Is 'social shopping' a feature or a business?

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 behavior 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

• Finding products from trusted friends
• Seeing who the cool / trend hunters are and subscribing to their finds
• Collaborative product / service research
• Showcasing your discerning taste through recent & targeted purchases
• Building and materializing groups of people who care about products / services

...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

Comments

[John Foley]

Great post/question Scott. We have asked this ourselves in the past. Our take is that social shopping community tools are a great addition to a comprehensive search platform (read: in our minds social shopping is a feature but a meaningful differentiator amongst a crowded online shopping space). Does it surprise you that we think that? ; )

We believe that consumers want to see ALL of their buying options -- all products and all merchants -- but that they also want help in deciding which products to buy and which merchants to buy from. That is the beauty of social shopping tools on top of a comprehensive product search engine. Users have all the power and all the information.

Needless to say, we're excited to see how this debate/question is answered over the coming years. We're glad you're teeing it up Scott. We look forward to seeing more responses to this post and future posts on this blog.

John Foley
President, Pronto.com

[eCopt]

Great post Scott. Hadn't seen that article from Gordon, I liked it.

The point you made about social sites needing more products is one I have pondered for a long time. To make that jump or not must be a tough decision. I am glad Pronto and Jellyfish are headed that direction. Another VERY social site with great product selection (crawler based) is ShopWiki.

[Scott Hurff]

Hey, thanks for reading. Comments make it worth writing :)

@John: doesn't surprise me at all :) In fact, as we spoke about (also reflected in my review of Pronto's new release) a while ago, I think this is the best way for CSEs to maximize user engagement. As for Pronto in particular, you guys really get it! The power a social mechanism has when layered on top of an existing, strong product search engine is very compelling.

@eCopt: I think a lack of overall product selection and a focus on a product niche is fine when tailored to a specific community. There's no need to include pots & pans when you have a camera site centered around social shopping. The struggle, I think, is when you have a social shopping site trying to target everyone but not offering a worthwhile product search.

I should take a deeper look at ShopWiki.

[Hairfreax Cybergoth Extensions]

I have used social shopping bookmarking to promote my niche products with success but as a user of social shopping, the novelty wears off quickly. I think to follow the trends using social shopping is a great tool but you have jump from one ship to the next to make sure your items are still on the 'new fad site'