Productizing Crypto Payments
Cryptocurrency is a digital or virtual currency that is secured by cryptography. These are generally not issued or controlled by any central authority (e.g. banks, governments). Many cryptocurrencies are decentralised networks based on blockchain technology.
This was probably all we knew (known knowns) when we started exploring the opportunity of offering cryptocurrencies as a medium of exchange at FARFETCH.
By that time we still didn't know if cryptocurrencies could even fulfil the four main functions of money: medium of exchange, measure of value, standard of deferred payment and store of value and how this could impact the opportunity.
Although the majority of merchants did not accept crypto as a form of payment, we knew that some had ventured into offering them as an online medium of exchange while others decided to withdraw it after a trial period for different reasons.
It seemed difficult for most cryptocurrencies to be used as a measure of value given most commodities were still not naturally expressed by the merchants and consumers in cryptocurrency. People were still largely converting from crypto to FIAT to make sense of prices and compare goods and services.
At that time, the cryptocurrencies' significant price volatility deemed it infeasible as a standard of deferred payment as lenders were not willing to gamble on its interest.
Finally, some cryptocurrencies, particularly Bitcoin, were drawing a lot of attention due to its so-called ability to act as a store of value independent from central authorities, especially during times of enormous growth in inflation by FIAT currencies (e.g. USD, EUR, etc). Being acquired as an asset/investment was probably the most common function for cryptocurrency, especially because of the belief that its value would continue to increase.
The Product Challenge
The challenge we had can be described as what Marty Cagan calls a high-integrity commitment given we had to launch by a specific date in the future in order to support our company's growth and innovation strategy.
We had to understand how to offer cryptocurrency as a payment method (aka medium of exchange) in a scalable manner for the right FARFETCH customers at the marketplace checkout.
Early in this journey we recognised crypto as an asset/investment that was in a different stage of the product adoption curve when compared with crypto as a medium of exchange. The latter use case, which was our main focus, was considerably less mature and spread than the former. This meant that having crypto technology being used for online payments was probably something that only highly motivated and skillful innovators and early adopters were willing and capable of doing.
Fig. 1 - Inspired by the book Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers
Start with Why
We started by making sure we understood Why we were taking on this challenge and what success could look like for us.
In sum, we were supporting FARFETCH Web3's mission to be the connectors, the bridge, between the fashion culture and the crypto culture.
This was the guiding message taken directly from FARFETCH's press release which was quickly picked up by the press: "As a platform company, we are continually innovating to serve as the bridge for the luxury industry to new technologies and environments where the luxury customer is today, and where they’ll be tomorrow. With this move, we look forward to empowering our incredible boutique and brand partners to embrace cryptocurrency.”
Success for this initial phase meant we were able to show our commitment and support to the Web3/crypto communities and to strategically position ourselves to help crypto owners to easily and conveniently pay at FARFETCH as the technology evolved and the market matured.
The Product Way
It's still common in some Product organisations to focus inordinately on Product Delivery under the old assumption: "if we build it, they will come!".
Our Product Vision was to turn this statement into the following, slightly different but powerful question: "if we build it, will they come?".
To achieve it we focused on Product Discovery, in order to validate product ideas quickly, inexpensively and effortlessly before we spend time building them (Delivery).
To achieve success we knew we had to nail the 3 main Product streams: Product Delivery to increase our chances to build the product right, Product Discovery to build the right product and Product Launch & Marketing to launch the product in the right manner to the right audience.
- During Product Delivery we focused mostly on closing the procurement process across a few crypto payment service providers and working on the design and UX to support our engineering platform and experience teams.
- During Product Discovery, we focused on understanding the problem we were trying to solve, the associated product risks and our potential customers’ motivations, abilities and triggers.
- During Product Launch & Marketing, we focused on understanding how and through which Web3 channels we could best target the right audience.
In reality, Product Discovery was the true star of the process, feedbacking into the other 2 streams so these could adapt to every relevant insight coming in.
In this article we focus on the Product Discovery process and although it was not always as neat and structured as it might appear with the benefit of hindsight, the concepts and intentions presented here were always the tenets supporting our Product Discovery team.
Fig. 3 - inspired by the books Escaping the Build Trap: How Effective Product Management Creates Real Value, Continuous Discovery Habits: Discover Products that Create Customer Value and Business Value and The Right It: Why So Many Ideas Fail and How to Make Sure Yours Succeed
The Discovery Mindset
Learning the basics
The world of crypto was riddled with things we didn't know we didn't know (unknown unknowns), so it was clear that to initiate our Discovery process we needed to start by learning the basics and scale from there.
We started by doing our own desk research and we talked to subject matter experts (SME) to learn the basic facts (known knowns).
As our knowledge grew, so did our ability to ask new and better questions, as well as to formulate increasingly interesting hypotheses to test (known unknowns).
Additionally, our realisation of how little we really knew also grew, which meant we had to position ourselves to increase our chances of learning what we didn’t know we didn’t know (unknown unknowns) and to surface our biases, or the things we didn't know we knew (unknown knowns).
Fig. 4 - Knowns & Unknowns Framework
During this stage we relied on the Product Risks "frame" to help us uncover and find the right questions to be asking and assumptions to debunk (in product development, assumptions are notions that need to be true or resolved in order for an idea to work).
On top of that, we stole the idea from the Riskiest Assumption Test (RAT) to address our biggest assumptions regarding business model, market type, users, strategy, and measures of success before developing the whole thing ("build to learn instead of build to earn").
To organize and define at what level we were asking each Discovery question, we created an inverted pyramid of questions with the following levels, ordered from most generic to most specific.
- E-Commerce
- Industry
- Company
- Customer
- Market
- Channel
We could have gone broader or narrower, but the goal was to help us understand roughly where we believe we should be "playing the Discovery Game"
Fig. 5 - Discovery Pyramid
The goal of this article is to focus on the Product mindset for now and not fully disclose the content and insights we gathered (I'll share some of our crypto learnings and outcomes in an upcoming article!). Having said this and, because some context is key for a better understanding, here's a sample of the questions that emerged right from the start.
During this stage we relied on the Product Risks "frame" to help us uncover and find the right questions to be asking and assumptions to debunk (in product development, assumptions are notions that need to be true or resolved in order for an idea to work).
On top of that, we stole the idea from the Riskiest Assumption Test (RAT) to address our biggest assumptions regarding business model, market type, users, strategy, and measures of success before developing the whole thing ("build to learn instead of build to earn").
To organize and define at what level we were asking each Discovery question, we created an inverted pyramid of questions with the following levels, ordered from most generic to most specific.
- E-Commerce
- Industry
- Company
- Customer
- Market
- Channel
We could have gone broader or narrower, but the goal was to help us understand roughly where we believe we should be "playing the Discovery Game"
1- Value Risk
- Will luxury customers want to pay for online luxury goods with crypto? Which type of customers? What's their motivation and triggers? Where are they?
- Are luxury customers struggling to find reputable places to purchase with their crypto portfolio? With which cryptocurrencies? Across which channels? How much are they willing to spend?
- Will the crypto community perceive FARFETCH's crypto offering as a clear show of support and investment in crypto?
- What's the impact of mandatory KYC (Know Your Customer) processes, specially for customers that hold crypto under libertarian views of the World?
- What's the impact of crypto payments' particularities such as price volatility, over/under payments, payment processing times and the inexistence of chargebacks on customers' willingness to pay with crypto?
2- Usability Risk
- Are luxury customers used to paying with crypto? Will luxury customers have the ability and knowledge necessary to pay with crypto? What's the minimum ability level they need to do it knowing the payment experience was not as straightforward as with other more established payment methods?
3- Viability Risk
- Will crypto payments work as an efficient way to convert luxury customers in a cost-effective manner? Will this drive enough conversions to take advantage of lower merchant transaction fees thus outsetting the payment service provider investment?
4- Ethical Risk
- Will offering cryptocurrencies reliant on proof-of-work contribute to an impact on the environment that can be offset?
- What's the current perception around crypto and overall impact on society?
5- Feasibility Risk
- Will FARFETCH be able to build a stable technical solution in the allotted time?
- Will the partnership with the crypto payment service provider work having in consideration FARFETCH's strict business, legal, financial and security requirements?
Prioritize Product Questions
Once we were in a good position to ask relevant questions and list assumptions, the next step was to act as risk managers and priorities the ones more likely to hinder our path to success.
Our prioritization framework was pretty lean as we focused on variables such as likelihood and impact. At this time, we also tried to make sure the team was aware that prioritizing questions could work for known knowns and known unknowns, but it did not work so well for the things we didn't know we didn't know (unknown unknowns) or the things we didn't know we knew (unknown knowns). This meant that whatever exploratory techniques or experiments selected in the next stage should be open enough to learn the unexpected.
Some of the top topics prioritized at this stage were mostly related to learning:
- who the prospective customers were and what was their motivation to pay with crypto
- the triggers that preceded the moment where they first became aware of crypto or paid with crypto
- the ability, knowledge and skills that helped them pay with crypto
- where they were in the World and why crypto payments was a viable solution there
- what was their behaviour when paying with crypto
- what characteristics were most valued by crypto communities regarding crypto payments
- who were NOT prospective customers, specially within FARFETCH's customer base and what was their perception and behaviour when confronted with crypto as a payment method
Experiment & Learn
With our questions and assumptions prioritised we started by defining the hypotheses, experiments and techniques that could be done quickly, simply and at low cost to reduce the time, cost and effort to collect data and learn.
The other one factor we had in consideration was to make sure the customers' had some "skin in the game" during some of these experiments. This meant we were not only asking what our customers think they would do, but really we were trying to put customers in situations where we could see and measure their actual behaviour and reactions.
Our Product Discovery approach to Crypto
The Discovery effort started with the collection of data outside our customer base (external data) through market research, competitor benchmarking and a bit of internal data by chatting with our Customer Service advisors to establish the known knowns.
We shifted from gathering external to internal data very quickly. We started to gather quantitative data through a 30 question survey sent to FARFETCH's customer base. This survey allowed us to know the lay of the land when it comes to crypto, as well as to act as a powerful recruitment tool for further customer profiling and interviews. We also did a crafty fake door test and a quick AB test that ran onsite to measure actual customer behaviour when presented with the possibility to pay with crypto (skin in the game). Both of these were quick and inexpensive to set up and allowed us to learn more about some of the known unknowns we had been discovering specifically around value, viability and ethical risks.
At the same time we also started gathering qualitative data by conducting interviews directly with our customer base and externally-recruited prospects. It was amazing to learn from the innovators and early adopters in the space (e.g. who owned and have paid with crypto), but also from the laggards (e.g. who were open to pay with crypto) and sceptics (e.g. who didn't want to pay with crypto). This phase was critical to uncover the unknown unknowns and even to surface some of our own biases (unknown knowns) by allowing us to get to know crypto payment prospects better, ending up with the creation of 6 distinct user profiles (e.g. crypto sceptic, crypto neutral, crypto investor, cautious explorer, celebratory winner and crypto advocate). From these six, two of them naturally emerged as our target customers for the initial launch thus critically affecting and framing our delivery, launch, target markets and marketing efforts from that point on.
As the insights were coming in from our Discovery journey, we set up an experimentation workshop to make sure that the team built a shared understanding and vision about the known knowns and as an opportunity to surface some of our own biases (unknown knowns) by hearing the different views from the multidisciplinary team.
The Product Discovery did not end here as Discovery must be continuous and continues post-launch, mostly because we are never one "feature" away from success!
