Meet Flip, a social network powered by the 'voice of the shopper'
CEO Noor Agha says shopper-generated reviews are the key to creating a commerce community built on trust.
CEO Noor Agha says shopper-generated reviews are the key to creating a commerce community built on trust.
Social media and ecommerce are closely intertwined. In fact, they’ve long been in a symbiotic relationship.
Last decade, consumer product advertising helped to supercharge the businesses of social media platforms like Facebook and Instagram, while the audiences those networks attracted and the targeting tools they offered in turn became a powerful conversion engine for ecommerce brands.
Eventually, this close relationship inspired ecommerce marketplaces and social media platforms to attempt to bring elements of each other into their platforms. Social commerce held out the promise that brands could depend on one platform for the entirety of the shopping journey, from discovery and browsing to evaluating the product via visualizations and reviews to checkout and post-purchase.
Yet despite many experiments, the major platforms have yet to crack the code on social commerce. In part, that’s because the attributes that make one platform so strong haven’t been at the core of the other’s business. Either a commerce platform is trying to add social elements, or a social platform is attempting to add ecommerce. In either case, it often feels like one of the elements was added on, and ultimately doesn't take off with users.
But the team behind the recently launched platform Flip believes it has the keys to social commerce success, and that lies in turning much of what we know about ecommerce today on its head.
At its core, Flip is a social network for shopping. It aims to provide engaging video-based content that can drive discovery, while offering checkout and logistics that represent the “best-in-class” infrastructure of an ecommerce platform, such as order tracking and revenue, said Flip CEO Noor Agha.
The throughline that truly differentiates the network, however, is the shopping experience. It’s powered by people, and not brands.
The users of the social network are the people who are shopping. They’re buying the products. They’re also sharing what they think to inform other shoppers’ decisions by creating content about those products to review them. All of that content is connected to a product through a patented tagging technology, which is what focuses the platform around commerce.
Crucially, this review content is being completed by people who actually bought the products it covers, without compensation from the brands. That means Flip has an important difference from other ecommerce marketplaces and social networks: Brands aren’t behind the content that shoppers see.
“Decisionmaking is completely given to the shopper, rather than to the influencer or creator or the marketer or the brand,” Agha said. “So basically, the only voice in this shopping social network is the voice of the shopper. What other shoppers think about what you want to buy is way more important than the person that created it or the platform that is trying to boost it.”
This is designed to create trust. By removing mediating forces such as advertising, there is room for authenticity in reviews, whether they are positive or negative, Agha said. Shoppers are also speaking as a user, rather than as an expert or the creator of the product.
“The inherent solution here is, when you give it to the shopper, the only way the shopper talks about it is from a non-expert point of view, and a personal experience point of view, which is the only thing valuable for the next person that's interested in that product.”
Flip's content is powered by shoppers. (Courtesy photo)
For brands, the role is simply to list products, then ship orders out when they receive them. Flip recently launched an operating system for sellers called MagicOS, which provides self-serve tools to launch on the network, as well as track inventory, content and orders. Flip believes this system will help the marketplace extend from a base of beauty into more categories such as lifestyle, nutrition, electronics, fitness, and home goods.
Brands can still promote content, but it can only be content created by the user. This means giving up a measure of control compared to most platforms. But Agha believes there’s a trade-off that brands will embrace: They will be part of a marketplace that has trust built in, and get genuine feedback in the process. It could even reduce issues like copycatting that have sprung up on other marketplaces, he said.
“It is a haven for somebody that actually believes in what they're building, and likes what they're building,” Agha said.
Flip has initial traction that indicates brands are listening to Agha's pitch. It has 1,000 brands live on the platform, including E.l.f., Goop, and MOON Ultra. On the shopper side, Flip also has 2 million registered users who have racked up more than 30 million views, and is signing up more than 200,000 monthly. So far, brands have shipped 321,000 orders.
Flip has fuel to continue to grow. The brand raised a $60 million Series B funding round led by WestCap & Streamlined Ventures in 2022, which valued the company at $500 million. It recently hired Hao Ma, a former director at Meta’s Discovery Org, as VP of AI and data science. Kapil Mokhat, the former head of commerce at Venmo and head of payments programs and partnerships at Airbnb, also recently joined the company as president.
If successful, Flip stands to usher in a new model for social networks. Such platforms have long been centered on social connections, but Flip shifts that rallying force to shopping. It is also shifting the social business model to commerce. Rather than an ad-focused model, Flip receives percentages of orders as a result of the services it performs for brands. For their part, ecommerce marketplaces have solved the problem of shopping for consumers who navigate to a site and already know what they want to buy, said Agha. Flip aims to center discovery of new products, where there is still room to grow.
But it is the focus on trust and integrity where Agha becomes most passionate.
Shoppers have gotten used to a world where most of the messages they receive about a product is paid for by the brand. In turn, ecommerce success has become driven by mastering marketing. For brands that are willing to put their product forward, Agha believes the shopper-powered experience that Flip offers will be one of the best selling points of the platforms for brands.
In a world of multichannel commerce, there’s room for many kinds of marketplaces to grow. Flip shows a differentiator can come down not just to the products a platform sells, but how it sells them.
The retailer's marketplace is expanding quickly.
When it comes to ecommerce growth, was the pandemic a blip or a new trendsetter?
As we move further from the height of COVID-related closures, it’s a question that will start to be answered through the lens of history.
So far, the narrative of ecommerce growth in the U.S. from 2019-2022 has gone like this: Ecommerce’s share of overall retail saw a huge spike at the height of the pandemic in 2020-21, when goods in general were in demand and online shopping was necessary to preserve health and safety. Experts looked out and saw a permanent exponential change in the penetration of ecommerce as a share of retail that would last beyond the pandemic. Then, in 2022, everyone went back to stores and the trendline came back to 2019 levels. Growth was no longer exponential. There was still growth, but it was not happening as fast as during the pandemic period.
With this in mind, it’s worth pointing out that 2023 is the first year that there likely won’t be a pandemic-influenced swing to influence ecommerce growth. It is also a year where demand has suffered challenges amid inflation and interest rate hikes.
So as we seek to determine the importance of ecommerce to overall retail, it’s worth it to continue taking a close look at what growth trends retailers are seeing now, whether ecommerce is remaining resilient amid consumer pullback and how retailers are preparing for the future.
The latest example arrived this week from Macy’s. It’s a fitting one for the times. Overall, Macy’s is seeing a slowdown as consumers pull back on discretionary purchases, with sales declining 7% in the first quarter versus the same quarter of 2022. Digital sales were down 8%.
Macy’s is particularly susceptible to the macroeconomic headwinds that many brands and retailers are facing, as spending among the middle-income consumers it counts as a primary customer base is particularly softening, said GlobalData Managing Director Neil Saunders.
But while ecommerce is slowing overall, the importance it gained to Macy’s business during the pandemic is remaining in place.
In 2019, ecommerce made up 25% of Macy’s revenue, CEO Jeff Gennette told analysts on the company’s earnings call. That jumped to a high of 44% in 2020. By 2022, digital reached 33% of sales after the pandemic boom. In the first quarter of 2023, it remained at 33%. So, while the trend line dipped after shoppers returned to stores, ecommerce share still settled in at a higher post-lockdown point than it was before the pandemic.
This came in a quarter in which traffic was “relatively good” across both online and in-store, Macy’s CEO Jeff Gennette said. It was “flattish” online, and slightly up in stores.
“We do expect that this is the reset year with the penetration between them,” Gennette said. “But we do expect more aggressive growth in digital in the future versus stores as we think about '24 and beyond. And that's going to be foisted by a lot of ideas and strategies.
Over the last year, the retailer has made investments in boosting ecommerce, even as shoppers returned to stores. In a bid to boost the assortment of goods available online, Macy’s launched a marketplace in September 2022 that welcomes goods from third-party sellers.
The marketplace had an “outstanding” first quarter, said Macy’s President Tony Spring, who is poised to succeed Gennette as CEO next year. Gross merchandise value increased over 50% when compared to the fourth quarter of 2022, while the average order value and units per order for marketplace customers was 50% above those not shopping at the marketplace.
Macy’s is continuing to build the marketplace even as it racks up sales. The retailer added 450 brands, ending the quarter with 950 brands.
This is helping to draw in new customers, as well as younger existing customers who are buying more items, resulting in increased basket size.
“We're very excited as to how marketplace is really attracting the Gen Z customer, particularly in categories where it was not economically feasible for us to carry in the past,” Gennette said.
In the end, Gennette said a strong digital and social presence is key to attracting younger consumers. That's a different type of shopper than other age groups.
“We know the younger customer starts first online,” Gennette said. That behavior will still be in place as the generation gets older, and gains more buying power in the process.
Going forward, Macy’s is seeking to expand the model to other retail banners in its portfolio. Bloomingdale’s will open a marketplace in the early fall.
The Macy’s ecommerce trajectory isn’t that different from the wider U.S. ecommerce narrative detailed above. With one quarter of 2023 data, there is evidence that ecommerce share settled out at a higher point after the pandemic than where it started before COVID arrived. There is flattening now, but the retailer is taking it not as a sign of a slowdown, or a signal to change course. Rather, it sees changing consumer behavior as a reason to build for the future.