Flip app screenshot
The emergence of social commerce has fundamentally changed traditional e-commerce digital retail. Instead of brands setting up digital stores and using digital marketing to market to shoppers, social commerce engages shoppers through social media connections.
While social commerce has really taken hold in China thanks to platforms like TikTok Shop, Alibaba and WeChat, it's only just getting a foothold in the U.S. The Boston Consulting Group (BCG) predicts that China's social commerce market will grow from $350 billion in 2021 (13% of China's e-commerce sales) to about $900 billion in 2025.
By comparison, McKinsey estimates the US social commerce market at $37 billion in 2021, and predicts it will reach nearly $80 billion by 2025. BCG expects it to be even higher, reaching $110 billion, though a possible ban on TikTok could reverse this trajectory.
TikTok Shop was only launched in the United States last September, but it is reported that about 500,000 merchants are now participating in the affiliate program, selling products through shopping videos produced by influencers, and creators are sharing a portion of the sales. Bloomberg reported that TikTok Shop is expected to reach $17.5 billion in sales by the end of 2024.
But another social commerce player, Flip, has been around since late 2021 and shares similarities with TikTok Shop: video presentations are at the center of product presentations. But its key differences could make it more appealing to U.S. consumers.
To date, the Flip app has been downloaded by 5 million users, with over 5,000 brands listed on the site. And unlike TikTok Shop, Flip handpicks every brand it features. Over 70% of sellers who apply to be on the platform are rejected, giving customers peace of mind that they're getting the real thing and not being sold a fake. And only brands that ship from the U.S. are required to apply.
Venture capital firm WestCap has heavily backed Flip: In April, the company participated in a $144 million Series C investment, more than double its $60 million Series B funding in 2022. To date, Flip has raised $236 million in venture capital.
And Flip just made a big move of its own, acquiring social commerce company Curated for $330 million in stock. Flip and Curated operate with different business models and target different types of customers with different buying needs, but they share a belief that e-commerce has lost the personal touch in digital retail. And they plan to bring that touch back.
“With the acquisition of Curated, we are accelerating our strategy to reimagine e-commerce with a focus on authentic human interactions and high-quality products,” Flip founder and CEO Noor Agha said in a statement.
“At a time when most shopping platforms rely heavily on algorithms, we remain focused on creating a human-powered shopping experience that fosters genuine connections and personal recommendations, giving our customers the best guidance and satisfaction possible,” he continued.
Lawrence Tosi, founder and managing partner at WestCap, believes in that mission: “Flip is expertly combining complex technologies to redefine and elevate the way people discover and shop online, and the company's cutting-edge social commerce model is here to stay and poised to scale.”
Flip features stories told by real customers
Unlike TikTok Shops, which has a mercenary nature through paid influencers, Flip maintains strict standards for who can post and gives influencers the freedom to speak their mind.
Flip's policies prohibit paid influencers from creating posts to promote a brand's products and restrict brands from influencing product reviews. Only real customers can post reviews, and screen time is limited to one minute.
“With the sheer amount of content out there on everything, people really want honesty when it comes to product recommendations,” Aga told PYMTS. “Consumers are disinterested in this, and you can see it in the numbers. Interestingly, the most successful creators on Flip don't even have Instagram accounts.”
Video creators must first be authenticated as buyers of products on the site. The site's camera feature is only enabled after the products are delivered to the customer's location through integration with the company's logistics system. Creators also earn a certain amount of commission based on sales and views, which can be used for further purchases on the site or deposited into a bank account.
Flip app users can also gift their social networking connections credits to spend on the site, adding a viral element. Personally, I don't want to inundate my closest friends with commercial messages, but I'm not the customer Flip is targeting.
About 60% to 65% of Flip users are between the ages of 25 and 45, with the under-30 demographic growing fastest. We think it's appealing to them, especially since beauty is the foundation of Flip and encouraging impulse purchases is its biggest draw.
Curated's consideration purchase model
Unlike Flip, which excels at retail therapy and instant gratification, Curated is designed for thoughtful, high-investment purchases where expert advice can greatly benefit prospects: The average order value on Curated is $700.
Curated gained a foothold in the outdoor sports space, where hand-picked experts in skiing, snowboarding, camping, fly fishing, golf, and tennis consult with potential customers to learn their needs and recommend trusted, authoritative products. They then expanded to include home goods, such as cookware, kitchen tools like knives, coffee and espresso machines, air purifiers, and floor cleaners.
“People love being able to consult with someone knowledgeable before making a big purchase,” says Eduardo Vivas, founder of Curated. “We do this every day in our lives, but we don't have someone we can go to for everything. We've built a platform that connects these people with experts who can give objective advice.”
Heart-to-heart exchange
While Flip and Curated have little overlap in their customer bases from an age standpoint, both target customers with disposable income for discretionary purchases, and they share a common approach to talent in an area of retail, particularly e-commerce, where talent is largely lacking.
“Flip is about discovering cool new products as you flip through posts from people who bought something, loved it, and want to share it. Curated is about chatting with experts who are super passionate about their field and can help customers find what's best for them,” Vivas said.
Over the past year, he and Flip's Agha have gotten to know each other, sharing advice and struggles. Vivas is such a big believer in the value of networking that he sold his most recent venture to LinkedIn.
“One of our investors suggested that since we both had unique models in the social commerce space, it might make sense to come together. So I called Noor and within minutes we decided to do it,” he said.
Both companies will operate independently, but Bibas will join Flip as chief operating officer. The company also plans to bring in experts to the Flip platform and add customer videos to Curated. The acquisition is expected to double the combined revenue of the company from last year.
“By combining our strengths, we are committed to ensuring that customers receive an honest, authentic shopping experience powered by individuals who are passionate about sharing the things they love. Together, we will continue to drive authentic recommendations and create a vibrant, community-driven marketplace,” Bibas concluded.
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