Silk Road was the notorious online black marketplace run by Ross Ulbricht. Although Ross Ulbricht was arrested in October 2013, his founding of the first black marketplace shows the importance of trust in eCommerce.
It’s difficult to start a black online marketplace. For starters, the customers and sellers are committing illegal crimes and there’s no way to verify their identity since people don’t want to incriminate themselves. Without authenticity and accountability, it’s incredibly difficult to build a trustworthy marketplace. And this applies to the marketplace too. Many of Silk Road’s competitors like Atlantis and Project Black Flag shut down and stole their user’s Bitcoin. This makes it difficult for buyers and sellers to trust new websites since they’ve already been burnt before by other black marketplaces claiming to be trustworthy.
Silk Road had a review system
All buyers could review their purchase on Silk Road. A seller who failed to deliver or who delivered a faulty product would get a negative review. This would affect his reputation and rating on the eCommerce marketplace which will eventually cost him more in sales. Therefore he had the incentive to keep to his word and get a good review.
Silk Road only released payment once the buyer verified that he received his product
Many eCommerce stores are DTC (Direct To Consumer). But Silk Road was a marketplace like Amazon. This meant that Silk Road didn’t know (for sure) that the seller actually sent out the product and didn’t know if it was in good quality.
They fixed this by setting up a release payment issue where sellers would only receive their Bitcoin payment once the product had been received by users.
Sellers also had the option to receive the amount of Bitcoin that was agreed on at the time of purchase, or at the time of Bitcoin release. This was to hedge against the volatility of the price of Bitcoin since it could either increase or decrease, leaving the seller with an unpredictability in his earnings.
A simple eCommerce website design that focused on reviews
While Silk Road is a regular marketplace like Amazon, its unique eCommerce website on TOR contained a lot of features that other eCommerce websites don’t have. For example, Silk Road had a forum for users to talk about sellers and product quality. They also had other features like a book club which still remains active to this day!
An eCommerce website design with a forum is very unusual since most eCommerce stores treat customers individually and don’t expect them to talk about their product collectively.
If there’s a community, this is usually on social media platforms like Instagram or Facebook where customers will chat with one another in the comments. (That’s also why social media marketing is usually done wrong. Stores should focus on building communities rather than blindly shoving ads of their products in people’s faces.)
How Silk Road built one of the largest online black marketplaces by prioritising trust
But the success of Silk Road shows that eCommerce website design is not always about colours and font and images. Rather it’s about putting trust as the number one priority and developing your eCommerce store with their in mind.
Whether that’s a review system, a Bitcoin-released-upon-product-received system or forum that allows open criticism of sellers, trust is something that’s often taken for granted on online businesses like Amazon and Instagram.
Watch the following 25-minute video if you have the time. While half of it is about Ross Ulbricht, the mini-documentary also talks about why Silk Road was successful. Being a first-mover wasn’t all Ross did right. Trust is key in any online platform.
