May 03, 2012

Fab.com ... BOOM!

You probably read this article from Forbes (click here) on the $0 to $100,000,000 year-end-projected revenue figure for Fab.com, right?


This business was built off of the fabled "social commerce" route.  Check out Quantcast ... website visitors skew young, don't they?  Younger customers were sourced from Facebook, from Twitter, via Email.


The article mentions One Kings Lane, a business that has a 65+ audience, but also skews young (check out Quantcast).


I find it fascinating how quickly we dismiss new business models.  Each of these businesses will go from $0 to $100,000,000 in a matter of a year or two.  Now think about your catalog-infused or search-infused business ... did your business add a hundred million dollars of volume in the past year?


We followed a "multi-channel" route, one where catalogs and search were designed to drive traffic to websites.  This strategy yielded, at best, average results.


I can already hear the comments from the peanut gallery:

  • "These social commerce businesses don't sell proprietary product, they depend on other folks to be highly creative, they benefit from the creativity of others."
  • "We could increase sales if we sold cheap stuff, too."
  • "This isn't a best practice, it's luck.  We have a Facebook presence, we're on Twitter, and we have an email list, none of that stuff truly works.  Do you think we're dumb?  We've tried all of this stuff, it doesn't work."
  • "You only point out the successes ... for every Fab.com there are five hundred businesses that tried the exact same thing and failed, miserably."
Here's the thing.  If our business model depends on Abacus finding us 55+ rural customers who love responding to catalogs, then social commerce is not going to work, because our customer base is 55+, rural, and loves shopping from catalogs ... we get exactly what we pay Abacus for.

I bring these examples up because so many of you contact me and say "what is the next big idea?" or "what are people doing to grow these days?"  

The stories are generally found among cheaper merchandise that is curated and targeted to a younger audience via word of mouth / social / mobile.

And, yes, there are stories that are fueled via catalogs ... like Chasing Fireflies (click here to see Quantcast data).  But these stories are far less common than those fueled by cheaper merchandise that is curated and targeted to a younger audience via word of mouth / social / mobile.

So let's keep paying attention to folks who have success, identifying the traits that yield success.  Is there a parallel for the businesses we manage?