Thrive in our connected world

Threadless is 10: Learnings from an Innovative Social Commerce Business Model

If you were to invest $100,000 of your own hard earned cash in a social commerce site or technology, where would you invest?

Sure, private sale clubs and group buy sites/technologies are the hot trends right now.  But what about the established ratings and reviews industry, responsible for so many popular sites and enhanced e-commerce sales?  Or the profitable business of recommendations and referrals? Or how about social media stores touted as the Next Big Thing in social commerce?

Before you make your choice, take a look beyond the usual suspects and you’ll find one other social commerce business model worth looking at, epitomized by, a succesful curated social marketplace run by Skinny Corp that turned 10 this month.

As a fashion brand operating in the highly competitive and largely commoditized t-shirt market Threadless has an enviable reputation; it sells out of every line it produces – generating $17m+ in annual sales with a healthy 35% profit margin.  Its secret is social commerce; rather than design and sell its own t-shirts designs, Threadless is a curated social marketplace that connects t-shirt designers with their customers through American Idol-seque talent contests.

The mechanism is simple and elegant; the 600,000+ regular site visitors to Threadless are always presented with three options – become a contestant on the site’s latest t-shirt design contest and submit a design, become a member of the contest jury and vote on a design, or be a customer – and buy one of the previous winning designs.  Every fortnight Threadless takes the most popular of newly submitted designs and puts them into production, and sells them on the site.  Winning contestants receive a $2500 prize in return for commercial rights, and get their name put on the t-shirt label.  Winning designs always sell out.  It’s ‘selling with social media’ in its most pure form – shoppers rate, review, critique, discuss vote and buy.  (see here for Threadless Wikipedia entry, and Inc. feature article).

Okay, so curated social marketplaces might work for small business – but what about big business?  Consider Apple and the money it makes from Apple iTunes and the App store / iBook store : Apple is curating a giant social marketplace – not actually producing anything but connecting buyers with sellers and adding value with social media by helping people buy and sell smarter.  With its iTunes marketplace, Apple is more like an online impresario or talent spotter than a retailer, connecting artists with their markets – and pulling in a healthy commission on sales.

Could social marketplaces curated by big brands be the future of big business social commerce?  Getty Images appears to think so – snapping up iStockphoto – a curated social marketplace linking photographers with stock photo buyers.  And so do Forrester (with Jeremiah Owyang)  predicting that the 5th era of social media will be ‘social commerce ‘- an era of self-organizing communities that not only shop and buy online but also produce and sell.  Curated social marketplaces are making Forrester’s fifth era of social media – the era of social commerce – a reality.

And here’s the big opportunity for big brands – what if, in addition to making and selling their own stuff – they got into the talent spotting business – spotting and commercializing the work of creative talent through online social marketplaces like Threadless, iStockphoto or iTunes?  The added value a brand would bring to the party is quality assurance and a trusted name behind the marketplace linking creative talent to the market.

Through Threadless, iSockphoto and iTunes, curated social marketplaces are already happening, and the future of social commerce is here: So what kind of social marketplace could your brand curate?

Written by
Dr Paul Marsden
Join the discussion

  • Great examples of social marketplaces. Your post demonstrates how these businesses have provided and trusted their communities with brand ownership/participation.

    In my opinion, for business to be successful in creating their own social commerce opportunities, they need to be ready to trust their community. I think some businesses out there are still hesitant to do so and yet they leap into the “social media game” without any strategic vision and then wonder why their community doesn’t engage with them.

    Trust works both ways and if businesses want that engagement, they need to be willing to let go of control and trust that their brand can benefit (via that feeling of ownership that can translate into loyalty and transactions) if they permit their community to help shape that brand.

    • Thanks for the comment Melany – you make a really good point about trusting the community, totally agree trust is key. I’d even go further than this if e-sales are the goal – and suggest its more about brands trusting themselves to ‘curate and facilitate’ – as community enablers – rather than ‘direct and communicate’. Love Jeff’s (Howe’s) idea “ask not what the community can do for you, but what you can do for the community” – it’s about identifying natural communities and helping them do what they do. P&G’s BeingGirl community is a good example – helping girls connect; now they just need to add a marketplace for girls…

  • […] ModCloth brengt hun concept zelfs zo dat je je als bezoeker een ‘virtuele mode inkoper’ voelt. Dit betekent dat je als e-tailer al weet dat je producten (waarschijnlijk) ‘bestsellers’ worden en zodoende kan je heel strak het productie(aanbod) op de vraag afstemmen. Dit resulteert in een verlaagd (financieel) risico. Threadless heeft grote winsten geboekt, ze hebben namelijk hoge marges (35%), aangezien ze relatief weinig uitgeven aan (online) marketing, ze geen ontwerpers in dienst hoeven te nemen, geen modellen en modefotografen nodig hebben en geen verkopers in dienst hebben (bron: […]

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