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Using Social Media for Crowdsourcing and Profits

Using Social Media for Crowdsourcing and Profits

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Published by: Crowdsourcing.org on May 29, 2012
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Using Social Media for Crowdsourcing and Profits

by Claudia Bruemmer | May 28, 2012 5:16 PM PST

Fab.com, a design e-retailer, is succeeding at creating traffic and sales by using innovative social media marketing tactics. This is a strategy that can be used by any ecommerce merchant, including wholesalers and manufacturers. What you need to do is advertise to build up your membership, which is done through social media by crowdsourcing, and then feature exciting, colorful products on your site, which sell out quickly to members and their friends. Rinse and repeat.

Fab featured exciting socks that were polka-dotted, neon orange or neo-argyle, which are selling out fast on its website. Fans are even posting sock images on Pinterest and tagging them on Tumblr blogs. The idea is to display your products on digital dashboards that are compelling for buyers, such as the one shown below from Fab.com. Then, periodically change your dashboards with new and exciting products.

Fab.com encourages buyers to discover and select products through social media crowdsourcing. The company sends out daily emails, as shown below, alerting customers to flash sales of whimsical, limited-edition items like these colorful typewriters while suggesting a number of ways to share with friends. Founded last June, Fab has more than 4.5 million members, which collectively order about $400,000 on a typical day.

Ecommerce sites can measure the impact of social media marketing and act on it practically in real time by keeping track of social media analytics. For example, you need to keep track of how many users visit your site from Facebook, Pinterest, Google Plus and so forth. You also need to keep track of Twitter posts that mention your site’s newest items to suggest next-day sales. It helps to regularly blog about your company’s product trends, app use and leading sources of traffic. To create an audience before going live with this new plan, Fab bought some Facebook ads, inviting design magazines, design blogs and designers to join, as well as influencers who like certain flash-sale sites. The outcome was that each person who joined as a result of the ad typically invited three friends to join, resulting in at least one additional membership. By the time Fab.com was up and running, it had about 175,000 members. Of those, 30,000 came from ads, at an acquisition cost of about $2.50 per member.

Extrapolating from its sales trajectory, Fab.com is on track to have revenue of about $140 million in the coming year. In search of insights into user behavior that could bolster sales, the company hired two customer analytics service providers: Custora and RJMetrics . With access to Fab’s historical and current sales data (minus personal details like members’ names, addresses and credit card numbers), RJMetrics generated online dashboards displaying the company’s total gross revenue, revenue per day, orders per day and membership statistics, updated every few hours. RJMetrics’ system also segments Fab.com members into cohorts, depending on the week they joined the site, then shows the groups’ past spending and frequency of purchases. That system uncovered an interesting trend. Of the 12 percent of members who made a first purchase, half returned within two weeks to make a second; one-third made a third purchase within 30 days. Custora, which also works with sites like Etsy and other clothing sites, creates similar online dashboards. However, its specialty is identifying the most valuable customer segments and then using algorithms to forecast their potential spending over time. Currently, only 15 percent of Fab purchasers shop with the company’s iPad app. However, a Custora forecast estimated that over the next two years, a typical iPad customer would spend twice as much as a typical web customer and that the iPad users would generate more than 25 percent of Fab.com’s revenue. Recently, Fab re-engineered its look to capitalize on recent data indicating that users who had checked out the site’s crowdsourcing feature were more likely to make purchases than those who hadn’t. Among other updates, the site now gives more prominence to a live feed featuring the products that members have just bought or liked. It’s a lot of work to keep track of all trends and change dashboards regularly, but the payoff is worth it. This is something that would work for most ecommerce merchants, especially those that sell apparel and accessories as well as home décor.

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