It has been a year and a half since we enabled customers to buy with bitcoin on our website. I felt it would be useful to write an overview of how it compares to our other payment methods and our general experiences / insight. I first got into bitcoin at the end of 2012 and my previous startup was in the industry. As a retailer, we can see the direct impact price has over how likely someone will spend their bitcoins and its benefits in terms of payment processing fees charged by financial institutions.
The short answer is yes! There are many reasons to accept bitcoin as a payment option. First off, additional revenue. We have received $7,402 worth of bitcoin orders since launch. A large majority of that is likely from purchases that we would not have received if we hadn't added it. From a financial perspective, it makes a lot of sense.
The bitcoin community is filled with very loyal and supportive people. They love seeing websites accept BTC on your store and their online communities (most notably /r/bitcoin) allows open discussion about purchases made with bitcoin and the stores that accept them. That community is currently followed by over 175,000 subscribers and is a worthy marketing channel. The biggest factor to increasing bitcoin sales is interacting and catering to that community and making their experience amazing. I personally am a part of it so it was easy but in practice it should be simple for newcomers as well.
Pro-tip: We don't recommend spamming your links on their boards. The best way to market to redditors is to 1. introduce the fact that you're accepting bitcoin, 2. give them a customer experience worth telling friends about. Email your bitcoin customers just to say hi and discuss it. We take a different approach in general with our customer/community relations and feel getting personal is the best method for success.
You can really standout and gain fans by making products specifically for the bitcoin community. We licensed and sell a funny bitcoin shirt based on a popular ad campaign on reddit.
We receive our largest amount of bitcoin sales during Bitcoin Black Friday, which is an event catered towards special bitcoin discounts. Signing up to BTC Black Friday is free and simple as well. Marketing-wise, it has been a common practice to announce you accept bitcoin as a standalone PR agenda as well. News websites are more likely to pick the story up (although we personally don't interact with the media ourselves, I know we could leverage it if we wanted to). Overstock has done a specifically remarkable job at this.
Lastly, the fees are at least half (or zero if you accept it directly without a third-party service) of standard payment processors. We have Coinbase integrated into our website and our fees are only ~1%. It gets a little more complicated when tax season comes, so additional expenses may occur if you liquidate the bitcoin into fiat cash. In the US, selling your bitcoin sales under 1 year are taxed at your regular income bracket which can dramatically increase the cost. We personally HODL (common joke on the term "holding" your bitcoin) onto the bitcoin from sales, so we haven't incurred these tax implications.
I was shocked and rather pissed off earlier this year after completing a full financial analysis of our revenue and expenses. I learned that Paypal was charging us ~5%... 5% of all payments made through their damned service... in fees for the privilege to use them. I realized that having a merchant account didn't lower your fees compared to being a regular member. You have to dig into the settings and click one button to turn on the lowered fee prices. After doing so, we are now charged ~2.6% in sales fees.
This is pretty standard for regular payment processing but I felt the way they handle this is a scam. The fact that having a merchant account doesn't automatically give you merchant fees is ridiculous. If you use Paypal for sales, dig into the settings and make sure this is turned on.
Bitcoin isn't going to make a huge impact on your business unless you leverage it to gain widespread media attention. For us, it has still been worth it for the marketing opportunities and ability to service a group of people we identify ourselves with and love.
Bitcoin only totals about half a percent of our total sales this year, but every sale counts. We also are in the low-margin high-volume industry of apparel so it makes sense that our total sales would be on the low end. Businesses that cater to a higher-end customer and commodities like rare metals will likely see a larger increase.
We have noticed a dramatic difference in the number of sales from bitcoin based on bitcoin's current price. When the price is "undervalued" or people are down on their initial investment, they spend less. When the price is up, especially during price surges, we see bitcoin sales almost daily.
Overall, bitcoin in 2015 is a great value proposition. We saw bitcoin sales grow from 2014 to 2015 by 20.4% and I anticipate that to only increase in the future as the payment method becomes more trusted and widespread. Personally, I am bullish on bitcoin's price going above $1,000 again, so the bitcoin we have received from orders hopefully will continue to increase in value as well. We are up on our position overall. Shirts sold during 2015 have sometimes doubled in their value as the price fluctuates.
We will continue to accept bitcoin as one of our three payment methods and can't wait to see what happens in the future.
Please leave questions or comments below!