providers/partners, UX as well as accounting and legal issues.
That is a lot to deal with in such a short time.
In terms of technical implementation they were looking for a local (preferably Czech, or from EU) partner who would be responsive in terms of their demands (in case something went wrong and also during implementation due to tight deadline).
They needed both an BTC ATM provider and a Bitcoin Payment Gate.
They found both in Czech republic.
Now there's an ATM where you can buy Bitcoin in their physical brick-and-mortar shops where you can buy as well as sell Bitcoin. And when paying online you get a chance to pay with Bitcoin.
Though they don't deal with Bitcoins at all.
In fact, their partners take all the risk.
Alza deals with local Fiat. They have the prices in Fiat and they receive Fiat. This decision is on purpose.
Alza does not want to speculate on the price. They don't hold any Bitcoin.
If you pay with Bitcoin, they receive local Fiat (eg, Euro).
This was also easier from legal perspective as they had to look at every single country they operate in (whole EU) and their legal status on Bitcoin. In many countries there wa sno clear answer and in some countries the answer varied completely.
Though as they decided to go with simple option of receiving Fiat, the implementation was relatively easy in terms of technical, accounting and legal changes to their system.
The process of paying (from Customer's and Alza's perspective)
if you want to buy something in Alza, the process for you barely changes. It's all the same. Just at the "payment option" step you select that you want to pay in Bitcoin. Then you get redirected to the Payment gate which looks almost identical to the one they use for accepting credit cards.
On this page there is a QR code, the amount to be paid, etc. Though there's a 15 minute timer. During these 15 minutes you have the exchange rate fixed and guaranteed for you so it does not fluctuate. If it expires, new exchange rate is calculated.
There is also a link that describes what Bitcoin is and where to get it.
From Alza's perspective, they have to wait for a confirmation of the Bitcoin payment that they'll receive from the Gateway provider once the transaction was mined. Once that happens Alza will ship the product you ordered. There's 48 hour window for this to happen.
If the transaction is not confirmed then your order is canceled.
Though most of the time the transaction is confirmed in the first 15 minutes.
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What do data show?
Alza is very curious about the development of this implementation so they check the data regularly to see trends in it.
More than 5% of their orders are paid in Bitcoin.
Though more interestingly, on average the "median" transaction for orders is 4x to 5x higher then the average for their fiat orders. That means people buy more expensive things with Bitcoin,. Also, in order to keep the median where it is people have to buy some very expensive things, too.
Though nobody bought Tesla with Bitcoin from them.
The biggest order paid in Bitcoin was 25,000 USD.
Most people tend to buy Graphic cards, Bitcoin wallets, Gaming computers or Apple products.
What about Fraud?
Alza offers a 14-day no questions asked return policy. When you return something you get cash back, not Bitcoin.
This opens up a question if there's potential for using the retailer for getting your "dirty" Bitcoin into "clean" cash.
In terms of the exchange rate it's not really worth to buy a product in Alza and then return it to get cash as it would be more profitable to just do it in a BTC ATM they provide at their stores. In which case they probably don't have to deal with this.
On the other hand, if you want to own the products, or sell them somewhere else afterwards, that might be possible and worth it.
The only time it'd be worth it to return the product you bought and get cash back is when in next 14 days (after your purchase) the price would go extremely down and as a Speculator you'd want to actually buy more BTC instead of owning that product. The it might be worth more to you to return the product, get cash and buy BTC back.
What's next?
As they have very positive experience with Bitcoin and very positive statistics (meaning, it was very profitable for them, more then anyone expected) in near future they're going to accept more alt coins, namely LTC and they're also looking into Dash.
They're keeping an eye on other crypto currencies, too for potential opportunities.
So maybe we'd be able to pay with Steem at some point.
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About the Author;
Hi, I am Joe and I love freedom.
Freedom of all sorts, social, financial, emotional, physical, freedom from your stuff or place.
My biggest passion is to show that it is possible to live life being free, work towards my freedom, and help others obtain their own versions of freedom.
I also love exploration and experimentation (of all senses).
My articles are about all of this (Freedom, exploration, experimentation)
as well as my own transparent and authentic experiences.