The electronics retailer’s customers have been asking to pay in Bitcoin for months.
Abby Callard , Associate Editor
Newegg Inc. has become the latest retailer to accept Bitcoin, the digital currency, on its e-commerce site.
Newegg is No. 17 in the Internet Retailer Top 500 Guide, with 2013 web sales of $2.73 billion. The company has more than 25 million registered customers and lists more than 10.5 million products including electronics, computers, game consoles and household items on its web site.
Bitcoin is a decentralized—meaning no one organization regulates it—digital currency that buyers and sellers exchange over the Internet, with no bank involvement. The value of all the bitcoins on the market at the end of the first quarter of 2014 was estimated at $6.45 billion, according to CoinMarketCap.com, which tracks the valuations of virtual currencies across major exchanges. That value changes as new bitcoins enter into circulation and as the currency's value itself fluctuates.
Newegg is working with payment processor BitPay to process its Bitcoin transactions. BitPay counts as clients more than 35,000 merchants and has raised over $32 million in venture capital funding. BitPay’s pricing model is tier-based, with the tiers based on daily sales in Bitcoin. The professional version, which includes up to $10,000 of Bitcoin sales a day, is $30 for 30 days. The business version, which includes up to $100,000 in Bitcoin transactions a day, costs $300 for 30 days. The pricing model differs from credit cards, which charge a percentage of each transaction.
Newegg, like many retailers accepting the digital currency, immediately converts Bitcoin into U.S. dollars. That protects the retailers from the volatility of the currency.
Soren Mills, the chief marketing officer of Newegg North America, says Newegg customers were among the first Bitcoin miners—meaning they amassed the significant computing required to add new Bitcoin coins into the marketplace—and have been proponents of digital currencies. “Our customers have been asking for Bitcoin as a payment option for months,” says Mills. “Therefore, we believe there is a pent-up demand just waiting to be served."
Overstock.com became in January 2014 the first large e-retailer to accept bitcoin. In the first 24 hours of accepting the digital currency, shoppers placed 840 orders using it, accounting for $130,000 in revenue, the retailer says. The company has since done more than $1.4 million in sales in Bitcoin.
Overstock.com’s CEO Patrick Byrne is so confident about the digital currency that Overstock is now keeping 10% of its Bitcoin transactions in the digital currency.
1-800-Flowers also announced today it would begin accepting Bitcoin for payment on its e-commerce sites, which include including 1-800-Flowers.com, FannieMay.com, Cheryls.com, ThePopcornFactory.com, 1-800-Baskets.com, FruitBouquets.com, and Stockyards.com. 1-800-Flowers is using Coinbase to process transactions.
1-800-Flowers is No. 65 in the Top 500, with 2013 web sales of $538.5 million.