IOU

E-COMMERCE MARKET: A GIANT

The e-commerce market is a global giant. For private consumers around the globe, the most well-known form of e-commerce falls into the business to consumer (B2C) category, which includes online retail or online shopping. In 2017, an estimated 1.66 billion people worldwide purchased goods online. During the same year, global e-retail sales amounted to 2.3 trillion U.S. dollars and projections show a growth of up to 4.48 trillion U.S. dollars by 2021. In Asia Pacific, e-retail sales accounted for 12.1 percent of retail sales in 2016 compared to 8.1 percent in North America, and only for 1.8 percent of retail sales in the Middle East and Africa.

GROUPON FACTOR

Groupon, a true success story of pre Blockchain era, has taken advantage of the collective buying power of its users to offer deep discounts for services and products. The business model is a combination of coupon discounts and group buying. Coupon discounts and group buying are old concepts which date back to the late 19th century and early 20th century, respectively. In 1887, Asa Candler, a partner with the Coca-Cola Company, was the first to utilize coupon discounts as an advertisement strategy. Candler made use of various avenues such as magazines, mail, employees and sales representatives to distribute complimentary coupons to potential customers.

With over 100M total subscribers across over 500 cities in more than 50 countries, Groupon is the largest player in the local deals market. The company, a pure-play on the local deals segment with a proven success. Groupon offers “Deal of the Day” and other promotions on their local markets and thereby guaranteeing revenue and large number of customers for the local businesses. Local businesses do not have to pay upfront fees and need to share revenue with Groupon only if the deal achieves the minimum subscription. Groupon offers considerable savings to consumers who can discover services/merchandise that were not known to them earlier.

Groupon backbone of success has been its strong partnership that it created with local businesses breaking into new markets by researching the local market and identifying successful local businesses which are approached by the Groupon sales personnel. Groupon is best suited for high fixed cost businesses and business where the customer acquisition cost is very high and businesses have to advertise a lot and their deals offer them a channel to reach out a target consumer based in the local market without paying any upfront fees. Groupon is also best suited for businesses thriving on repeat customers such as spas and restaurants.

With much success, however, Groupon has met many challenges:

• Local Businesses Have to Figure out the Economics of the Deals. In some cases, local businesses offered deals in which there was no cap on the number of subscribers and the deal was oversubscribed. In such cases, local businesses ended up being unable to meet the delivery expectations and incurred huge losses. Businesses with unprofitable promotions have reported low rates of spending by Groupon users beyond the deals face value and low rates of return to the business again at full price.

• Low Barriers to Entry and Low Switching costs. Groupon’s business model is easy to copy, barriers to entry for the local deal market are low and switching costs for consumers and local businesses are low.

• Competition from other player is rapidly expanding to all cities in which Groupon is offering deals. Groupon could also face competition from players in the local review & search space such as Yelp, which has started offering deals.

• Consumer retention is difficult. While most of Groupon consumers are deal-driven and not long-term consumers its retention rate is about 20% which requires the company to spend heavily into sales and marketing expensive resources. Groupon’s consumer base is composed of deal seekers and bargain shoppers who are not willing to make purchases beyond the deal. The majority of users make onetime purchases at Groupon.

• Low revenue share is not sustainable for its merchant partners. Groupon takes a 40%–50% of the revenue from its deals. This arrangement is not sustainable in the long run as merchants learn quickly to move into search and other competitive advertising alternatives driving revenue away from Groupon by charging less.

KEY ADVANTAGES

With existing advertising systems becoming less and less effective, the IOU Platform presents the ultimate solution. Its key advantages for merchants and consumers are the following:

FOR MERCHANTS

• Loyalty and Customer Retention

• Viral Marketing

• Market Driven Flexibility

• Merchants can receive current consumers’ parameters and interests

• Getting in contact with consumers

• Receiving additional parameters of consumer profile

• Barter functionality between merchants

FOR CONSUMERS

• Trade IOUs with other consumers

• Protection of anonymity

• Opting out at any time of Merchant interaction

• Possibility to personalize interaction with Merchants

TOKEN UTILIZATION

The token IOUX is expected to be utilized in many ways, including:

• Escrow Management

• VIP Merchant Status

• Consumer Purchases of IOU Merchant Offers

• Loyalty Token Grants

• Promotional Offers

Merchants must pay 5% Gas fee in IOUX Tokens for every IOU offer issued for Consumers (in addition to the 5% Fee on any purchases made by other cryptocurrencies, while purchases made by IOUX Tokens would be exempt).

In exchange, to provide incentives for the IOUX Token holders, every IOUX Token transaction would be granted an additional 5% Discount to the Consumers. Additional 10 Loyalty Tokens would be given equally each time to both Merchants and Consumers after accumulating transactions of 1,000 Tokens.

Merchants would also have an option to Guarantee the Service and issue refunds of payments if product or service offered by their IOU offers was not satisfactory. Thus, additional IOUX Tokens would be escrowed until the completion of the term of the IOU Offer.

During issuance of IOU offers, Merchants must agree to the Token Discount, Service Guarantee, and Gas Fee Terms.

TOKEN STRUCTURE

800,000,000 IOUX TOKENS * 1 IOUX = $0.28

Allocated for ICO and Private Sale. Company will burn unsold tokens and use 20% of e-commerce transaction fees on buy-back program to quarterly acquire IOUX tokens from listed exchanges and burn those re-purchased tokens.

Web: https://iou.io/
White paper: https://iou.io/assets/pdf/whitepaper.pdf
Ann Tread: https://bitcointalk.org/index.php?topic=4845370
Bounty Tread: https://bitcointalk.org/index.php?topic=5001075.0
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