Topic: Newegg Needs to accept bit coin. (Read 3725 times)

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

- 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.

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 )

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.

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

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.

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:

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.

Good idea. At least it's something.

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.

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.

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.

no one would pay a premium except for idiots.  the incentive is the irreversibility.

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.

they would gain a lot of loyal customers if they decided to accept bitcoin.

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.

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?

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.

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.

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.

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.

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.

Sorry for the strange formatting but I tried to do quotes in quotes and got the whole thing messed up so started over.

Do you vary your prices in USD when the value of USD relative to other currencies changes?

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.

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.