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Why Brands and Consumers Need SHOP, a Blockchain-Powered Commerce Network

The way that founder John Wantz talks about his blockchain-for-retail platform SHOP, you get the feeling that he wants to “fight the power.” And that power means Amazon.

Speaking at PSFK’s CXI conference in New York on Friday, the Target alum said Amazon has seized upon the biggest opportunity in retail—centralized consumer data—and that merchants cannot compete with its massive investments without spending “billions and billions of dollars,” which they don’t have. Blockchain, decentralized and immutable ledger technology that establishes trust between parties, could upend the current power structure within retail.

More so than ever, data is having a moment. Hudson’s Bay Company and Under Armour are just two of the retailers to suffer breaches this year, and with the General Data Protection Regulation compliance deadline a mere week away—and Facebook’s data-management scandal not quite in the rearview—everyone is paying attention to data management, data privacy and data rights.

Though Wantz began developing SHOP prior to this current hyper-data-focused environment, he’s seizing the opportunity to push the value proposition that blockchain can bring to both shoppers and brands. He wants consumers to think carefully about their private information, and who should receive access to it. “What is our data? Is it something we should be freely giving away and letting other people control or is it something we should start to reclaim and participate in a network value associated with that?” Wantz said.

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The most consumer-empowering solution, said Wantz, is a system like SHOP that lets shoppers commoditize and control their data into a format that can be traded for goods and services within a retail environment. In keeping with its anti-establishment mentality, SHOP operates as a co-op. “The idea,” Wantz explained, “is that the people who are typically relegated inside an industry or market…sometimes unite to go against an incumbent or market forces that have [marginalized] them out of being able to operate a basic business.”

SHOP plans to operate its retail blockchain with three tokens. The original SHOP token will enable consumers to exchange “high-level” data, such as their phone number or email address, with brands they’re just starting to discover and explore. “You’re potentially looking to be remarketed by them and they want to start to know about you,” Wantz said of how the token works. “You can immediately start to get rewarded for that.”

Brand-level tokens will take the consumer relationship a step further for shoppers who want to share brand-specific data, such as their Lululemon yoga pants fit preferences or their needs around Nike running shoes. For brands, these tokens can function similarly to a loyalty rewards program, and enabling this relationship helps to cut out the retail middle-man that typically doesn’t share customer data with brands.

“We’re presenting it as an opportunity for brands to start to have a direct relationship with you and compensate you to give feedback or views on products and allow for a two-way value-exchange between brands and manufacturers and the consumer,” Wantz said.

SHOP’s shopper-level tokens, which are expected to launch next year, will be the real game-changer, according to Wantz. They’ll live in a wallet app on the users’ smartphone or desktop computer, storing that personal data that can they be shared with brands as they see fit. Because they maintain control over their data, consumers can enable or relinquish access at any time. Wantz noted that the upcoming GDPR compliance deadline is “excellent timing” for SHOP and will be instrumental in evolving its product roadmap.

Though some aren’t quite sure what to make of blockchain yet, SHOP is founded on the premise that it’s well past time to rethink what commerce can be and to recoup data privacy in a connected world.

“I get asked this question often: are we ready for this?” Wantz said. “How many times does our data have to be hacked, stolen, breached? How many times do we have to see how much money Facebook makes off us annually to start to understand that all of this information for these free services that we’ve enjoyed for years are compounding the network effects against us to no end?”

Companies like Google, Walmart and Amazon and their enormous global market caps were “built on the backs of brands” that poured endless dollars into marketing on those platforms, Wantz said, and ultimately on “the shoppers whose data they’ve consumed and marginalized and really use to continue to extract more data and capital and money and time and attention out of us.”

However, a world that values a shopper’s data based solely on how desirable that consumer’s information is perceived to be presents a new, thorny set of issues. Wantz said his wife’s data “probably will be worth more to most brands just because of a lot of factors that just exist today in retail.” Understandably, the consumer who earns $200,000, for example, likely would be worth more to Givenchy that someone with a more modest salary.

But thinking more broadly, socioeconomic issues could come into play. “When we start to think about tokenizing information associated with humans, things like race and gender become real sensitive issues,” Watnz said, adding that SHOP is working on its “human policy.”