BizJournals Portfolio

Attention, Facebook Shoppers

Now that Facebook's initial public offering is officially on, startups such as ShopIgniter are hoping it will light the fuse for social commerce.  

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ShopIgniter Kevin Tate and Alan Wizemann

Facebook’s move toward going public will surely add to the net worth of many, from CEO Mark Zuckerberg to the graffiti artist that painted the company’s offices in exchange for stock options to, perhaps, the companies that are considered proxy investments for Facebook, such as Yelp.

But among those that hope to profit are some in the Facebook shopping sphere, which has its own shorthand: "F-commerce."

Those startups include ShopIgniter, which launched in 2008 in Portland, Oregon, and now provides e-commerce tools for an active client list of 40 companies that includes Target, Omaha Steaks, and Beats by Dr. Dre. The company helps its clients craft social-commerce programs that don’t just raise awareness or “likes” for a brand on Facebook, but encourage discovery, sharing, and, ultimately, sales.

ShopIgniter’s founder and chief product officer Alan Wizemann told Portfolio.com in a recent interview that his company has already received $11 million in funding over the last two years, fueled by interest in the social-commerce space that has resulted in funding, conferences, and rise of competition.

In light of the Facebook news, he wrote a blog post on the topic of how Facebook going public would impact other companies that operate in its orbit, such as social-commerce startups. Here's the preview he shared with Portfolio.com:

There has been some speculation on the long-term viability of the market, if people are actually shopping socially, and if Facebook and other social networks like Twitter, Pinterest, and Tumblr are going to make it easier to support social-commerce initiatives. From where we sit, Facebook's IPO signals a resounding "yes."

While some have been worried that the revenue pressure of an IPO would force Facebook to implement some form of blanket “tax” on Facebook store transactions or conversions from browsing to sales, Wizemann wrote that the S-1 filing and articles on the company’s revenue growth plans do not seem to indicate Facebook will take a cut of physical goods, as it does for virtual goods.

The focus going forward, he writes, seems to be on serving as an advertising platform for the site’s 850 million users. Not everyone is sure that ad revenues will suffice for Facebook, though.

Tomer Irge, the chief operating officer of Bday, a newly launched Facebook app that directs users to retailer websites to purchase gift cards for friends, says the company is working with retailers to develop a secure and seamless payment solution that will let users purchase recommended gifts without leaving Facebook.

Unlike Wizemann, though, Irge sees Facebook wanting to use Facebook Credits to get a piece of the pie if people shop online—especially because of the IPO pressures.

“With Facebook Credits already established as a key virtual currency in the space, expanding its reach to allow users to also purchase physical goods, not just virtual, will open the platform even further for businesses—and increase our monetization potential,” Irge said in a emailed response to Portfolio.com. “As a public company, Facebook will face pressure to increase revenue, and allowing the use of Facebook Credits to purchase physical products would only mean another steady source of income for them and companies like Bday.”

Bday, which collects a portion of the revenues for each transaction facilitated thorough its app, benefits either way, he says.

What no one disputes is the power of social referrals in the shopping community. Among the programs that ShopIgniter has launched on Facebook are VIP and members-only events. For example, the company created a special product launch for Nike Golf that revolved around special-edition golf balls that were made available in limited quantity around the time of the Masters Tournament.

“There were referred people who went to their stores,” said Kevin Tate, ShopIgniter's chief marketing officer, who said there was a Nike Golf app and a special tab for the promotion on Nike’s Facebook page. “What we had were brand evangelists who were particularly helpful in directing traffic.”


Teresa Novellino writes for Portfolio.com

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