Crowdsourcing for Shopping
Image: Jordan Hollender for Forbes
t’s easy not to take Joe Einhorn seriously at first. The skinny, boyish-looking 31-year-old habitually dribbles a basketball during meetings at his rooftop office in Manhattan’s Meatpacking District. He flashes Lanvin sneakers and drops the term “dope” about as often as a Valley girl abuses the term “like”.
But he’s a dangerous comer in e-commerce. His Fancy lets you buy high-end things on a website as eclectic as Pinterest, as stunning as Tumblr and as money-driven as Amazon. “What we’re saying is, let’s find out about the coolest stuff in the world through people who have amazing taste, and then we’ll ‘fancy’ it, and, if merchants and brands are seeing demand forming around a place or product that they want to sell, they’ll come to us.” And they are: One thousand or so merchants make their wares available to more than 1 million registered members, growing at the rate of 10,000 a day.
Striking user-curated photos, shopping opportunities via accidental discovery instead of deliberate search—it’s a new retail model in the making. In a matter of seconds you can drop $600 on a Bianchi bike, $5,800 on a Graff showerhead or book a stay at the $642-a-night Grace Santorini Hotel in Greece, all without leaving the site. Theoretically, at least. So far Fancy hasn’t gotten a lot of revenue traction; Einhorn insists that isn’t a priority yet.
Here’s how it works. I spot a photo of a guy wearing Maison Martin Margiela boots on my favourite menswear blog, save the image, add a title and upload it to my Fancy feed. I link to the Margiela site, write a comment and file it under the “men’s” category. As the photo goes live, the notes I added join Fancy’s database, which indexes the boots thanks to the tags, title and key words in the comment section.
Soon after, a sales rep from Margiela checks the site and sees my post—or, if he has an account, gets an e-mail notice. Creating a listing for the new product in his vendor profile, the rep tags it with key attributes and submits it to Fancy, which checks to ensure the link between the photo and seller is legit and the product for sale is of a high quality.
That night my friend Harry checks his Fancy feed, and, because he follows me, sees my posting of the boots and receives notice that they’re on sale. He clicks to buy, then checks out as you would on any site. The purchase remains in escrow until the seller accepts the order; then $929, minus Fancy’s 10 percent commission, gets released. It’s seamless and secure commerce.
What keeps the engines humming is a massive database Einhorn and developers created called Thingd, or “thing daemon”. A demon it is—churning 150 million items and 1 billion associated attributes of those things. Einhorn is steeped in this stuff, having joined Capital IQ when he was 16 and moving on to co-found Inform Technologies, which helps publishers like Condé Nast and CNN organise content, at age 22.
On TheFancy.com you never know what you’ll find: Gorgeous photos of the Pacific Ocean off Samoa; young women in Fendi and Dior; artwork by Damien Hirst and KAWS. “The Web is very much about spearfishing and people looking for things they already know they want—that’s why Google has been so successful,” says Sucharita Mulpuru, an e-commerce analyst at Forrester Research. “These guys are supporting the other audience of shrimpers out there who are just looking for cool things to discover.”
Einhorn’s backers are more whalers than shrimpers. François-Henri Pinault, the billionaire head of PPR Group, kicked in $10 million for a 10 percent stake last October. “It is a stunning combination of social networking and a visual magazine,” he says in an e-mail. An additional $8 million came from backers like Ashton Kutcher, MTV founder Bob Pittman and Andreessen Horowitz (for an undisclosed amount of equity). Fancy’s governing board includes Twitter’s Jack Dorsey, Facebook’s Chris Hughes and billionaire hedge fund operator Jim Pallotta.
Fancy is a lean operation of 20 people; all but two are engineers. They constitute 60 percent of Einhorn’s monthly expenses (which he declines to specify). Another 30 percent goes to development and to maintaining the site and the giant servers in the US, Europe and Asia. He spends next to nothing on marketing and advertising. Twitter is the main town crier for Fancy, which has 52,000-plus fans, including Marc Jacobs, Tory Burch, Kanye West and Pink. In May, Barneys.com and YSL.com added ‘fancy’ buttons on all their merchandise.
Einhorn says he’s barely touched his venture-funded nest egg. “It’s not an expensive thing,” says analyst Mulpuru. “They’re crowdsourcing a lot of content, and they’re basically intermediaries to drive people that drive production.”
But how to drive Fancy’s top line? Einhorn says he’s grossing an average of $10,000 in sales each day—$1,000 to him. New iPhone and mobile apps, along with the ability to do international transactions, are expanding the shopping mall. But Fancy needs to step up the volume tenfold to produce what Einhorn calls substantial profits.
“You’ve got to continue to innovate so that you can still delight the consumer,” he says. “But then you’ve got to continue to hammer away at creating a viable marketplace.” He expertly dribbles a basketball around and under his knees, barely concealing some existential angst. “Can we prove that this paradigm, instead of searching Amazon, will enable a marketplace just as robust as the intent-driven? Can we prove that discovery commerce is just as lucrative or, hopefully, even more lucrative?”
One of Fancy’s great virtues—user-created content—is also a lingering liability. Copyright infringement is a constant threat, despite warnings on the site not to post copyrighted work. Einhorn says his team has received “a couple” of take-down requests and that he’s mollified those folks with a link and photo credit. Most brands, he says, are happy for the publicity—and the chance to make a buck on a product or service.
The site is certainly mesmerising. “Easy to shop, right?” Einhorn says, eyes transfixed as he scrolls down the home page.
“Very,” I say.
“I know, I know,” he shoots back. “It’s dope.”
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