Posted: 3:40 p.m. Tuesday, July 30, 2013
By Erik Sherman
Fancy, a crowdsourced cross between Pinterest and a catalog, is capable of selling thousands of units of a product, but only if it grabs the attention of enough users.
Pinterest has become a significant tool for marketers. You can use the visual social network to attract fans, promote images of your products, and even ride a wave of viral popularity--if you're lucky enough, and prepared enough, to catch it.
And yet, for its strengths, Pinterest also has its limitations. Although you can collect information on how your pinned images perform, you can't easily amass orders. But there's another site--Fancy--that might be worth some attention.
This combination crowd-sourced catalog and pinnable wish list offers some serious e-commerce opportunities. Major backing--$53 million in recent investment from the likes of American Express and actor Will Smith, with Square founder Jack Dorsey on the board of directors, according to Bloomberg--means that Fancy might have the staying power and reach to be worth your time.
How Do You Fancy?
Fancy presents products, split into 16 categories, in an image-driven format. The site's 8 million users see big pictures of each product, along with a few descriptive words. They can "fancy" a product (like pinning an image on Pinterest), look at a longer description, or purchase the product. There are also monthly subscriptions of products, some themed by celebrities such as Ashton Kutcher or Pink.
Users follow others to see what they like, adding to the social nature of the site, and can add products they like to the system, with a link to the seller's site. The Fancy negotiates access to sell them or vendors can directly approach Fancy and offer their goods.
Fancy will work with vendors to build a following so that they can eventually have a hit product. The company assumes that vendors try to promote themselves to influential users to help move things along, although any product still has to prove its popularity before being featured and sold.
Should You Fancy?
Fancy claims "well over $3 million of revenue a month," according to a company spokesperson who wished not to be identified. Over on Bloomberg, Mark Gimein largely dismisses the site as a "Fad.com for the 2010s":
Social shopping, though, suffers from one key deficiency: people just don't like being "marketed to" by their friends--note Facebook's now-deceased "sponsored stories." Frier reports that The Fancy takes in $3 million in revenue each month, but those figures may be juiced by The Fancy's collection of monthly gift boxes. That may or may not be a viable long-term plan; eventually the attraction of paying $39 a month for a a selection of "the dopest stuff" "curated" by Ashton Kutcher has gotta wear off.
I think such criticisms may be off. There is nothing new about novelty or pop culture sales. There have been catalogs and stores that have successfully focused on such items for decades, and whether or not Fancy's sales are "juiced" by monthly gift boxes is almost beside the point.
According to the Fancy spokesperson, the business model is based on popularity. Yes, users can add items that they think are cool, stylish, and hip. "Tens of millions [of items] have been added to date." But most user-listed items never become more than a picture and link to an "authoritative place to buy." Only about 60 items a day make it to the home page.
Instead, Fancy depends on hefty back-end analytics that look at such factors as how many users add the same item, what percentage of the people following influential users show interest, and previous sales and behavioral data, like tracking images, domains, and URLs that attract user interest.
When an item looks like it could take off, operations people (50 in total) will check if there is an existing relationship with the source and can bring on new vendors. Sometimes they find that small vendors or independent artists are not interested in major exposure, because a listing can potentially lead to thousands of items being sold.
Fancy takes significant but tight inventory positions, outsourcing fulfillment to two locations in the U.S., one in Europe, and one coming in Asia. Items typically sell out, but that is fine given the ephemeral nature of the business and promotions. Unlike a typical e-commerce site or catalog, there is no inherent problem if Fancy runs out of stock.
The company gets margins that range from 30 percent to 95 percent. Yes, 95. Some vendors look at this as a way to test a new channel. Others will add the incremental orders onto an existing production run, as to only incur incremental costs. Still others will negotiate no-return policies.
It's not going to be a channel for every company. Products must have the right vibe to fit in. But if they do, Fancy seems like one channel to investigate.