Web entrepreneurs are moving closer to duplicating the real-world feel of a mall, where shoppers can pop in and out of multiple stores, and browse with the advice of friends

August 16, 2013

Hanging Out at the E-Mall

By JENNA WORTHAM

Shopping online is easier than shopping in a mall — as long as you know exactly what you want to buy. The problem comes when you don’t know what you want. The Web has yet to duplicate the real-world feel of a mall, where shoppers can pop in and out of multiple stores, easily browsing racks of clothing, display cases of jewelry and shelves of housewares. And online, friends can’t join you in a dressing room to help you avoid buying fashion faux pas. But now, many entrepreneurs have their sights set on better replicating those experiences online, creating a category of e-commerce loosely known as social shopping. Venture capitalists are opening their pocketbooks for these new start-ups, and even some of the biggest players in e-commerce, like Amazon and eBay, have introduced their own social features.The social shopping sites essentially compile stylish goods of similar sensibility from shops around the Web, and make it easy to share with friends what items they like and buy. Most of the sites have adopted the interface of pinning images on a virtual bulletin board popularized by Pinterest, one of the most popular social networks.

Deena Varshavskaya, the founder and chief executive of the social shopping site Wanelo, which she started in late 201o, said sites like Amazon, eBay and Etsy had made people comfortable with buying things online, both from giant retailers and small sellers. But as more companies and shops migrated to the Web, it became harder to find cool, stylish and quirky items, giving entrepreneurs an opening.“The current state of commerce is very fragmented,” she said. “Stores expect you to discover their site on your own and know what’s relevant and interesting.”

The shopping sites do not sell one type of item or good — instead, they mimic a bazaar where people can browse through bins at their leisure. The point, of course, is also to find a way to profit off the millions of people who are looking for a better way to shop online.

Among the sites are Polyvore, Svpply, Fancy, Fab and Wantworthy. They each vary slightly, but they share a common DNA. After a user signs up, which is usually free, the sites show a collection of items, either based on a curated selection or what other members have recently bought and liked.

In addition, most social shopping sites let their users find and follow their friends and favorite brands or shops, which creates a feed akin to those on Instagram, Twitter or Facebook. The feed is filled with new items that they might like to buy.

Veronica Gledhill, 29, an editor at The Cut, a fashion blog, said that sites like Wanelo brought back the fun of trips to the mall with her friends that she remembered from her youth.

“The last time I went shopping with friends was at the mall in my early 20s or maybe when I was a teenager,” she said. On the Web, “shopping is an isolated experience,” she said. “But you still want input.”

E-commerce sites with social features have had a spotty track record among users, either for questionable practices or for paid promotions. Beacon, an early feature of Facebook’s advertising system that publicized some purchases on people’s Facebook pages, angered enough people that Facebook eventually removed the feature. Blippy, a start-up that published people’s purchases in a public feed, faded not long after its debut in 2009.

But the latest social shopping sites, says Gene Alvarez, an analyst at Gartner, are meant to appeal to a younger generation of shoppers — users who like to see what’s trending among others with similar tastes. The rise of the visual Web and popularity of image-heavy sites like Snapchat, Vine, Tumblr and Instagram, is also influencing the look of e-commerce sites as well, he said.

“Once they start following, they start purchasing,” he said about users. “It’s a recommendation, but it’s not automated. It’s a recommendation from a friend instead of an algorithm.” The power of that influence, Mr. Alvarez said, cannot be underestimated.

Wanelo, for example, lets a user tell friends about a great find by clicking a button to post the item on the site. When users decide to buy an item through the site, like one of its colorful shirts or shoes, they are rerouted to the company that is offering it for sale. Wanelo collects commission, essentially a finder’s fee.

A few years ago, investors were just beginning to grasp the promise of social shopping. When making her presentation to several dozen investors in 2012, Ms. Varshavskaya struggled to close a $2 million seed round of financing for her young company.

But this year, the company “had no trouble at all,” attracting the attention of investors, she said with a laugh. Although the start-up says it was not actively raising money, venture capitalists still courted the company, sending cupcakes and gifts to sweeten the proposition. “They’d all been told about it from their daughters,” Ms. Varshavskaya said. In March, the company raised $11 million, to put the company’s valuation at $100 million.

Wanelo now has more than 10 million members — mostly women, the company says, and many teenagers, one of the most coveted demographics for online retailing. More than 200,000 companies and brands have signed up on Wanelo.

Several other sites have also attracted significant investments, including Fancy, a sort of crowdsourced wish list of interesting things available for sale around the Web. The company raised $53 million in July from American Express and a few celebrities, including the actor Will Smith.

And major e-commerce sites have also been picking up on the trend. In August, Amazon introduced a feature called Amazon Collections that lets people see what other Amazon users have liked, saved to a wish list or bought recently. Last September, eBay bought one of the sleeker social commerce sites, Svpply.

Pinterest, the hugely popular social network that lets people share images from around the Web on virtual boards, has clearly been an inspiration for many of the start-ups. But the company, valued at close to $3 billion, has said in the past that it was not interested in profiting off the items that people collected through the site.

In recent months, though, Pinterest, has seemed to shift its stance. In May, the company introduced a feature called “Rich Pins” that lets merchants include information about where and how to buy items through the site.

Hiroshi Mikitani, the founder and chief executive of Rakuten, a Japanese e-commerce company and investment firm, said that American companies were finally beginning to realize that the future of commerce looks more like a marketplace, where people can complete errands at the same time, like buy wine for a dinner party, right after they have picked out the dress.

“That’s what we need on the Internet as well,” he said.

Mr. Mikitani, whose company led a $100 million investment in Pinterest in May, compared it to a trendy shopping district, but for the Web.

“You don’t need to go to Tokyo or High Street,” he said. “Tens of thousands of merchants can provide that” same shopping experience.