Girls Just Wanna (Buy From Their Friends): The New P2P Economy
History repeats something something
They say history repeats itself. Or rather, history doesn’t repeat, but it rhymes. Or… Anyways, the point is that history moves in cycles — each is similar to the last but distinct in flavour (much like every girl on the streets of NY — thank you Chloë Sevigny). The same is true, though less obvious perhaps, of commerce.
It is typically argued that commerce has developed in a straight line over time, moving from the Phoenicians bartering pelts for salt, all the way to the phenomenon that is buying a Gua Sha stone straight from a TikTok live stream (we wanted flying cars blah blah TikTok livestream — Peter Thiel). What a ride.
Instead, I would argue that the evolution of commerce is cyclical, and we are moving back towards a peer-to-peer economy in which girls (and boys) want to shop from, and buy through, their friends — the only difference is now we’re doing it online. This has huge implications for the future of social commerce that I believe aren’t being properly addressed in today’s tech scene— a problem to which web3 might actually be the answer (finally).
Forgive me as I take you down a quick history rabbit hole — I promise it will be worth it on the other side.
A Quick History of Commerce
The typical view of the history of commerce looks a little like this:
Instead, I would argue that the evolution of commerce looks a little more like this — a cycle:
The peer-to-peer economy is just a little more advanced this time around. Instead of selling a hand-made ceramic cup either in exchange for salt or a gold coin, we’re selling gently-used Y2K vintage on DePop in exchange for clout er, sorry I mean USD. The more things change, the more they stay the same. I swear I’m done with the history platitudes.
Over a year ago I heard Kristen Green riff off a quick history of commerce on an episode of Invest Like the Best that still lives rent-free in my mind — so I thought I’d recreate my own version below. I can only hope it’s half as impactful. I promise this leads to my broader point.
Bartering: The true P2P exchange. I have something you want, you have something I want, we exchange. Ie. A ceramic bowl in exchange for some spices.
Currency: Still P2P, but more efficient. You don’t always want what I have (and vice versa), so we use another medium to trade between objects — tada, currency.
Markets: Multiple sellers begin gathering in one place (more efficiency) and we get outdoor markets. Trust was essential — you had to trust both the quality of the goods, and who was selling them to you.
Corner Stores: As markets grew, so did their complexity and inefficiency. So a few enterprising sellers began to collect various products under one roof, tailored to the needs of their local communities.
High Street: Eventually multiple of these stores start locating themselves next to each other (this is called clustering, and is explained by Hotelling’s Model of Spatial Competition) and ‘high streets’ develop.
Malls & Department Stores: The invention of malls is SO much more interesting than you probably know. Victor Gruen, who would become one of the most prominent architects in America, immigrated to the US in 1938 with $8 in his pocket. He was eventually tasked with creating a shopping center in Minnesota, and planned to fashion the experience after the Ringstrasse in his native Vienna. But because of the cold, he designed it all under one roof, voila — a mall. Gruen grew to hate his own creation, and disavowed both malls and America more broadly and escaped back to Vienna in the 70s (can relate). Malcom Gladwell has archived the whole story in a very Gladwell-esque way here if you’re interested.
Amazon: A whole category unto itself. Amazon is the equivalent of malls going online. This created an entirely new retail experience that would forever change commerce and consumer habits.
In my opinion, this is actually when the cycle begins to curve. We hit what is, I believe, peak commerce *here*. Online malls. As you’ll see, we begin moving backwards towards a high street, then a marketplace, and eventually P2P. The only difference is now it’s all happening online.BTC Online: The true power of Amazon was teaching individual retailers that they too could sell online. And sell online they did. This is the Glossier (and Warby Parker, and Casper, and…) era, all of which has been catalogued here, here and here. This is the equivalent of High Street — with the internet providing the roads and infrastructure.
Social Commerce: Instagram launches, and brands face a new challenge — distribution. They take to these social media platforms, with each brand maintaining their own little corner within… A “shop” within the broader marketplace. And the cycle continues.
This is where the vast majority of reporting and analysis ends. We’re still suck in the ‘social commerce era’, with brands, consultants, journalists and more obsessing over ‘the best micro-influencer strategies’, or ‘how to engage your community on TikTok’… Yawn.
I believe we’re missing an important point, an obvious next step if this evolution is, in fact, a cycle. The broader change that is redefining commerce: The shift back to a Peer-to-Peer Economy.
The future of e-commerce brings the scale and pricing of Amazon to the personalization of "market merchants" of the past -closing the loop in the history of commerce.
The Commerce Cycle Returns to Peer-to-Peer
The fundamental demand driver here is as straightforward as possible: As the number of influencers, and the products they’re marketing, has risen exponentially, trust on social media platforms has fallen in direct proportion. Gen-Z consumers desire authenticity and trust in their transactions above all else, so they’ve turned to their peers.
The stats are clear:
82% say peer recommendations and reviews are central to their buying decisions
81% rated their friends as a top influence when deciding what to purchase
63% of product discovery for Gen-Z happens on social media
The rise of P2P commerce is best reflected in the success of DePop, a P2P resale e-commerce platform, on which 90% of users are under the age of 26. On DePop, users buy and sell secondhand goods from and to their peers— the platform was acquired by Etsy for $1.6B in 2021.
The success is attributed largely to DePop’s ability to combine the social aspect of Instagram with the marketplace efficiency of traditional e-commerce, where personal connections and the story behind each transaction take center-stage.
But so far this P2P structure has only succeeded for resale platforms… Why not primary marketplaces?
The Future of P2P Social Commerce
At present, it is only possible to buy secondhand goods directly “from” your peers. However, content creators of all sizes are constantly influencing primary purchases will little to no recognition or attribution. Hell, I have 2K IG followers and I swear I have personally generated thousands of dollars in primary sales from DMs about where I got my (insert fashion piece here). That is the opposite of a flex — I haven’t seen a dollar come from this ‘work’. But that doesn’t have to be the case.
In the future, I imagine a P2P social commerce platform on which *every* user, no matter what size, can curate their own personal “shop” full of the products they love, use and recommend, that other users can buy directly from. The drop-shipping is handled by the brand or marketplace (like at present), but that *influencer* (yes, they are an influencer!) would receive an immediate revenue-share for having influenced the purchase.
We're closing the commerce loop as we shift back to P2P commerce-- combining the localization, personalization & specialization of individual merchants with the discovery methods, payments infra, economies of scale & more of mass e-retailers.
Web3 Actually Makes Things Easier For Once
This may be one of the first cases (with many more to come, I’m sure), in which web3 makes a consumer product less complex, rather than more. Shocking, but possibly true. As a quick aside, this tweet from the always witty David Phelps made me giggle.
If you’re more of a web2 girlie than a web3 girlie, bear with me. I’m going to try to make this explanation the least annoying possible.
Tokenized Social Commerce
When we represent all digital assets online (Ie. That dress you’re eyeing on Net-A-Porter) as NFTs, aka tokenize these assets, we unlock a whole new world of commerce:
Easy Revenue Share: No more waiting for affiliate links (which can take months to be paid out to the creator), with NFTs the revenue-share payout can be instantaneous.
Royalties: Similarly, on secondary (and tertiary, and so on) sales — brands can recoup royalties, allowing them to both track and profit from those sales (ideally incentivizing them to help create a circular economy in the first place!)
Buy Anytime, Anywhere: With tokenized goods, we could buy these fashion & beauty products anywhere — no need for a formal store and checkout process like we are familiar with on traditional fashion marketplaces like Farfetch and Net-a-Porter.
I read Kiran’s (@neuroswish) piece on Verse — the Hyperexchange Protocol in March of 2022 and it wouldn’t be an exaggeration to say I think about it on a bi-weekly basis 2 years later.
The tl;dr (in his words) is that the ability for digital objects to be their own medium of exchange enables a paradigm shift for media, culture, infrastructure and identity on the Internet.
The tl;dr (in my words) is that, with one click, you could buy any asset, anywhere, at any time. It doesn’t matter the platform, or who is selling it — and the appropriate revenue shares, royalties and more will be doled out accordingly.
That is the future of P2P commerce.
We Made it Back to P2P Commerce
When digital assets become tokenized (an exciting prospect for some, dreadful for others, I imagine), we can finally achieve my full vision of P2P social commerce: A social commerce platform that enables *every* content creator of any size to curate their own shops, influencing and selling products from all brands, and being recognized and rewarded in turn — both socially and fiscally.
This brings us all the way back to a technologically-advanced version of Gruen’s Ringstrasse (no drab middle-American mall necessary).
See? History does repeat. I mean, rhyme. I mean, you get the point.