Back in February, I argued that social media is the future of e-commerce—a fact that few can disagree with now, with the recent launches of Facebook marketplaces like Payvment and Gamestop’s newly launched Facebook store. But what about private merchants—individuals who make and sell jewelry from their own home, or private antique collectors who sell online? As awesome as eBay is as a hub for the antique aficionados and the crafty hobbyists, the site has long been plagued with issues of buyer and seller fraud—buyers who game the system so that they can get the product without paying and sellers who trick buyers into purchasing cheap items or never send out the items at all.
It seems logical to turn to social media to solve such a problem. While social networking sites like Facebook and Twitter don’t necessarily offer a guarantee of buyer or seller integrity, it does offer a channel for finding out more on an individual’s history.
Facebook commerce, otherwise known as f-commerce, is a rising phenomenon—why buy from a stranger when you can buy from someone you can connect with online?
That’s what Fredrick Nijm and Anthony Saia took into account when they founded Addoway in 2010. The concept behind Addoway is to reduce fraud and make the marketplace experience more secure for buyers and sellers by allowing them to buy/sell from friends.
The obvious glitch in the business model is the fact that if your friends aren’t selling anything, you’re back at square one: making deals with strangers.
But in truth, social media has so many more dimensions than just: “I know this person ergo this person is my friend.” Addoway focuses on the prospect of using social histories to hold buyers and sellers more accountable for their actions online. It may not be a foolproof guarantee that you won’t get swindled, but it does introduce a new level of accountability to the private online marketplace exchange. Being able to connect with a buyer or seller online means more than just being virtual friends—it means seeing how many friends and followers that individual has, how long he/she has been on Facebook, and more.
Or…it might just mean you can see the face of the person who’s about to swindle you. You can see their laughing face, the laughing faces of their kids, and the laughing faces of all their friends. Meanwhile, where’s your stuff? Gone!
So to make sure that a person’s online reputation matches up with his/her merchant profile, Addoway has gone a step further and integrated Klout, a social influence measurement service that uses over 35 variables to calculate Web influence. Specifically, the service measures how large a user’s audience is, how likely the user’s tweets and status updates are to be retweeted or liked, and more. The result is a score of 1 to 100, with 1 being the lowest score and 100 being the highest. For example, Justin Bieber has a perfect score of 100, so he is considered a potent Web influencer.
Klout’s technology obviously has meaningful implications for marketers and advertisers who want to hitch their brands to the biggest movers and shakers on the Web. But for Addoway’s social marketplace, Klout offers a different advantage. Addoway has integrated Klout so that buyers and sellers can link their Klout scores to give others a more precise picture of their Web histories and social sphere.
“Trustworthiness is at the core of relationships and is essential in building an individual’s brand online,” Nijm told me. “The measurement of someone’s social clout determines their worthiness and status in the ‘social spectrum’ and we believe this is fundamental to trust in eCommerce.”
When I spoke with CMEA principal Sumeet Jain back in December, he predicted that f-commerce would explode this year. Think Blippy, Netflix, and other social recommendation platforms: the idea of shopping based on the recommendations and buying histories of friends is catching on. It’s no secret that consumers are more likely to try out a new product if their friends have tried it out. Addoway is just taking that a step further and introducing the actual exchange into the equation.
In addition to integrating Klout, Addoway plans to roll out its proprietary “Transactionality Predictive Index,” or TPI, which will predict the confidence rate of a transaction before a buyer purchases from a specific seller. Addoway intends to utilize the data aggregated by Klout to enable this feature.
But even without Klout, Addoway’s user base is growing steadily with 10,000 registered members—up twofold from January. Additionally, the site sees over 160,000 unique monthly visitors and 5% of users pay for the site’s pro membership, which offers more exposure and features. Some 20% of the proceeds from paid pro memberships goes to charity, and right now those funds are going to GlobalGiving for relief in Japan.