It’s me - Kevin, your dedicated Bitcoin Guru once again.
How have you been? Have you been thinking about what we talked about last time?
In my last article, we learned about all of the good things that happen to e-commerce businesses just like yours when they start accepting payments in the world’s leading cryptocurrency, Bitcoin.
Namely, I shared with you how accepting Bitcoin can:
- Attract very unique customers to your business
- Increase your average checkout value
- Lower your transaction fees
- Eliminate a large portion of chargebacks
- Open up international opportunities for shipping and supplies
- Get a competitive edge over your competition
- Get free viral, word-to-mouth exposure
Most importantly, I showed you that accepting Bitcoin in exchange for your goods or services isn’t just extremely profitable today - since the price of Bitcoin is constantly growing, the value of the money you’re making today is likely to grow 8-10 fold in the next 12 months!
In fact, that’s why most successful e-commerce businesses opt for Bitcoin payments in the first place - they recognize the investment opportunity and simply go for it.
Just think of it this way - based on the data from the last 12 months, if you’ve accumulated $10,000 worth of Bitcoin through sales by the end of September 2016, you’d have $80,000 in Bitcoin right now (check the graph below how Bitcoin value increased 8 times)! Imagine being able reinvest the profit right back into your business, or simply cashing out and going on a well-earned vacation.
But who really uses Bitcoin? Even more so, what are these businesses that I keep talking about - businesses that take full advantage of the new currency? After all, you might’ve read that only some 14 million people in the world have Bitcoin wallets, and as many as 11% of surveyed Americans think Bitcoin is illegal.
What you have to realise is that Bitcoin is something new, something not totally clear to many people yet. And, just like with anything innovative, people don’t really seem to accept the reality until it’s too late.
The fact is - there are millions of people spending their Bitcoin on products and services at your competitor’s website this very moment.
To show you exactly what you’re missing out on, I’ve researched three companies and how Bitcoin helped them generate or save tons of cash. All three of these companies started accepting Bitcoin payments for different reasons, yet all three came out on top.
Here they are:
Case Study No. 1: Overstock
We all know how competitive the e-commerce space is nowadays. With retail giants going down left and right, the name of the game is evolve or die.
Now I’ve been watching Overstock closely ever since they started accepting Bitcoin payments in mid 2014. While I was extremely excited about their decision, it was also a bit disappointing to see them only keep 10% of their earnings in Bitcoin - the rest of the currency they would instantly exchange to dollars.
However, after witnessing a larger than 10x growth in Bitcoin price during the next three years, Overstock finally decided to keep 50% of their Bitcoin payments as a reserve. Even though Overstock’s CEO has often said how crazy it is that more retailers don’t accept Bitcoin payments, actions speak much louder than words - and their actions show an extremely strong trust in the currency.
Let’s do some math here. Overstock have been averaging around $50,000 in weekly Bitcoin sales throughout this period, and keeping 10% of the money in Bitcoin. After accounting for each month’s historical Bitcoin price, here’s how much money Overstock made during the three years with a 10% reserve (I used semi-annual data to save space):
In total, Overstock made around $2.7 million, simply through keeping 10% of the Bitcoin made in the period of three years.
But what would happen if they had chosen to keep 50% of Bitcoin right off the start? Let’s see:
The charts might look almost identical, but just look at the numbers. Should Overstock have made a different decision three and a half years ago, their profits from Bitcoin investment would be almost exponentially larger today.
In total, they would’ve made a staggering $13,8 million dollars by virtually doing... nothing. My entire point here is - all of this money was made as pure dividends. They simply sold some products in Bitcoin and didn’t immediately exchange them to dollars.
Think of your business - if you’d kept at least $5,000 worth of Bitcoin from sales each month over the last year, you could’ve made up to $35,000 in pure dividends, doing nothing! If that’s not a good deal, then I don’t know what is.
Overall, Overstock is one of the most interesting companies I’m constantly watching. They show an extreme belief in the future of Bitcoin - something that even Amazon doesn’t do. Can’t wait to see them down the line, kicking retail giant’s ass!
Case Study No. 2: CheapAir.com
For my second case study I chose one of the leading online travel booking services, CheapAir.com.
The travel industry is one of the early Bitcoin adopters. Expedia, CheapAir, Polish Airlines, AirBaltic - these are just a few big names that have already jumped onto the Bitcoin train.
Why? Because the travel industry, together with online commerce, is one of the fields that suffer most from chargebacks and fraudulent refund claims. Marketing, for example, is one of the biggest expenses in the travel industry, and when transactions get disputed, all of your marketing investments go to waste.
One of the most common types of chargeback fraud in the travel industry is when fraudsters pay for hotel rooms with stolen credit cards - and once the rightful owner of the card finally notice that, they submit a chargeback claim for the bank and get their money back, even though by the hotel the service has already been provided. It’s a huge double loss for the travel booking service.
As for the physical product chargeback fraud, it’s also common for customers to buy a product, receive it, and then call their bank to tell them that they didn’t receive the product (or that the product was damaged). Then, they ask to get their money back.
Since all transactions go through the bank, the customers almost always get their money back, and they get to keep the goods as well, leaving the business at a triple loss - the goods, the money, and other resources like marketing, time put in and shipping costs are all gone.
The solution? You guessed it - Bitcoin payments. One of the best things about the currency is that there are no abusing chargebacks - your customers simply send you money and get their purchases as expected. Nobody can force you to refund the money to an abusing or fraudulent customer.
However, even though CheapAir.com primarily seeked to avoid a massive amount of chargebacks they had to deal with, they got so much more in return.
First of all, they got a huge influx of new business coming their way - over $15 million in Bitcoin purchases the first month, to be more precise. $15 million worth of Bitcoin with 1% exchange rate, compared to a minimum of 3-4% in transaction fees offered by credit cards.
Considering an optimistic credit card transaction rate of 3%, CheapAir.com saved $300,000 simply by choosing to accept Bitcoin. I mean, you could literally buy a new Porsche simply by making the right payment option decision.
Secondly, they noticed that all of those new customers were spending more - they were buying premium seats and ordering trips to more exotic locations. They were buying flight tickets more often.
Lastly, they noticed that more and more customers choose to spend in Bitcoin every month, despite whether the currency’s value goes up or down. This is a major counter-argument to all of those who think that if you accept Bitcoin payments, your business fluctuates together with the currency’s value (which has grown 8-fold in the last 12 months, by the way.)
Overall, CheapAir.com have come out massively on top, exceeding their wildest initial expectations and uncovering interesting tendencies along the way. Good for them - I’m really excited to see how far they can go with Bitcoin payments.
Case Study No. 3: BloomNation
Finally, I’d like to tell you the story behind a lovely San Francisco flower delivery startup that found its way into the market through implementing Bitcoin payments.
In fact, out of all of the Bitcoin payment success cases, this is one of my favorites, simply because they were such a small business when they just started out, and entrepreneurs often have the misconception that Bitcoin payments is something that only big, established companies can use.
That’s absolutely not true! The reality is that small-to-medium sized businesses can benefit much more from implementing Bitcoin payments, and BloomNation showed the entire world how.
What happened was - after BloomNation started accepting cryptocurrency payments - one of their Bitcoin customers was so happy that he could finally order flowers online with the cryptocurrency that he spread the message in one of the major Bitcoin forums, which started a viral chain of word-to-mouth marketing.
As a result, BloomNation got a huge amount of completely free exposure, and a solid client base among the Bitcoin community, enabling them to establish in the market.
However, besides getting a huge spike in sales early on, they also learned a few key insights about Bitcoin users.
One of the insights was that, just like with CheapAir.com, people who ordered flowers online using Bitcoin tended to spend 50% more on each purchase.
BloomNation also noticed that the conversion rates are higher among Bitcoin customers - probably because the checkout process is that much easier, compared to other payment methods (no need to fill extensive billing forms.)
Lastly, they learned that their fears of implementing Bitcoin payments into their systems were completely unjustified - adding the payment method was as easy as checking a few boxes.
Personally, I’m secretly rooting for these guys. Many small-to-medium sized businesses are so scared of Bitcoin, yet these guys went out and did it, and won big. They show us that not only are Bitcoin payments possible for small businesses, but they can make you tons of money and give you the kick-start at the early stages.
So, What Have We Learned?
I know this has been quite a lot of info, so for those of you who didn’t read the whole thing or simply want to refresh your memory, here’s what we’ve learned in this article:
- The investment opportunities with Bitcoin payments are huge if you choose to retain a significant portion of the sales you make. Free money, if you ask me.
- Bitcoin payments can help you cut the losses from chargebacks and fraudulent claims by three times.
- With Bitcoin payments, companies can cut their transaction fees from 3-4% to 1%, significantly increasing the profit margins.
- There are more Bitcoin customers than you might’ve thought, and they’re a tight-knit community, constantly spreading the word about businesses that accept their preferred currency.
- Bitcoin users are almost guaranteed to spend more, opt for premium products/services and make purchases more frequently.
- The Bitcoin customer base is always growing, despite the fluctuations in the currency’s value.
- Implementing Bitcoin payments is a great way to kick off your business with a bang by standing out of your competition.
- Setting up Bitcoin payments is much easier than many people think.
What are your thoughts after seeing these three strong case studies? Do you think any of them could apply to your business? Let me know!
P.S. If you feel like you’re starting to become interested in trying Bitcoin payments for your business, let me know below! After all, what kind of a Guru would I be if I couldn’t get you a killer deal! Enter your email and click ‘Continue’ button below and I’ll make sure you get the best possible Bitcoin processing deal right away.