Innovation in Virtual Markeplaces Generating Buzz
One of the hot topics the venture capitalists, entrepreneurs and executives have been buzzing about at Fortune's Brainstorm Techconference is marketplaces.
Cyriac Roeding is CEO of Shopkick, a mobile app that delivers real rewards for visiting stores: He balances brands and retailers who want to drive people into stores and to pick up their products, and customers, who want rewards for shopping.
Katia Beauchamp is founder of Birchbox, which sends a custom box of beauty samples for a $10 a month subscription.
And Patrick Llewellyn runs the most traditional marketplace: 99designs allows small businesses to connect with freelance designers from around the world.
Though the three businesses are incredibly different, the CEOs agreed on a few things. First, the biggest challenge is the chicken and egg issue, and getting the first suppliers on board was a major challenge for Shopkick and Birchbox in particular.
Second, customers always come first. Even when dealing with major retailers — Shopkick just announced a deal with Macy's Wednesday — the three CEOs agreed that if consumers don't have a flawless experience, the whole system falls apart.
For 99designs that means implementing a money back guarantee if customers aren't happy. For Shopkick that means respecting customers privacy and being careful about how they use their data. And Roeding says when they explained this philosophy — and the line they've drawn in the sand — to big retailers like Target , they get on board.
And third, the social component is huge. Birchbox and Shopkick rely hugely on social networks like Facebook and Twitter to spread the word about their services. LLewellyn says most of his business comes from old fashioned word-of-mouth.
As to who pays for these marketplaces, that depends on the business.
Beauchamp says it's crucial for Birchbox to charge the customer to establish a perceived value for the samples, despite the fact that samples are usually given away for free. The challenge for her was finding the price point which established some value, without it being so much that people would really mind the monthly charge on their credit card bill. (That's $10 a month for women's samples, $20 monthly for a different mix of men's products.) 99designs also charges customers, while Shopkick charges stores and brands for getting consumers in the door.
In another session at Brainstorm Tech, Airbnb CEO Brian Chesky weighed in on his experience creating the company's marketplace for places to stay. He also stressed that the consumer experience must come first, an experience he got to know well in the 9 months he spent without an apartment, living in various Airbnb enabled situations. He also said his goal is to achieve a win-win-win for travelers, hosts and neighborhoods, saying that revenue from his company helped thousands of homeowners avoid foreclosure.
Chesky says Airbnb can be as big as eBay, since the travel and tourism industry is so big. And with people throwing out the term "airbnb for X" — there's no reason we won't see entrepreneurs roll out this model from everything from dogs (yes, it exists: Dog Vacay) to office space (Loosecubes).
— By CNBC's Julia Boorstin
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