Bitcoin-Accepting Sellers Point to Multiple Benefits From Early Experience

In a time when consumers are using multiple ways—smart phones, tablets, stores, and Web sites—to shop, they are also using new ways to pay. Now, some are choosing to shop using Bitcoin, the best-known virtual currency.

Some merchants, like Reeds Jewelers, accept Bitcoin primarily because customers want to use the digital currency. Other merchants, like Overstock.com, also support the concept of virtual currencies, which do not rely on government backing for their value.

“It’s important to meet the customers where they are,” said Mark Decausmeaker, director of multi-channel sales at Reeds Jewelers, a Wilmington, N.C.-based retailer that began accepting Bitcoin last year. “People make choices, whether it’s a wallet or Bitcoin,” he said this week at the CardNotPresent.com annual conference and expo in Orlando, Fla. “Whatever it is, it’s important to meet them there.”

At Overstock.com, initially the decision to accept Bitcoin was out of principle, said Judd Bagley, Overstock director of communications and cryptocurrency initiatives. “It was a movement we wanted to support,” Bagley said. “It quickly emerged that it was actually a pretty good decision from a business standpoint.” On its first day of Bitcoin acceptance, Overstock.com had $180,000 in sales with the payment method, Bagley said.

Average order value also got a boost with Bitcoin acceptance. At Reeds Jewelers, purchases made with Bitcoin are three times the average order value of purchases with other tender types, Decausmeaker said.

But it’s not just increased sales. Some 55% of customers paying with Bitcoin are new to a Web site, said John McDonnell, chief executive of Bitnet Technologies.

Bitcoin transactions also don’t carry the costs of card payments. “Accepting Bitcoin has been interesting because it has brought hidden savings,” Bagley said. “Principally, we pay on credit card processing fees.”

Another advantage is there are no chargebacks or fraudulent transactions when consumers shop with Bitcoin. Yet another benefit is the type of consumer Bitcoin acceptance attracts. “People are loyal and actively advocate,” Bagley said.

Decausmeaker echoed Bagley. “Because of who is in the Bitcoin community and how loyal they are, one of the things you get besides purchases and repurchases is they post a lot,” Decausmeaker said. They use social media and other online venues to post photos of their purchases.

Bitcoin acceptance, at least in Overstock.com’s instance, brings in another type of consumer, Bagley said. The typical Overstock.com shopper is a woman between 35 and 54 years old, usually with a higher income, he said. “The average Bitcoin shopper tends to be male, 15 to 34 years old, not as high income, but very technology savvy.”

At Reeds Jewelers, the cost of integrating Bitcoin acceptance paid for itself within three months, Decausmeaker said. “It was one of the easiest projects we’ve done.”