Newegg, the online electronics retailer worth at least $2bn in annual revenue, has tweeted yet another hint that it will begin accepting bitcoin payments in the near future. The California-based company posted this teaser today:
— Newegg (Official) (@Newegg) January 9, 2014
There has been much online speculation over the past month as to what Newegg might be planning. A company of this size accepting bitcoin would be one of the biggest gestures toward mainstream bitcoin acceptance yet.
On 24th November, Newegg was asked by @thedatascape on Twitter whether the company would accept bitcoin. The following response came:
— Newegg (Official) (@Newegg) November 23, 2013
It is still unclear when Newegg will make a formal announcement, or launch a bitcoin pilot. But with Overstock.com coming online with bitcoin payments through Coinbase six months ahead of schedule, the pressure is on.
US retailers going global
One interesting phenomenon that has emerged over the last couple of years may be working in bitcoin’s favour. Black Friday sales are going international, as more and more non-US consumers are getting in on the act.
Although the rest of the world does not celebrate Thanksgiving, everybody loves cheap electronics, and massive Black Friday discounts are making them attractive to overseas buyers too.
“Many have been curious about bitcoin, but seem to be waiting for better payment (and legal) structures to exist before leaping in.”
Bargain hunters are not only looking for low prices and holiday bundles – they are looking for a cheap way to make their purchases, without the usual credit card charges. US e-tailers are simply trying to adjust.
Many have been curious about bitcoin, but seem to be waiting for better payment (and legal) structures to exist before leaping in. With smaller technology and online businesses paving the way, it would make sense for large electronics stores to come next.
Shopify announced it would introduce bitcoin payment options for its independent merchants in November. Overstock.com is an online retailer but it deals mainly in household goods, so it was surprising to see its CEO being the first to announce a plan to accept bitcoin. Heads turned even more toward businesses with customers more likely to be bitcoin enthusiasts, like Newegg.
According to MarketLine research, online retail in the US alone was worth $200.4bn in revenues in 2012. It probably comes as little surprise to discover the electronics segment is the most lucrative of all, its customers supplying 21.9% (or $43.8bn) of that total.
Having experienced a compound annual growth rate (CAGR) of 11% between 2008 and 2012 despite the economic hard times, online retail as a whole is projected to grow to $371.4bn by 2017.
Other online retailers are no doubt salivating at the thought of keeping more of that revenue in their own accounts, rather than handing it over to banks and credit card companies. They might, however, want to observe for a while to see how certain bitcoin-related vagaries are handled before joining in.
Still hurdles to overcome
There are consumer protection issues like how to properly identify and resolve fraudulent purchases, and how such things can be proven. Then there's price volatility: currently, this is handled by payment processors like BitPay and Coinbase who can instantly convert bitcoin to USD before the price fluctuates. But these online retailers are in a new league, and their revenues on a much larger scale.
If large-scale online retail with bitcoin proves to be successful, it won't just be only other retailers looking on hungrily. The IRS will definitely be looking for its share, and some in government still bristle at the idea of large-scale adoption of a currency not under state control.
California's Newegg has long been a favorite online retailer for technology fans. Launched in 2001, its popularity grew quickly and Internet Retailer Magazine named it one of the Top 10 online retailers in 2005. The company went public in September 2009 and in 2010, generated $2.5bn in revenue. It has been profitable every year of its existence.
It also has local stores, in Canada, China, and Taiwan and operates a number of more specialized stores and brands, including NeweggBusiness.com.
Co-written with Jon Southurst
Egg Image via Shutterstock