Twitter-based shopping website seeks retailers
Buying something online can be a frustrating process. The shear numbers of websites offering the same product can lead to endless hours of surfing to try to find the right deal. Consumers often become overwhelmed and end up not buying anything at all.
Prashant Nedungadi (see Nedungadi’s personal five-day entrepreneur journal, exclusively for Reuters.com) has been one of those people and decided to use that frustration to launch IMshopping.com, a website that utilizes a combination of software and sales experts to direct buyers to the precise product they’re looking for. What Nedungadi has dubbed “human-assisted shopping” is a network of retail experts, or guides, and the broader community of IMshopping’s more than 30,000 registered users.
IMshopping leverages Twitter to help allow consumers to pose shopping-related questions around the clock.
The Twitter part works by submitting your shopping query to @imshopping, which spits back a response to your Twitter account, usually within 15 minutes, with a link to the answer of your question. Photos of the product and other recommended products may also be included in the response.
Every user who registers on IMshopping automatically has an online profile generated when they either ask or answer a question. Their bio page also includes a numbered ranking, a list of their retail expertise (electronics, automotive, household, cosmetics, etc.) and an archive of all the questions they’ve answered so the questioner has a way to judge how credible they are.
IMshopping just released a merchant side to their website and hopes to follow that up in the coming weeks with the announcement of an iPhone application. That is likely one of the key reasons IMshopping garnered $4.7 million in venture capital from SK Telecom prior to the site’s April launch.
The idea for this service stems from Nedungadi’s first-hand experience with Andale, a website he co-founded in 1999. Nedungadi noticed a drop in traffic to the site, which offered cloud-based services to help small- and medium-sized businesses manage their inventories online. Thinking it might be a problem with his software, he started calling customers to see if they were displeased with the service. What Nedungadi discovered was that an explosion of online retailers competing for customers had driven prices down, while subsequently ratcheting up the costs of buying traffic, through services like Google’s AdWords.
“That was a huge red flag,” admitted Nedungadi, who analyzed online retail data from 2002-05 and found that conversion rates for online merchants had nearly halved, falling from 3.7 percent to 2.1 percent. “In 2000 when Google launched AdWords buying traffic was a science and now what we’re seeing is that buying traffic is becoming a commodities business: if you buy the right keywords, you get traffic. The problem was converting traffic into new customers became harder.”
Nedungadi’s research showed him that the sites that were most successful in getting consumers to buy their products were those that offered the best customer assistance. He feels that IMshopping’s community of experts, answering all manner of initial and follow-up questions, is the closest thing to actually dealing with an in-store clerk and that this will be an attractive and low-cost option for sellers who are looking to connect more deeply with their customers.
“When people ask questions and they get answers, the likelihood of them actually buying the product that was recommended to them is about 15 percent,” said Nedungadi, who asserted that the industry standard is 3 to 4 percent. “What we’re trying to do is make the community sell for them and that is something that nobody has done before.”
In order to do that he will have to convince retailers that his experts are just as credible and trustworthy as those at a big chain like Nordstrom, while at the same time keeping his price point low enough that businesses can afford the additional expense.
“The need is clearly there, but converting that need into a solution that you can give to somebody in a very simple way and have them pay for it, is a chasm that is always very hard and it takes multiple iterations,” said Nedungadi, whose target audience is primarily small- and medium-sized businesses looking to bolster sales during the upcoming holiday shopping season. “At Christmas everybody has questions on every website and we want to leverage that. We want to offer this to every merchant and ask them: can you offer a high-quality service on your site, using our platform?”
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.”
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.”
What do you think of IMshopping’s business model? Would you use this tool to help you shop online? Leave your comments below: