Social shopping sites prepare an attack on the high street

20 October 2007

For all the talk of a consumer spending slowdown triggered by increased economic uncertainty, Britain’s online shopping market is set to continue booming over the next year.

Hearst – the American media conglomerate that publishes Cosmopolitan and Good Housekeeping magazines – is hoping to change this. In August it acquired Kaboodle, a so-called social shopping site, for around $40m (£19m, E28m). Described as the MySpace of shopping, it launched in 2006 with $5m in venture capital from investors including Ron Conway, an early bankroller of Google. The site has grown steadily ever since; in October 2006 it had just 100,000 monthly unique users, a figure that jumped to 3m in September 2007.

Users who join Kaboodle are asked to rate a variety of products before being placed into a network of users with similar tastes. The site’s best feature is a plug-in that installs a button at the top of a user’s browser; each time they see a product they like on another site – such as eBay, Amazon or Topshop.com – they can click the button and save or “clip” the product to their Kaboodle profile.

The system is almost identical to social bookmarking sites like Digg and Del.icio.us; the most popular products will move to the top of the rankings as they receive more votes. But unlike Digg et al – which are text-based sites – Kaboodle focuses on images, with products being represented by thumbnail pictures in an attempt to create the internet version of window shopping. When a product has been clipped to a profile the user can ask their friends for advice, compare prices and buy.

As a user clips more and more products, Kaboodle builds up an increasingly accurate snapshot of their tastes, allowing it to target consumers with impressive accuracy. This kind of business model will integrate perfectly with Hearst’s print business. For decades, readers of Cosmopolitan and Good Housekeeping have been snipping things from magazines, be it a certain style of shoes they want to track down on the high street say, or to build up a folder of ideas and tips when doing up their home. By including pages for these titles on Kaboodle, Hearst hopes its readers will start doing this online, enabling them to sell the data to advertisers and firms keen for a snapshot of consumer tastes.

Hearst is not the only company to cotton on to social shopping. California-based StyleHive is another site aimed at women shopping for fashion and homeware on the internet. It recently gained the interest of investors, securing $2.62m in venture capital in July 2006, and now clocks up an impressive 1m unique users a month. It too focuses on pictures, not text or titles. Although technology products have a specific product code, making them easy to research online, fashion items need to be seen.