“I’m not a cryptocurrency trader. I don’t want cryptocurrency on my balance sheet,” says David Kaplan, chief operating officer of luxury watch reseller WatchBox.
But, he adds, it is worthwhile to offer cryptocurrency as a payment option to customers. This holds especially true for the retailer’s international customers, he says.
WatchBox noticed an increase in cryptocurrency transactions in 2021, which continued into the beginning of 2022, Kaplan says.
Luxury watch reseller benefits by offering multiple payment options
Over the last two years, $10 million of WatchBox’s online sales have been from cryptocurrency transactions at checkout. This is a small, single-digit portion of the luxury watch reseller’s roughly $500 million in total sales over the last two years. But within this $10 million, some of the transactions are more than $1 million in cryptocurrency. This is much higher than WatchBox’s normal average order value, which is $25,000, according to Digital Commerce 360 data.
“Then we have the normal run-of-the-mill $10,000, $20,000 or $50,000 transactions,” Kaplan says.
Several high-dollar cryptocurrency transactions skew the average order value higher, Kaplan says. As a result, cryptocurrency transactions tend to have a higher AOV of $80,000, he says. The median order value for online cryptocurrency orders is $20,000. This is more in line with the retailer’s non-cryptocurrency transactions, Kaplan says.
The volatile nature of this digital currency places both consumers and retailers at risk. But that hasn’t stopped top online retailers WatchBox and Shop.com (owned by Market America), from offering it as a payment method to their shoppers. Both retailers outsource processing these payments and pay a per-transaction fee to bypass processing these payments in house. WatchBox says international customers increasingly prefer to pay with cryptocurrency instead of paying via wire transfer. And Shop.com’s chief operating officer Steve Ashley says it’s worth the “low costs” to offer it to appeal to younger shoppers. There is a lot of work involved to keep current on ever-changing regulations and fluctuating pricing — work that WatchBox and Shop.com prefer to delegate to their vendor. It’s up to retailers to perform due diligence when researching whether to offer cryptocurrency at checkout and if so, how.
What is cryptocurrency?
Cryptocurrency is a digital currency that is a hybrid between a currency and a digital asset. As a currency, it can be used to pay for things. As a digital asset, consumers can invest in it to earn more. These payments are encrypted using blockchain technology.
The biggest difference between currency and cryptocurrency is that cash is issued by a government, whereas cryptocurrency is not. Cryptocurrency is not controlled by an
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