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Author Topic: Newegg Needs to accept bit coin.  (Read 3225 times)
Duffman
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July 14, 2011, 12:24:22 AM
 #41

I just don't see this happening. Where is the incentive?
The incentive was already mentioned. If customers would pay a premium to use BTC over USD, that is profit.
no one would pay a premium except for idiots.  the incentive is the irreversibility.
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July 14, 2011, 12:55:54 AM
 #42

I just don't see this happening. Where is the incentive?
The incentive was already mentioned. If customers would pay a premium to use BTC over USD, that is profit.
no one would pay a premium except for idiots.  the incentive is the irreversibility.

Commenters in this thread have expressed willingness to pay a premium. I would be happy to pay a (reasonable) premium to buy from Newegg with btc. Why?

  • Right now there are very limited options on what you can buy with btc. Anyone willing to sell gift cards or preloaded credit cards charge a premium for that service. I'd rather pay a premium directly to the vendor and cut out the middleman, especially if it makes the purchase process simpler.
  • If I mine some coins and use them to buy from a vendor, do I owe tax on the purchase? Maybe. Does the IRS have any way to know I made the purchase? Nope. If I buy with cash and later get audited I won't be looking forward to reviewing those bank statements if I didn't pay those taxes.
  • Newegg has a risk of losing money if the exchange rate drops before they can cash in. They can minimize that by charging a premium. However, they also stand to earn extra money from the exchange rate increasing. The btc economy is small enough right now that backing from a major vendor could very well cause the exchange rate to rise. They're big enough to move the market in their favor.
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July 14, 2011, 05:39:29 AM
 #43

I would be willing to sell newegg products for a reasonable premium in the near future, much less than the 15(?)% charged by these websites.
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July 15, 2011, 07:02:34 PM
 #44

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.

Your wrong on if Newegg is paying in USD for their parts, they are. They are basically an eCommerce frrontend to the real Tier 1 Disti's. Their margin is very slim on most items and they make this up in that they are not actually warehousing, shipping or dealing directly with importing the parts. They do appear at times to handle things directly skipping the Disti such as when they bought and sold the fake CPU's last year or the year before but for the bulk of their product you can look at them as nothing more than a customer service web front to the backend importers. I would argue that those backend importers, the Disti's also pay for their products in dollars but I can't say that is a fact. Orders for most products are done months in advanced by the Disti's directly with the manufacturer and although those Intel chips may come from Taiwan it's Intel TechData, Synnex and Arrow are buying from and paying.

I agree that refunds would be based on what you paid but as I said if you paid 5BTC because that's what Newegg's backend API called for when doing the math you would not be a happy camper if Newegg sent just 4BTC back if the market had fallen nor could Newegg survive many returns if the market went the other way and 100 people all returned those video cards because Newegg based returns on current pricing and the price had gone through the roof. The dollar does not vary by 5% in a day, BTC does. Somebody in the exchange is going to be very unhappy.

So let's say you have Newegg accepting BTC how does Newegg get it's dollars out of it? The exchanges are limited in the amount they can pull out in a day, MTGox is what $1000? They would have to limit sales to the amount they could reclaim to cover cost not to mention sending those dollars to DWolla or however would show up as thousands in possible international money transfers, RED FLAG IRS!

I think the better idea if for Newegg to offer on a daily basis X number of $10 Gift Cards, limit per user to say 5 (yes some people would just backdoor multiple accounts). They could thwart the scammers by offering those cards in batches spread throughout the day so one users could be sitting at his PC with multiple accounts open at 12:01AM PST in order to pick up ever single Gift card.With a limited number of cards in the wild they should be able to cover any withdrawals they need to make per day to cover the dollar cost of the cards, the price of the cards are fixed and Gift cards are not refundable. Now if you use that card today or a month from now doesn't overly matter and any returns would be based on the dollar price of the product purchased with the gift card. There may be some legal room in there too since they would only be exchange a card for BTC vs. BTC for a physical product.
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July 15, 2011, 08:18:27 PM
 #45

Your wrong on if Newegg is paying in USD for their parts, they are. They are basically an eCommerce frrontend to the real Tier 1 Disti's.
I said, "from the manufacturer." You would need the entire process, from mining, refining, design, fabrication, etc. to be in USD for exchange rates to not be relevant.

Their margin is very slim on most items and they make this up in that they are not actually warehousing, shipping or dealing directly with importing the parts. They do appear at times to handle things directly skipping the Disti such as when they bought and sold the fake CPU's last year or the year before but for the bulk of their product you can look at them as nothing more than a customer service web front to the backend importers. I would argue that those backend importers, the Disti's also pay for their products in dollars but I can't say that is a fact. Orders for most products are done months in advanced by the Disti's directly with the manufacturer and although those Intel chips may come from Taiwan it's Intel TechData, Synnex and Arrow are buying from and paying.

I agree that refunds would be based on what you paid but as I said if you paid 5BTC because that's what Newegg's backend API called for when doing the math you would not be a happy camper if Newegg sent just 4BTC back if the market had fallen nor could Newegg survive many returns if the market went the other way and 100 people all returned those video cards because Newegg based returns on current pricing and the price had gone through the roof. The dollar does not vary by 5% in a day, BTC does. Somebody in the exchange is going to be very unhappy.
Yes, but all of that is irrelevant. Everyone knows that a refund does not mean fair market value. I have never received a reduced refund through them, and this is the only part in their return policies that says anything like that:

Quote
Out-of-Stock (Back-Order) Items
If Newegg no longer carries an item that is sent in for replacement, or if that item is simply out of stock, the item will be sent to our Back-Order RMA Department. You will be notified via email of two options: 1) Newegg can send you a comparable replacement item, or 2) Newegg can issue you a refund at the current market value of the product. A current-market-value refund may not exceed the original invoice price. If the item is returned within 30 days of the original invoice date, a full refund will be issued.

If someone wishes to cash out on a low, that is their problem. I wouldn't expect Newegg or anyone else to do that. They only need an EMA on the exchange rate, profit margin, possibly a little buffer at first which they can remove over time to remain competitive, and price and exchange at or above that level. It's not rocket science. If they want to limit or reduce their risk, they can only offer certain items for sale with BTC, not offer a return policy at all on them, insure themselves by investing an equivalent amount of their risk elsewhere, etc.

So let's say you have Newegg accepting BTC how does Newegg get it's dollars out of it? The exchanges are limited in the amount they can pull out in a day, MTGox is what $1000? They would have to limit sales to the amount they could reclaim to cover cost not to mention sending those dollars to DWolla or however would show up as thousands in possible international money transfers, RED FLAG IRS!
The same way we do. Yes, the exchanges are small, but once you get retail markets involved, it will expand, probably rapidly. Few are willing to tie up capital in order to be the counterparty to any deal, so they are mostly simple brokers between parties at this point.

I think the better idea if for Newegg to offer on a daily basis X number of $10 Gift Cards, limit per user to say 5 (yes some people would just backdoor multiple accounts). They could thwart the scammers by offering those cards in batches spread throughout the day so one users could be sitting at his PC with multiple accounts open at 12:01AM PST in order to pick up ever single Gift card.With a limited number of cards in the wild they should be able to cover any withdrawals they need to make per day to cover the dollar cost of the cards, the price of the cards are fixed and Gift cards are not refundable. Now if you use that card today or a month from now doesn't overly matter and any returns would be based on the dollar price of the product purchased with the gift card. There may be some legal room in there too since they would only be exchange a card for BTC vs. BTC for a physical product.
Good idea. At least it's something.

https://tmmb2ro3icewhmqz.onion/
dual6990s
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July 15, 2011, 08:56:29 PM
 #46

A novel concept, but for the number of items that break, burn out, or have been replaced I would be up a creek many a time if I had payed in bitcoins
JBDive
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July 16, 2011, 12:13:15 AM
 #47



This is not true I have seen the city of industry warehouse. The stock. I'm sure they drop ship also.

When ordering from Newegg and you see the shipments coming out of NJ, PA, TN and yes CA those are direct from the Disti. They may have a warehouse at this point but it's stock would surely be limited to the high turn over items or items they are pack breaking like hard drives and MS OEM software which you won't get a Disti to do. I have noticed HD's always seem to come out of CA so yes I can see them getting HD's in by the case and breaking those out but I am willing to bet it's setup in some type of "as we need it, replenish it" from the Disti who also has warehouses there.
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July 16, 2011, 04:15:09 AM
 #48

Their profit margins are super thin and they make their money in volume and low operating costs.  Because of this, they can't take a currency whose value goes up and down pretty wildly.  They could take a payment for an item that has a 20% profit margin and the next day, the change in bitcoin value means it's -5% and they actually lost money.

There's nothing stopping someone from acting as a middleman and taking bitcoins then buying items on newegg for USD and forwarding the item on to that person (except that that's a massive fraud waiting to happen Tongue)
Stephen Gornick
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July 16, 2011, 05:22:29 AM
 #49

they can't take a currency whose value goes up and down pretty wildly.

This is a long thread now, perhaps you missed earlier posts where this was addressed. Specifically:

Quote
until they have a place for those bitcoins to go (i.., employees, suppliers or investors) then they would likely be cashing out most of (or all of) those bitcoins that they've received.
- http://forum.bitcoin.org/index.php?topic=25380.msg317659#msg317659

That way a merchant not wishing to be exposed to exchange rate risk is never holding bitcoins for more than a few minutes.  They can accept them as payment and trade them out to USDs upon receipt.

There is an expense in adding this new payment method though.  That expense is offset though from the benefits that bitcoins bring:  no chargebacks, significantly lower transaction fees and nearly instantaneous settlement.  Compared to sales paid for using Visa/MC payment cards, the sales paid for using bitcoins could be the merchant's most profitable as a result!

Bitcoin is perfect for ecommerce sites though the larger sites probably will hold off until they are forced to follow.  Expect some smaller ecommerce sites to start experimenting with bitcoin payments.  This experimentation is already happening for at least one global ecommerce company in a private trial with a small target group of customers.

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