Is ‘social shopping’ a feature or a business?

September 13, 2007

Digital Marketing ChannelAdvisor By ChannelAdvisor

Capital, attention, time and reputations are being funneled into a slew of social shopping sites, with Kaboodle being the first player to exit via a sale to Hearst for $30mm+ barely a month ago in early August (after raising $5mm in total funding).

To revisit the core assumptions of these brands (Jellyfish, ThisNext, Pronto [with its recent beta release], Wists, Kaboodle, Stylehive, etc.) and basically define social shopping, I define it as product / service discovery aided by real people — whether they be a trusted friend, a category / brand / product opinion leader or a perfect stranger with similar tastes.

This doesn’t take place completely online, and as most startups in this space tend to cite, 70-80 percent of product purchasing decisions are made offline.  Essentially, the goal is to recreate the qualitative / passionate / spur-of-the-moment / peer pressure experience that one gets when going to the mall with friends, etc. online.

Gordon Gould (ThisNext CEO) wrote a great piece framing his perspective on the opportunity at stake

Consider for a minute how gargantuan the social
shopping/merchandising market opportunity is: the current US retail
market (excluding home and automotive) is around $4+ TRILLION/year and
is supported by $150+ billion in advertising, the bulk of which still
goes to TV for immersive, emotionally impactful ads. Capturing the
proverbial 1% of that total market would represent over $40
billion/year in transactions which is huge!

So, clearly, whomever figures out how to get paid to unlock
socially-driven product discovery and merchandising is going to make an
astounding amount of money and have a huge impact on net culture.

So, assuming that translating offline social shopping behaviour to the online world is 1) possible, 2) desirable to people and 3) the dollars directly translate close to a 1:1 ratio, online social shopping looks like a lovely business.

The largest question outside of market dynamics, though, is if social shopping in and of itself can become a sustainable business.

I don’t dispute the value of

…but one of the missing pieces I see with a number of these sites is a lack of direct product discovery mechanisms — crawlers, imported shopping feeds, etc. as a way to make products available on the site without relying on bookmarklets to import them.

Essentially, do users limit themselves to product subsets by getting active at a site that doesn’t suck in products from the largest universe possible?  Or is limiting the product set a GOOD thing, and inherent in the social shopping model?  Isn’t that why one goes there, anyway?

What we’re seeing with CSEs now is an emergence of social features similar to sites like ThisNext.  I covered Pronto’s beta release pretty heavily, and Jellyfish has been integrating social features for a long time — even building it into its marketing and distribution strategy by partnering with strong, distinct communities and running targeted Smack shows (Slashdot & The Knot are two examples).

These guys also have, as a  foundation, the tried-and-true product search engines underneath them.  They don’t have to rely on user-submitted products and information and can crawl this stuff or get feeds.

The other side of the story: you don’t need 2 billion products around which to form a community.  Only a subset of those products are worth people’s buzz bandwith and get people excited.

So one conclusion from this long-winded exposition is that social shopping doesn’t need to be all things to all people, as CSEs seek to do.

To be a successful social shopping site, you must appeal to talkative subsets of shoppers.  ThisNext is going after trendy, cutting-edge, fashionable people (or those people just happened to find ThisNext) — but  this has been done for years within communities like car enthusiasts (street racing, car collectors, etc.) and geeks.

So, is social shopping a business or a feature?

  • It’s a business-enhancing feature for existing CSEs to increase loyalty, user experience, time spent on the site and pageviews.  It empowers communities on top of existing product search engines and defines lines between product niches more clearly.
  • It’s a business if a social shopping community attracts, knows, appeals to and services distinct communities — then leverages that to identify the people and groups who are pivot points.  Plus, it’s got to streamline the process of product discovery and addition so that it’s almost second nature.

By Scott Hurff — scott.hurff at channeladvisor