How ShopSocially uses social media to bring retailers and consumers closer

Jai Rawat spotted a big opportunity at the intersection of social networking and e-commerce. He observed how brands and retailers used social media and was not impressed. "Their approach is totally wrong. They follow the B-to-C (business to consumer) messaging paradigm. But social is not B-to-C but C-to-C (consumer to consumer)," he says.

He felt he could fill a void and started ShopSocially, a social commerce set up.

It was the fourth venture of this serial entrepreneur. He had begun with Obongo, which was acquired by AOL in 1999, and went on to create two more successful companies, Airtight Networks and Nanolane, before starting ShopSocially.

"Social media has democratized marketing," he says. "Every consumer is now a potential marketer. To tap into the true power of social media, companies need to get their customers to do the marketing for them. People trust the opinion of a friend more than any business messaging."

ShopSocially was co founded in October 2010 by Jai Rawat and Sameer Palnitkar as a destination site for consumers (a first stop for surfers, which has many links that take them to other relevant sites). But they soon found that growth, though reasonable, was not explosive enough to make it a successful business. In March last year, they turned it into a technology platform for retailers.  

The start-up offers a suite of social apps that retailers can embed in their websites, within their marketing campaigns or on their social network pages to support functions. They include, for instance, one called share-a-purchase (or a product offer or promotion) a social shopping community view, where people leave comments on the purchases they have made. It is a live feed that can be seen on the subscribing retailer's site. Potential buyers get to see what others who have bought particular products feel about them. The platform allows businesses to control when and how these apps are shown using rule-based targeting, search engine optimization, analytics, reporting, and more.

"We are bringing the social network to commerce. Shopping is inherently social and with new technologies, social commerce is more scalable. We are not forcing a new behaviour on customers, but tapping into an existing behaviour and capitalizing on that ," adds Rawat.

Several hundred customers, including big brand names in the US such as Sears, The Children's Place, Sport Chalet, CafePress, Ritz, Zales and others have begun using this 'software-as-a-service' (SaaS) offering.

ShopSocially has raised a total of $1.7 million with an initial angel funding round of $550,000 through TiE Angels, which is in addition to $1.1 million in venture funding it got from October 2010.

"We are profitable and we are not proactively looking for funding. The lean operation has just three people in the US and 12 in Pune," says Rawat. "In my previous ventures, I raised a total of $70 million and we built very differently. For ShopSocially, the founders thought of building it more organically rather than going all out."

He explains why.

"When you raise a lot of money, you are pressured to spend it quickly and scale up faster. Studies prove that one of the reasons start-ups fail is because of premature scaling. We want to prove ourselves on a small scale first - get the idea right and then take it to a point which shows our approach is correct and the retailers and customers are willing to pay for our service. You cannot scale your way out of a bad business model," he adds.

Using data aggregated from hundreds of retailers on the platform, the company found that it was able to increase sales through email promotions three times. By adding social sharing functionality, it increased site conversion by an average of 12 per cent. Again, it was able to help brands convert two to five per cent of their site traffic into fans of their Facebook page.

Additionally, by utilising a social shopping community in the style of something like Pinterest or Fab.com, ShopSocially reported an average of 95 per cent increase in onsite and fan page engagement.

"There is a mobile app in the works coming soon. Many of ShopSocially apps for the online marketplace are applicable in the offline space too. Currently, it is very cumbersome to do social shopping offline and if that can be streamlined, it is an obvious opportunity," says Rawat. He thinks that commerce in the mobile space has huge potential for disruption and innovation.

The company also has plans to enter verticals outside of retail.

"While commerce is a highly social activity, social elements make sense in other areas like travel, finance and education too. The speed at which other verticals are being developed is very dramatic," says Rawat.

Emphasising the need to stay platform agnostic, Rawat says: "Facebook has contributed a lot to the social phenomenon, but Facebook and social are not the same thing. There's no going back on social at a broader level. People may get tired of a particular social network but they will flock to another. We are not losing people. Social is not a destination portal but has been weaved into the online fabric and this holds true for commerce too. If you embed the correct social elements into an ecommerce site, it can significantly improve the varied business metrics for the site."

Rawat says being an entrepreneur is always hard, be it a first venture or a subsequent one.

"You make fewer mistakes probably with second or third ventures," he adds. "So often you ask yourself, 'Why am I doing this?' It gets exhausting. I have three children and finding the right balance is not easy," he says.

Rawat opines that while all businesses are worth succeeding at, entrepreneurs should ask themselves if their venture is worth failing at because the odds of success are stacked against them. Even if one fails, if at the end, one feels that the journey was a reward in itself, then it was worth trying.

"Marrying your passion with the right business opportunity and willingness to change the model as the market dictates is very important, but more importantly, you have to be very excited about what you are doing," adds Rawat." As a startup, the only strategy that you should have is a growth strategy and not an exit strategy. Along the way if an appropriate exit comes along, you might take it but you cannot focus on that."