Experts weigh in on Twitter-based shopping site
Yesterday we presented entrepreneur Prashant Nedungadi (read his entrepreneur journal) and his startup website IMshopping.com, which offers a platform whereby consumers can ask specific retail-related questions, through the website directly or via Twitter, and have them answered by an online community of retail experts. (click here to read Nedungadi’s pitch)
Nedungadi launched his website last April and has already received $4.7 million in venture capital investment from SK Telecom, but now needs to find retailers willing to pay to utilize his virtual sales force instead of going the traditional route and hiring their own sales people.
Our panel of experts have watched Nedungadi’s pitch video and gave us their reaction to IMshopping and Nedungadi’s business model.
TAKING IT TO THE EXPERTS
Tom Ryan, the CEO of the trend-setting clothing company Threadless, knows all about leveraging Twitter for business, having formed a partnership with the social media powerhouse to reproduce notable “tweets” on t-shirts.
“I believe that using social solutions to boost conversion is generally promising,” said Ryan, who feels IMshopping’s approach of creating a network of unbiased experts to answer specific questions of shoppers is interesting.
However Ryan added they will have a tough go competing with review sites, like CNET and decision-engine sites like Hunch. “I think a key success factor will be the company’s ability to successfully recruit a large, loyal, talented and unbiased group of experts and to convince shoppers that these experts truly are talented, unbiased, and a better source of information than other sources.”
Beth Goldstein, the president of Marketing Edge Consulting Group and author of “The Ultimate Small Business Marketing Toolkit,” is skeptical on whether businesses will entrust their hard-earned brands to an anonymous and untrained sales staff.
“Without a staff trained to understand your brand, it’s akin to pulling people off the street to reinforce your brand and help your customers,” said Goldstein, who added not even Nordstrom’s highly-trained sales staff has been able to help the retail giant stem huge losses in a recession where price trumps everything. “That’s a risky business model for any business that is interested in long-term customer loyalty.”
Goldstein said Nedungadi should take a sober look at his business model with an eye on what IMshopping’s true value is to the merchants that he hopes will pay for his service. “If the problem you’re solving for merchants is to help them improve customer conversion, does your current business model truly solve that problem?”
In addition, Goldstein said she would also drastically reduce the areas of expertise and focus on just 2-3 niches that IMshopping experts can mine. “Priceline’s failed model of trying to provide ‘name your price service’ for everything from plane tickets to gas and supermarkets should be studied to understand the value of focusing on specific target market areas and not be ‘all things to all people.’”
Goldstein also said it would be a good idea to offer free trials to merchants to test this before the holiday, with the goal of converting them before the mid-November rush.
Josh Hallett, a social-media expert and New Media Strategist at Voce Communications feels IMshopping has merit and an interesting platform, but would need to see more of a “wow” factor in terms of the kind of product suggestions being made by Nedungadi’s experts.
Hallett said IMshopping is similar to what entrepreneur Jason Calacanis is doing with his human-powered search engine Mahalo, which he launched in 2007.
“Everybody knows Google and Yahoo as search tools, but (Calacanis’s) business model has always been we’ve got actual humans reviewing and providing recommendations based on just intuition,” said Hallett, who says the downside is that sites like Mahalo and IMshopping have to pay those people, which can be a big expense. “What’s interesting about the IMshopping platform is that he (Nedungadi) can offset those costs onto the retailers using the service as opposed to having to rely upon an advertising model.”
While Hallett didn’t know if there was enough behind IMshopping’s technology to justify a $4.7 million investment, he explained that sometimes VCs are only investing in one particular aspect of a company that they feel they can monetize.
“The other value you begin to think about, almost like in the Google model, is the wealth of data that’s being collected now: the questions are being asked, the recommendations are being made and then the actions are taking place based off that. So maybe there’s value there as opposed to the actual retail transactions that are taking place.”
What do you think of IMshopping’s business model? Would you use this tool to help you shop online? Leave your comments below: