NEW YORK — LoopIt.com, a new social site, was launched to fulfill the promise of the convergence of social media and shopping that has so far fallen short of its potential.
Many of today’s social media giants have yet to figure out how to most effectively use social media to interact with customers and increase brand recognition, build loyalty and fuel sales, according to experts. Several studies have shown that social media plays a very small role in e-commerce. For example, an IBM survey found that shoppers who visited e-commerce sites referred through social networks such as Facebook, Twitter, LinkedIn and YouTube during Black Friday 2012, generated 0.34 percent of total online sales, down more than 35 percent from the previous year.
Geraldine Laybourne, cofounder of LoopIt — and the media veteran behind Nickelodeon, as well as founder and former ceo of Oxygen Media — said shopping is “part game, part social and part practical for women. [LoopIt] is the emotional piece that women are missing when shopping online. It’s more playful and more fun. That’s why we named it LoopIt. Originally, we called it Never Shop Alone.” LoopIt leverages personalized word of mouth, which the company said is 10 times more effective than an advertising impression, furthering product discovery and accelerating purchases.
The site works two ways. Visitors to LoopIt.com type in the name of a product they’re looking for or a URL. The Web site aggregates products with that description. When a user clicks on a product, the site asks for the context of the search, such as whom the item is for and whether it’s a gift. It then “loops in” the user’s network of trusted friends and experts to the shopping decision. Alternately, consumers can visit the Web site of a LoopIt retailer partner and go from there. Rent the Runway is the first one.
“We’re getting inquiries from retailers of all sizes,” said Joe Chung, cofounder of Redstar Ventures, the venture foundry behind LoopIt’s creation and ramp-up. On Rent the Runway, there’s a “get advice” button next to every dress. Click that and the “ask” button leads shoppers through the steps to create a mini network of friends who can vote on or comment on the dress. “It’s like eavesdropping in a dressing room,” said Chung. “What’s clear is that this is a conversation shoppers have all the time, but not so much online.”
Asked how LoopIt will make money, Chung said, “We’re pretty confident that if we can provide some real consumer value in the purchase flow, there’s ways of monetizing that. Google has taught the world to shop by key word. We [have to] shift some percentage of that behavior to consulting your network of peers and the social intelligence of people around you. There’s a possibility down the road to charge retailers directly for the service, if we can prove it’s of enough value to them. We’re now offering it as a free service. There’s also some potentially interesting marketing relationships we might create. Because we’re able to capture people’s intent and what they’re thinking about, we can better match consumers with new products.”
“I think we’re hitting retailers at the right time,” said Laybourne. “Unless they hook into social networks and get endorsements from third parties…the days of sending [direct mail and e-mails] to consumers are numbered.”