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Author Topic: Newegg Needs to accept bit coin.  (Read 3222 times)
fascistmuffin
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July 03, 2011, 07:59:48 PM
 #21

I don't think people realize that it's not as simple as making a form to pay with bitcoin and putting it on the site. Running a business isn't just taking money and giving a product out. You have to take a lot more things in consideration.

Like I said in a earlier post on this thread, Newegg has no use for bitcoin because they can't pay suppliers, shippers, or employees with BTC. They probably will never have a use for bitcoin as long as they wish to deliver things with low prices, and they will never be legally able to pay their employees in BTC in the USA*. Think of all the fees associated with BTC when the only use you have for it is turning it into money. You pay the trade site a commission, then you pay dwolla (or trade site for different method) an amount to withdraw those funds. All of that is done on a not as developed infrastructure, unlike credit cards. Yes they paid fee's with credit cards, but they also get a whole hell of a lot more protection in that way, since the fees from credit cards help pay towards anti fraud services and insurance. Does bitcoin really have any fraud protection other than people pointing out scams?

They don't get any benefit from internationally purchases, which could be easier with bitcoin, since they don't ship internationally.

Then there's also taxes, employee benefits, and other costs that can't be covered by bitcoin. Also, they would need to add more support and/or train support people to deal with BTC translations.

So in the end, if you were running this business rationally, with consideration of the well-being of your employees and business growth, would you accept bitcoin?

*If you disagree with this point, look how long it takes for any technology legislation to be passed or how informed the people deciding those things are. Hint: Most of them get money from businesses to insure that businesses interests.
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Stephen Gornick
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July 04, 2011, 02:37:45 AM
 #22

They probably will never have a use for bitcoin as long as they wish to deliver things with low prices

The price competitive businesses will be among the most enthusiastic about a low cost option to compete against businesses that only offer credit and debit payment card methods.


Quote
Think of all the fees associated with BTC when the only use you have for it is turning it into money.
.  

0.65% exchange fee (on Mt. Gox) + $0.25 per-day to sweep the balance to Dwolla.

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All of that is done on a not as developed infrastructure, unlike credit cards.

There are APIs for all of this now.

Quote
Yes they paid fee's with credit cards, but they also get a whole hell of a lot more protection in that way, since the fees from credit cards help pay towards anti fraud services and insurance. Does bitcoin really have any fraud protection other than people pointing out scams?

As long as the merchant waits for the transaction to confirm (and thus become irrevocable) before shipping, there is no fraud risk.  Are you instead trying to make an argument why consumers might not want to pay with bitcoins?

Quote
So in the end, if you were running this business rationally, with consideration of the well-being of your employees and business growth, would you accept bitcoin?

Let's see: no payment network fees (to the merchant), no chargeback risk, all payments "settle" (funds available to be spent) within an hour ...  hmm ...  what's the question again?

happyface
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July 04, 2011, 02:42:31 AM
 #23

A big site like newegg accepting bitcoins would definitely help the currency out.
Isn't a huge problem that the value of bitcoins changes so much though?
zybron
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July 04, 2011, 02:57:23 AM
 #24

One thing that would help a lot is if one of the exchanges could offer BTC rate insurance. The way it would work is a company like NewEgg takes bitcoins and purchases rate insurance on them. If they accept them at the going rate, say 16BTC, the insurance might cost 1% of the dollar value and would allow them to exchange the BTC for USD at 90% of the rate they accepted them if the rate was lower than that for the entire following month.

For example say NewEgg accepts $500 as 31.25 BTC at an exchange rate of 16.
NewEgg pays a $5 to insure their 31.25 BTC.
In 30 days, NewEgg may claim their insurance any time in the next 30 days if the exchange rate drops below 14.4
If NewEgg claims the insurance, the insurer pays them 90% of the their money ($450) and takes their 31.25BTC.

This will cost NewEgg less than they pay for credit card fees. And it caps their loss at 10%. The insurance should be possible to provide cheaply, since you're only covering the drop in value.

You do need a stop loss provision. Something like: If the exchange rate drops below 80% of the rate at time of purchase, the insurance company can give NewEgg two days to either trade their BTC at full value (they get $500, they lose nothing) or give up the insurance. This allows the insurance company to cap their payouts at only a bit more than 10% of the insured amount, unless the exchange rate drops catastrophically.

This sounds a lot like a credit default swap. We know where that lead. Smiley

Although the last part - the part that didn't exist for CDS transactions - might help mitigate the potential crash.

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July 04, 2011, 03:37:29 AM
 #25

I don't think people realize that it's not as simple as making a form to pay with bitcoin and putting it on the site. Running a business isn't just taking money and giving a product out. You have to take a lot more things in consideration.

Like I said in a earlier post on this thread, Newegg has no use for bitcoin because they can't pay suppliers, shippers, or employees with BTC. They probably will never have a use for bitcoin as long as they wish to deliver things with low prices, and they will never be legally able to pay their employees in BTC in the USA*. Think of all the fees associated with BTC when the only use you have for it is turning it into money. You pay the trade site a commission, then you pay dwolla (or trade site for different method) an amount to withdraw those funds. All of that is done on a not as developed infrastructure, unlike credit cards. Yes they paid fee's with credit cards, but they also get a whole hell of a lot more protection in that way, since the fees from credit cards help pay towards anti fraud services and insurance. Does bitcoin really have any fraud protection other than people pointing out scams?

They don't get any benefit from internationally purchases, which could be easier with bitcoin, since they don't ship internationally.

Then there's also taxes, employee benefits, and other costs that can't be covered by bitcoin. Also, they would need to add more support and/or train support people to deal with BTC translations.

So in the end, if you were running this business rationally, with consideration of the well-being of your employees and business growth, would you accept bitcoin?

*If you disagree with this point, look how long it takes for any technology legislation to be passed or how informed the people deciding those things are. Hint: Most of them get money from businesses to insure that businesses interests.

I understand your point of view as I run a wholesale business myself. Fluctuation in pricing(even a little bit) can drastically undermine your bottom line. Now take the additional man hours it takes to convert these bitcoins into USD, handle refunds, etc...  There is no reasonable expectation that they will clear the same profit than were they to not accept them.

 I think a lot of folks simply look at the market rate and say hey! my bitcoins are worth $17.00. I'll give you 2 bitcoins for that $34.00 mouse pad. As a company, were I to accept bitcoins I would be skeptical that I would be able to get the funds I really need into a bank account to pay my creditors, employees, etc... in a timely manner. I don't have enough faith in the value yet. I know what my cost of goods are, I know to the penny what it costs to have an employee working for 1 hour or 41 hours. I know what I need to charge to break even, and I know what I need to charge to make a profit. A fluctuation in price of even .30$ could take me from profitable to break even or worse.

Now if there was a premium associated with accepting bitcoins' at this particular time (for arguments sake 1:1.25 I could reasonably justify accepting them for products that I stock and sell. Until that happens I would be very hesitant of tackling this animal.
Stephen Gornick
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July 04, 2011, 04:23:23 AM
 #26

Now take the additional man hours it takes to convert these bitcoins into USD

There are APIs for all of this now.  They could be converted automatically, and immediately.

handle refunds

You convert the same number of USDs to BTCs using the market rate when the refund is issued.

Quote
Now if there was a premium associated with accepting bitcoins' at this particular time

Your logic seems odd to me.  To accept a payment method that costs less, you want to charge more?  

Maybe your business is booming right now and you aren't hungry.  A lot of businesses aren't that fortunate -- they'ld welcome new sales that might occur after accepting bitcoins as payment.

Ask Meze Grill, for instance, if they regret the idea of accepting bitcoin as payment:
 - http://bit.ly/l07wny

w2wgamer
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July 05, 2011, 08:46:05 PM
 #27

Bitcoin will need to become much less volatile for established businesses to accept it.  The best thing to do is to continue being part of the bitcoin community until it stabilizes.  If people leave, or don't have faith in it, the outside business world won't have faith in it.
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July 05, 2011, 09:50:25 PM
 #28

Would be cool if they took it...been a newegg fan for like 10 years.
JBDive
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July 06, 2011, 03:23:27 AM
 #29

Simple fact is for Bitcoin to become anything more than basement geek coolness (look I at my mining rig) you have to start seeing more people/businesses willing to accept BTC as payment or exchange. I'm thinking more one on one transactions for services vs. larger businesses for products.

I have been trying to figure out how we could accept BTC in exchange for totally secure backup services we provide but would users be willing to be invoiced monthly and the price in BTC be a moving target? One month 1 BTC, the next who knows, not to mention there would have to be a padding in there for any price moves between invoiced date and payment date. If I knew there were enough geeks here who provide tech services to their own clients I can see where maybe they charge the client in $ but pay us in BTC and that might help drive it especially if they bought from us a chunk of backup space and then devided that up to their clients then we could charge based on the block, say 100GB, but cover the BTC price move based on them only using 80% of that then after they hit 81% they would have to go into the next storage block. Don't know, still trying to figure out some way to do it and not loose money while not overcharging as well.
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July 07, 2011, 03:42:39 AM
 #30

I have been trying to figure out how we could accept BTC in exchange for totally secure backup services we provide but would users be willing to be invoiced monthly and the price in BTC be a moving target? One month 1 BTC, the next who knows,
Do you vary your prices in USD when the value of USD relative to other currencies changes?

Quote
not to mention there would have to be a padding in there for any price moves between invoiced date and payment date.
Why? Wouldn't the opportunity make extra money balance out the risk of losing some? And if you know how to time your conversions, you can insulate yourself against that risk pretty well.

Quote
If I knew there were enough geeks here who provide tech services to their own clients I can see where maybe they charge the client in $ but pay us in BTC and that might help drive it especially if they bought from us a chunk of backup space and then devided that up to their clients then we could charge based on the block, say 100GB, but cover the BTC price move based on them only using 80% of that then after they hit 81% they would have to go into the next storage block. Don't know, still trying to figure out some way to do it and not loose money while not overcharging as well.
Pick a price in bitcoins. Adjust the price only as absolutely necessary just as you would with USD. Time your conversions of BTC->USD.

Yes, you would be taking an additional risk, but you would also have the potential for additional profits. If you don't think BTC is a good investment in the medium term (2-3 months at least), then don't do it. Wait until bitcoins are more stable.

I am an employee of Ripple.
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JBDive
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July 07, 2011, 04:35:41 AM
 #31

I have been trying to figure out how we could accept BTC in exchange for totally secure backup services we provide but would users be willing to be invoiced monthly and the price in BTC be a moving target? One month 1 BTC, the next who knows,
Do you vary your prices in USD when the value of USD relative to other currencies changes?

My cost are in US dollars and that cost is fixed based on storage use plus client software fee. It doesn't matter what the currency is doing the price remains the same. Since I can't pay for my cost in BTC I could get screwed considering the price moves in BTC over a month's time or the opposite, I could be totally ripping somebody off if I set it at 2 BTC based on today's $14 and next week it goes to $30.

Quote
not to mention there would have to be a padding in there for any price moves between invoiced date and payment date.
Why? Wouldn't the opportunity make extra money balance out the risk of losing some? And if you know how to time your conversions, you can insulate yourself against that risk pretty well.

Our margin is very tight. We should charge a good 30% more than we do but we provide this service to our customers as cheaply as possible so they have a solid, secure backup vs. some of the all you can eat junk that simple does not work or is not secure.

Quote
If I knew there were enough geeks here who provide tech services to their own clients I can see where maybe they charge the client in $ but pay us in BTC and that might help drive it especially if they bought from us a chunk of backup space and then devided that up to their clients then we could charge based on the block, say 100GB, but cover the BTC price move based on them only using 80% of that then after they hit 81% they would have to go into the next storage block. Don't know, still trying to figure out some way to do it and not loose money while not overcharging as well.
Pick a price in bitcoins. Adjust the price only as absolutely necessary just as you would with USD. Time your conversions of BTC->USD.

Yes, you would be taking an additional risk, but you would also have the potential for additional profits. If you don't think BTC is a good investment in the medium term (2-3 months at least), then don't do it. Wait until bitcoins are more stable.


My concern is I always want to be fair about things and trying to match our cost against a moving target, BTC to $, would likely require I pad the price in BTC to cover the 3-5 dollar swings we are seeing. The next problem would be how the customers feel about being invoiced a different rate each month in order to match that moving target. Would somebody get ticked off that this month it's 1.25 BTC and and next month it's 1.5 BTC because BTC to dollar fell, I'm doubting any would overly complain the other way around, was 1.25BTC and next month it's just .75BTC.

What I think I am going to do is to open it up to a test group, maybe 10 users, and see how a few billing cycles go. At 10 users on the lower plans I can cover any loses and get a feel for how to process and automate the billing. I think what your getting at is instead of me invoicing X BTC and then trying to convert those to dollars as they are paid I would bank those BTC either as a long term investment or sell when pricing matches what I value them at. This would probably put me in the hole the first few months as I have to cover cost yet in the long run I should come out ahead.

Sorry for the strange formatting but I tried to do quotes in quotes and got the whole thing messed up so started over.
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July 13, 2011, 03:08:31 AM
 #32

Now take the additional man hours it takes to convert these bitcoins into USD

There are APIs for all of this now.  They could be converted automatically, and immediately.

handle refunds

You convert the same number of USDs to BTCs using the market rate when the refund is issued.

Quote
Now if there was a premium associated with accepting bitcoins' at this particular time

Your logic seems odd to me.  To accept a payment method that costs less, you want to charge more?  

Maybe your business is booming right now and you aren't hungry.  A lot of businesses aren't that fortunate -- they'ld welcome new sales that might occur after accepting bitcoins as payment.

Ask Meze Grill, for instance, if they regret the idea of accepting bitcoin as payment:
 - http://bit.ly/l07wny

Sorry I didn't respond sooner. Got "busy"...

I checked out the link you posted. A few things: they haven't had a customer use BTC as of when the article was written. They have a worry that I also share, current exchange rate. I'm not selling food. I'm selling products that cost hundreds of dollars, my margins are thin, and my total profit is a small percentage of my total gross sales. I could not, nor want to absorb a 3% market value decrease over the span of a month, never mind a day. I think you'd find this is the case with the vast majority of companies out there(99.99999%) Meze Grill have a QR code to accept payment, but they say nothing of the process after getting BTC. I know what I have to do to get funds from BTC, so I'm assuming that's they way I'd have to do it initially.

As of right now, bitcoins do not cost me less to use. I can't pay my vendors, employees, insurance, fuel, import fee's, taxes, etc... in BTC. I need to convert 100% of my BTC to USD. It takes far longer to get the funds into my account than through normal means.  So the value of BTC could decrease in value(possible), I will pay an exchange fee and a transfer fee to get funds into my account(given) and it takes 2x's longer to get funds.  Now I need to refund BTC? Start the process over....

Take into account the costs of setting up my system to do this automatically; I don't know how to use API's, now I have to pay someone. I have a  company that handles our systems but I would need to hire someone else to do this specialty work and coordinate with the other company to make sure my systems are still hardened (also on my dime). It turns into a headache for me, and I want to be able to accept bitcoins. Now that I've gone through all of that, I'm assuming that even one of my customers have/have enough bitcoins to spend.

This all leads back to charging a premium to use BTC as a method of payment. It's great that MEZE can sell a chicken sandwich for BTC, can they afford to sell pallets of chicken sandwiches?  Another example of current market conditions. Right now, TH has a last sell price of $13.95. 2 weeks ago I sold 2 BTC for $17.00. That's a -17.94% decrease in value.

Let's say hypothetically that I'm Newegg and accept Bitcoins. I sell 100 parts for an average of $50= $5000.  Convert that to BTC. $5000/13.95= 358.42*** BTC.   Market drops 3%= 358.42 BTC= $4850.00 or $13.53.  Newegg has documented profit margins of 1.4%, that's off their financials FYI. They spend $98.60 for every $100 they make. So to break even they would need to have made $4930.00 in USD. You project that out over 100k in sales and it becomes unbearable. Newegg does over 2 billion in sales....  Now Newegg has already gotten services in place to accept BTC. There is a tangible cost associated with this. You might put a QR code on your site in 5 minutes but it's a little more complicated than that for Newegg. They are now even further in the hole profit wise. Exchange fee's? Transfer Fee's? 1, just 1 person submits for a return and they have to give a refund on the USD value of the product(unless otherwise stipulated) They've lost even more....

$1 USD = $1 USD but $1 USD=0.071*** BTC(Subject to Market Rates)  Basically Newegg shoulders all of the risk for BTC currency, while all partners shoulder risk with USD.

In the end, it is too risky for large companies to accept BTC as a method of payment right now. The market is too volatile to shoulder that risk. Hopefully one day it'll work itself out.

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July 13, 2011, 03:16:31 AM
 #33

it would be now more "risky" then accepting other currencies, as long as there is a market to support the bitcoin they can change it into whatever currency they want.  I think we need to start a petition or even only buy from hardware people that accept bitcoins things don't change unless you put your money where your mouth is.
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July 13, 2011, 03:18:59 AM
 #34

considering the business the bitcoin community brings em, i agree, as for risk cant they just wait for confirms ? and for value fluctuations they could just add 5% on the prices.

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July 13, 2011, 03:49:10 AM
 #35

I would be willing to pay 5%-7% premium to use BTC instead of USD in most cases.   If the order was huge maybe I would be inclined to convert it to cash but if I wanted a cheap SSD from newegg I would love to just pop off a fistful of BTC even if I technically paid $6 usd more dollars for it.
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July 13, 2011, 03:59:23 AM
 #36

Actually if I can acquire BTC through means I find sustainable (say mining, barter etc) and spend them say at Newegg and get goods/services that I need/want.  It would become a closed loop system that would eventually cause me to become less concerned about whatever the BTC to USD rate was even if there was a lot of fluctuation.   It would just become yet again another route to maximize value or minimize loss that many people don't take.   Just like coupons for example.   I don't use them,  well hardly ever... its not that I don't care about saving money, I do.  I work hard for what I have.  Its just that outside of a radical circumstance I just can't be bothered to incorporate the acquisition/use of coupons into my lifestyle for the preconceived gains.   So I miss out and I'm doing just fine. 

I don't really care what the medium for validating the equity of the exchange is...  Just so long as it works to give me what I need.
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July 13, 2011, 09:53:13 PM
 #37

The post concerning returns needs to be addressed and I don't see anyone doing that. If you bought that $200 video card for 16BTC and wanted to return it a week later and the current USD price of BTC was $10 would you expect Newegg to send you 20BTC, credit of $200. Maybe they should just return the 16BTC minus fees, I doubt anyone would be happy with that now would they? They certainly are not going to issue you a check, they can't credit your CC so should Newegg be forced to maintain a BTC bank for returns or program a Dwolla draft so they can convert dollars into BTC to send you?

I just don't see this happening. Where is the incentive? They would clearly need to see a huge markup in the price of the products in order to accept BTC and to cover their margins. Who would stand for paying 10% higher for using BTC than cash, kind of defeats why your shopping at Newegg to begin with?
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July 13, 2011, 11:30:37 PM
 #38

The post concerning returns needs to be addressed and I don't see anyone doing that. If you bought that $200 video card for 16BTC and wanted to return it a week later and the current USD price of BTC was $10 would you expect Newegg to send you 20BTC, credit of $200. Maybe they should just return the 16BTC minus fees, I doubt anyone would be happy with that now would they? They certainly are not going to issue you a check, they can't credit your CC so should Newegg be forced to maintain a BTC bank for returns or program a Dwolla draft so they can convert dollars into BTC to send you?

I just don't see this happening. Where is the incentive? They would clearly need to see a huge markup in the price of the products in order to accept BTC and to cover their margins. Who would stand for paying 10% higher for using BTC than cash, kind of defeats why your shopping at Newegg to begin with?
Most computer hardware is probably not purchased from the manufacturer in USD, and the USD exchange rate changes quite a bit each day, but have you ever heard about anyone correcting for that? Refunds return what you paid, not fair market value.

The incentive was already mentioned. If customers would pay a premium to use BTC over USD, that is profit. "Maintaining" a BTC account would probably be worth it, considering the effort required is close to nil. Software development to enhance their shopping cart, if done by someone competent, should only take an hour or two. Even on small margins, that would pay for itself rather quickly if they can fill their orders.

https://tmmb2ro3icewhmqz.onion/
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July 13, 2011, 11:39:07 PM
 #39

they would gain a lot of loyal customers if they decided to accept bitcoin.
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July 13, 2011, 11:48:57 PM
 #40

http://www.newegg.com/HelpInfo/OverView.aspx?SectionID=89&SubjectID=176&ShortDesc=Payment

I'm going to send them a email requesting they add bitcoin.

Any thoughts before I do.

There would have to be a company that handled the exchange. Then Newegg could just display the current BTC cost (based on the company's api). When people pay using BTC, it works just like paypal. They go to that companies site, pay, then they notify Newegg the person has paid and to proceed. Then the company pays Newegg the USD equivalent.

On Neweggs side, they're still selling it for USD, nothing really changes. The bonus is no chargebacks.

The bitcoin company handles selling the bitcoins, covering their costs, and provides the API/setup for any business to sell in BTC and get paid in USD. I'm not sure how much profit there is going to be, this is probably a business that loses money in exchange for legitimizing bitcoin and gaining consumer and business confidence. If I was that guy with 250k bitcoins I'd no question use 10k of them to fund this business in order to protect my other 240k coins.

No real business is going to screw around with converting/accept bitcoins. There has to be a specialized bitcoin company that will accept the incoming bitcoins and then turn around and pay the online retailer in USD. Just the fact there's no charge backs should be at least some incentive.

It's like saying you want Newegg to accept gold bullion. Newegg isn't going to screw around collecting gold bullion anymore then they would bitcoins. But if another company would handle accepting/exchanging it to USD, then it makes a lot more sense.
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