Social and e-commerce are forming a tight bond in China as Alibaba, one of the world’s largest e-commerce companies, is buying an 18 percent stake in the country’s Twitter-equivalent Weibo.

The deal that closed this morning will cost Alibaba $586 million, giving it breathing room the increase its shares up to a 30 percent stake in Weibo, according to the Wall Street Journal. Alibaba chairman Jack Ma explained in a statement that it hopes to integrate e-commerce into the microblogging website. He also wants to see Weibo bring mobile expertise to Alibaba — critical knowledge now that people are almost over the fear of buying from their smartphones and tablets. This could be an interesting predecessor to similar relationships between Twitter and e-commerce sites like Amazon and eBay in the U.S. The companies will focus on “social commerce,” sharing data, learning the best ways to go about payments online, as well as marketing, according to the Wall Street Journal. Weibo could see up to $380 million in new revenue as a result of the partnership.

Alibaba recently announced in December that it had sold $157 billion in merchandise in 2012, making it one of the biggest e-commerce company in the world by gross merchandise volume. The company reached this milestone soon after it bought back $7.6 billion in shares from major media company Yahoo. At the time, Yahoo had a 40 percent stake in Alibaba. Today, it holds on to a 23 percent stake.

Weibo, on the other hand, is small compared to Twitter in the U.S., which is rumored to have over 500 million members. The company has around 46 million users.

Alibaba image via charles chan */Flickr

Social commerce platform Moontoast is shifting its focus to emphasize the growing social advertising movement, the company tells VentureBeat.

Previously, Moontoast’s platform allowed big brands and entertainers to embed a store within their social news feeds, websites, and such — with the idea being that you can get people to buy a product/deal much easier if they never have to navigate away from their Facebook page (or whatever they may be engaging in). The service featured its own set of analytics to track various brands campaigns as well as some gamification-like services. And while those aspects are still very much a part of the platform, Moontoast now wants to focus on providing advertising within the social stream.

The new focus on social ads comes with a set of brand new clients, such as Lexus, which is already using Moontoast’s platform to provide video ads  for its 2014 line of vehicles.

“If you look at the overall market opportunity, more brands are looking for ways to provide brand awareness (through) interactions and engagement,” said Moontoast CEO Blair Heavey in an interview with VentureBeat. “We’re expanded what were doing because of the success we’ve had in social commerce.”

The startup is also just closed a $5 million series B round of funding. The round is led by The Martin Companies, with participation from previous investors.

Founded in 2008, the Boston, Mass.-based startup has previously raised $6 million , and now has $11 million in total funding to date. Moontoast, whose other clients include Universal Music Group, Procter & Gamble, Time Inc., and Simon & Schuster, faces competition from TopSpin, 8thBridge, and others.

And it’s one that many retailers haven’t yet woken up to.

“E-commerce retailers are used to a world in which they have products for sale, put them on the site, sell out, and take them down,” Curalate founder Apu Gupta told me yesterday. “But now all the stuff that people are pinning continues to live on Pinterest long after the products are gone. And we’ve discovered that once a product gets popular, it continues to get more popular.”

During the recent Black Friday weekend, Curalate reviewed a number of top retailers’ websites. The team was shocked to find that 48 percent of their top ten most popular products on Pinterest actually led to dead links — expired pages. The pages no longer even showed the product that had originally been pinned … much less offer it for sale. So when people — interested, eager consumers — see something they like on Pinterest and want to buy it, far too often they are clicking through to the original product website only to hit a brick wall, Gupta says.

And this isn’t just a problem for one or two year old pins. Brands like H&M and Forever 21 are built on rapid inventory turns, sometimes as quick as weeks or months. Even more traditional retailers typically turn their inventory over seasonally, meaning that products pinned just a few weeks or months ago could already have expired.

So what’s a busy retailer to do?

“It starts with handling 404s better,” Gupta said, referring to the error code a webserver engine returns for a page that cannot be found. “But also, if a product sells out … don’t take it down. Leave it on the site, so at least the page is there and consumers can maybe order it … get on a waiting list.”

Even if that’s not possible, there are alternatives.

“Or the page can say say that the product is out of stock, but here are some suggestions … maybe some other things that are on Pinterest from our brand that are getting really hot.”

Technologies to make this easy for retailers are available now, but e-commerce managers need to become aware of the possibilities. That’s what Curalate does, Gupta told me: Identify the products that are resonating with consumers, and highlight them to brands.

“Images are the new currency of social engagement,” Gupta says. “But as images replace words, brands can’t understand that … you can’t do a text search for images. We’re the first to be able to do that.”

As Pinterest continues to grow — and as perhaps 70 percent of its users visit the site to look for shopping inspiration — knowing how to manage old inventory and assess consumer demand in a very visual world becomes more and more important.

Facebook has added a major new partner to its Gifts program: Apple’s iTunes. The collab lets you send iTunes credit and recommendations through Facebook.

Facebook launched Gifts with a limited group of users back in late September, and opened it to “tens of millions” of users in the U.S. a few weeks ago. The pitch behind Gifts is easy: Facebook recommends high-quality items your friends might get a kick out of based on their Facebook Likes. You put in your credit card info and send a gift to a friend. That person confirms the gift, puts in their address, and the gift is headed off in the mail.

While Gifts has accumulated more than 100 partners, including Starbucks, Fab, Brookstone, Dean & Deluca, BabyGap, and 1-800-Flowers, the addition of Apple certainly doesn’t hurt. iTunes gift cards are a relatively popular item to give during the holidays and birthdays, so it makes sense to also give these cards through Facebook.

On top of giving iTunes credit to your friends, Facebook Gifts also lets you recommend albums, movies, games, and apps that you think they’d enjoy.

iTunes digital gifts through Facebook will be available in four different denominations: $10, $15, $25, and $50.

Photos via Facebook

Social commerce startup Moontoast has signed a new deal with Universal Music Group (UMG) that will bring its social analytics platform to all of its artists and musical groups, the companies announced today.

Moontoast’s platform will allow UMG musical groups under its various labels (Interscope, Def Jam, UMG Nashville) to generate money from the often large followings they have on social media platforms like Facebook and Twitter.

The platform primarily does this by letting its clients embed a “distributed store” into a social network status update or third-party website (Walmart, Target, or an affiliate blog) as well as through interactive games. The stores, which are tracked in real time with Moontoast’s analytics, let people buy something (digital downloads, albums, t-shirts, etc.) directly, without shooting them to an outside payment page. In this case, music artists can then look at comprehensive reports to find out what’s selling well and how to sell more. By the same token, music groups will also be able to see what their fans don’t like so they can stop annoying them with stuff they don’t want.

Moontoast previously worked with a number of smaller labels under UMG (Def Jam, Big Machine), which produced about 10 Moontoast campaigns per year.The new deal will allow the music company to run upwards of 100 per year. It also means UMG will be able to generate more money on music and merchandise sales.

“All of UMG’s labels will have their own Moontoast accounts, which will let them launch direct-to-consumer campaigns for each of their artists,” said Moontoast co-founder and CTO Marcus Whitney in an interview with VentureBeat. “What that means is these artists don’t have to mess with the middleman when they want to promote their stuff to fans. They can just go to them directly, using all the channels that they prefer to use on a daily basis (like Facebook and Twitter).”

Whitney said Moontoast’s social commerce platform is filling a hole in the market for people to generate revenue from their fans before they hit traditional digital stores, like iTunes or Amazon. “Those stores definitely still have their place, but we’re able to move faster to get the sales that no one else is getting right now,” he said, adding that a Moontoast campaign can be set up in a matter of hours rather than days.

Founded in 2008, the Boston, Mass.-based startup has previously raised at total of $9 million in funding to date. Moontoast, whose other clients include Procter & Gamble, Time Inc., and Simon & Schuster, faces competition from TopSpin, 8thBridge, and others.

Music photo via watcharakun/Shutterstock

Good grief, Charlie Brown. Halloween is barely over, and the gift-giving-holiday commercialism is starting already.

But since this announcement is from design-centric online shopping mecca Fab.com, we don’t mind it so much.

The startup is launching holiday pop-up shops, virtual boutiques with “affordable daily design for everyone on your list.” Fab’s done pop-up shops for other gift-giving occasions — Valentine’s Day, Mother’s Day — and all with great gift suggestions that have made this reluctant shopper’s gift experiences much smoother.

For the Q4 holidays, Fab‘s taking it a step further and will give you, the shopper, a pop-up shop of beautiful suggestions for a range of different tastes and price points. Pop-up shops will include options:

• For Best Friends
• For Design Lovers
• For Dad
• For Mom
• For Food Lovers
• For Her
• For Him
• For Pet Lovers
• Gifts Under $25
• Gifts from $25 to $50
• Gifts from $50 to 100
• Gifts over $100

Here’s a sneak peek:

Fab is also taking this as an opportunity to upgrade a few of its navigation and search features. The homepage will feature the holiday shops in the top navigation, a redesigned search bar and sub-nav menus, and new pop-up shop horizontal navigation that may remind you a bit of tablet browsing.

“Thus far in 2012 Fab has grown from 1.5 million customers to 9 million, serving design lovers in 26 countries, and selling 4 products per minute,” said Fab reps in a release on the news.

“We’re hopeful that we’ve been able to brighten your lives and make you smile. This has been a tough week for us here at Fab in NYC, but we’re still smiling. Big time.”

Top image courtesy of jocic, Shutterstock

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Here’s a sneak peek at the new iOS app lineup for Fab.com. The startup’s previous lineup was so last year.

No, for real, Fab first launched its mobile applications exactly 364 days ago, and if there’s anything we know about this social shopping powerhouse, it’s that Fab will change anything and everything over and over again, and the changes will be awesome.

Also, the Fab mobile experience will now be available in 24 countries around the world, a first for the young startup that’s quite in line with co-founder Jason Goldberg’s Amazonian ambitions.

Take a look:

The above pics are the result of yet another back-to-the-woodshed moment for the Fab team. As we learned in an email from our Fab contacts, “Six months ago, we took a from-scratch approach to mobile, challenging ourselves to rethink and re-imagine the Fab experience from the ground up as if it was designed entirely with the mobile shopper in mind.”

And here’s a clip of the app in action:

What’s even more eyebrow-raising than the Extreme Makeover: Mobile Edition is the user growth the service has seen in the same amount of time. At the first mobile launch, Fab counted a tidy 750,000 users. Now, Fab.com has more than 7.5 million members.

Right now, about one third of Fab’s traffic and sales each day come from mobile. Over the next few months, the company will be pushing that number even higher, with a half-and-half goal for desktop-mobile ratios.

Fab.com’s desktop version just got a major makeover itself back in May. The new design puts a large emphasis on social interactions.

“Up to 40 percent of our traffic comes from social feeds,” Goldberg told us at that time.

“You can’t force that. Social isn’t just a way to get something from the user; it’s a way to give value to the user. The traffic will come when you deliver a great experience.”

Sounds like the company is taking the same philosophy with mobile. And those great experiences Goldberg et al. keep creating is one of the reasons we’re so excited to see what Fab will do next.

On Boutine, you can ask a friend for advice, get style tips from the experts, view trending collections (see may favorite below, “The Modern Bohemian Spirit), and purchase items all in one place. Anyone with a strong aesthetic can be a stylist and launch a virtual boutique — once you’ve compiled your collection, you can earn a cut of the revenues for all the items sold.

Today, the San Francisco-based company is launching a nifty new feature: an integration with Filepicker.io that lets you upload pictures of yourself and integrate them into fashion collections. You can pull an image from Facebook, Dropbox, Instagram, Box or straight from your desktop to glimpse how a pair of earrings would set off your eyes, or a color would highlight your skin tone.

The Internet is crawling with e-commerce sites, but there may be a gap in the market for Boutine. While Pinterest has mastered the social elements, you can’t buy and sell directly on the site yet. Meanwhile, online boutique stores and e-commerce giants haven’t fully engaged their user-base on Facebook and Twitter.

Boutine isn’t the only site that offers a fun, collaborative shopping experience — it competes with Polyvore, a mecca for budding stylists; and Style Owner, a New York-based startup that lets you build a store and earn a cut of the sale. On all these sites, shoppers can interact with designers and self-made stylists, which feels more personal than a one-click purchase of a pair of socks on Amazon or eBay.

Pramod Dabir, Boutine’s founder and CEO.

Pramod Dabir, the site’s CEO and founder, told me he had the idea for Boutine when his wife attended graduate school at Stanford. Dabir, formerly a investor at Goldman Sachs, suddenly found himself living in a glorified dorm with six girls.

“Before an event, they would run into each other’s rooms to ask for fashion advice,” he said. “When I realized that this was the basis for their purchasing decisions, I hit on the idea.”

A year ago, he left the finance world to form the site and raised a small amount of funding from family and friends. In just nine months, the site’s staff had grown to a team of seven. Dabir told me they are already generating significant revenue, an increasingly rare feat for an early-stage startup. Boutine charges a 20 percent commission on products sold, and stylists (that could be you) receive a 10 percent commission for styling the look.

At first, it wasn’t easy convincing boutique and independent designers to sign-up, but Dabir said they are starting to approach him directly, as the site has proven to be a strong distribution platform. There are 80 designers featured on the site, and they have a wait-list of about 300.

Next up for Boutine is the iPad app, which is Dabir’s top priority — the first version will let you browse collections and make purchases. With this release, Boutine will be looking to raise its first round of funding.

Acclaimed The Dark Knight Rises composer Hans Zimmer has released a new song dedicated to those involved in the tragic incident in Aurora, Colorado, which he’s made available for sale online.

Zimmer and Waterhouse Music (the soundtrack arm of Warner Music Group) hooked up with social commerce platform Moontoast to power sales of the song via Twitter, Facebook, and an embeddable web store. While the track is available on iTunes for $1.99, using Moontoast’s platform lets people chose how much they want to pay — effectively turning the sale into a donation. Prices range from $0.10 all the way up to $2,500, and all proceeds from the song will go to the Aurora Victim Relief organization.

“I recorded this song in London in the days following the tragedy as a heartfelt tribute to the victims and their families,” Zimmer wrote in his initial Facebook update.

Since its release this morning, both transactions and social media activity for the Aurora song have been strong, according to Moontoast.

Zimmer is no stranger to the digital world. Last week, the composer released an augmented audio iPhone app The Dark Knight Rises Z+ to coincide with the release of the new Batman film. The app essentially provides a Dark Knight soundtrack that changes based on your movements.

Images via Hans Zimmer/Facebook

In perhaps the oddest investment strategy ever seen, Steigman has challenged Thiel to a chess match. High finance is often referred to as a chess match, but now it could be literally true.

“If I win, Peter would invest a million dollars at a pretty decent valuation,” Steigman told VentureBeat. “If I lose, I would give up a chunk of equity to Peter.”

Soletron’s social commerce platform is similar to Etsy — the company finds up-and-coming designers and artists and gives them a place in which to showcase and sell their products. The company already has angel investments from a number of prominent investors but is seeking a first round of venture capital.

Source: Wikipedia

A.J. Steigman

Soletron’s curious investment strategy has its roots in the fact that both Steigman and Thiel have been chess masters for many years. Thiel is currently ranked 919 in the US; Steigman is 456, so perhaps he has an edge.

But win or lose, Steigman expects charity to be a big beneficiary.

“My goal is that the event will be sponsored, and that revenue will go to charity,” he said.

In addition, Steigman says he wants to show entrepreneurs that “unconventional tactics can work” when seeking funding for a company.

The … million-dollar … question, of course, is whether Peter Thiel has responded.

“I haven’t heard back from Peter yet,” Steigman told me. “We’re trying to get the word out to reach his people.”

Image credit: 2Happy/ShutterStock

This comes just a month after the local shopping startup integrated with The Fancy to enable social commerce on that Pinterest competitor.

Zaarly users have already requested $30 million in custom projects, such as building a custom treehouse or setting up Christmas lights. But the new initiative broadens the reach of Zaarly-style local commerce to every site on the internet, significantly extending the number of internet users who can participate and enabling publishers to monetize their content in new ways.

“For example,” Zaarly chief executive Bo Fishback told VentureBeat, “someone might see a recipe on the EveryDay Health website, which has millions of unique monthly visitors, and click the Zaarly button to get it made for them.”

Source: Cookstr

Zaarly on a recipe at Cookstr … right with the like and tweet buttons

When users see an interesting item on a participating website — perhaps a custom-made table, or an amazing cake — they can click the Zaarly button. That creates a request on Zaarly’s website that skilled local creators can bid on. When the potential buyer picks one of the bids, a deal will be consummated, and the original participating site gets a share of the revenue.

Early partners using the Zaarly API also include the LA Times, Cookstr, and IKEA Hackers. But Fishback told VentureBeat that it’s simple for any site to join.

“It’s as simple as putting a Facebook-like button up,” Fishback said. “You could literally put it up on your personal blog … and even match the colors of your site.”

Fishback has eaten his own dogfood … he used the service to get a raised garden built in his backyard. The expert who built it for him turned out to be a farmer for 30 years and an expert in raised gardens.

The service is designed for custom, personalized items and services, not products you can buy at Amazon.com.

“Sites like The Fancy have their own e-commerce for commercial items like a Rolex watch,” Fishback says. “But other things, such as home improvement projects … there’s nowhere to go for that.”

That’s exactly where Zaarly excels.

Zaarly was founded in 2011 and has investments from Kleiner Perkins as well as super-angels such as Ron Conway and Paul Buchheit. The company is based in San Francisco.

Image credit: PixelBliss/ShutterStock

Facebook’s virtual lock on the identities of more than 900 million people gives it opportunities that very few companies have. The revenue it is currently generating is a drop in the bucket compared to the company’s potential. Here are 6 multibillion dollar businesses that Facebook could do really well at, if it got into them.

1. Search. A lot of people compare Facebook to Google and think Facebook should compete head on with Google. That would be a huge mistake. The search problem, as Google defined it, is largely solved. (And tackling it is enormously expensive.) But there are smart ways for Facebook to take on the lucrative aspects of search using assets that only it has. Instead of thinking of search as a monolithic entity, it’s best to think of search as a collection of verticals. There is a lot of range in the value of search terms. Some terms have zero commercial value (for example, “what is the value of pi”); others (like those related to travel) have a lot of commercial value. Facebook is uniquely positioned to serve taste-based search terms based on the data it already has on its users. By doing that, it can pick off some of the most lucrative terms from Google.

2. Person-to-merchant payments. This is an opportunity for Facebook largely outside the United States. In the U.S., going up against Visa, MasterCard, AmEx, and Discover is incredibly hard. But in places like Indonesia, Malaysia, and India, credit markets aren’t well developed, and they’re primarily cash economies. Systems that we’re accustomed to, like FICO scores for assessing credit risk, don’t exist. Facebook has the best trust graphs in these markets. If you think about the basics of commerce, trust is what makes it work.

3. Person-to-person payments. A lot of companies are trying to tackle person-to-person payments. The list includes PayPal, Amazon, Chase, Citibank, and American Express. In the U.S., I think most of these efforts are dead on arrival for the simple reason that no one has ubiquity, and it’s just easier (and cheaper) to pay someone in cash or by check. Facebook has ubiquity and could facilitate person-to-person payments. This could be done on a cost-reduction basis for financial institutions or for a small transaction fee.

4. Social commerce. Social commerce doesn’t happen if there’s too much friction involved. For example, planning outings to concerts can be a hassle — you have to coordinate your friends’ availability, get them to commit, and collect payment from them all. Facebook can automate many of these tasks and create a seamless concert booking experience. When you reduce friction like that, more commerce happens. Groupon promised a social commerce experience, but that’s largely been a marketing gimmick. (Disclosure: I have short interests in Groupon.) While Groupon didn’t actually do anything meaningful with your social graph, Facebook has the data and the network to effectively suggest things that you might want to do with your friends and to suggest which friends might be the best match for a particular event.

5. Local. Facebook has engaged millions of local business to create local pages. They connect to their customers through Facebook. Many of these businesses don’t have the time, expertise, or inclination to maintain Web sites. Facebook is their presence on the Web. By connecting these businesses with their customers and introducing new customers to these businesses, Facebook can introduce efficiencies in the local market that haven’t existed before. Twitter is the only other company that has generated this level of connection and engagement with small businesses.

6. Television. OK, I know this will sound like a crazy idea. But I believe Facebook has the opportunity to dramatically change and improve our television viewing experience. Television is still where the bulk of advertising dollars are spent. Facebook can influence what people watch and drive traffic to content providers. If you think about how Facebook is driving traffic to Spotify, that’s just a glimpse of what it can do for television. A lot of the content on Facebook can actually displace some TV viewing time if presented correctly on the big screen. (See my post on Me Casts.)

It’s important to separate Facebook’s potential from the current reality.

In the long-term, I think Facebook will be a fantastic company that will be worth way more than it is when it goes public tomorrow. But that will require that the company expand beyond its current dependence on display advertising into bold new ventures like those above.

But in the next five years, I expect a lot of volatility in the stock as Facebook grows into its valuation. CEO Mark Zuckerbeg has already made it very clear that he doesn’t care what Wall Street thinks. Wall Street doesn’t like that very much. Many companies manage their numbers to show consistent growth; judging by Facebook’s S-1, it couldn’t care less about managing its numbers.

[Top image credit:  Andrew Feinberg/Flickr]

Undoubtedly, the 30-second (or less) video commercial is an effective way to drive a company’s revenue. That’s assuming people take the initiative to visit the company’s store, walk through 2-3 additional steps, and finally confirm payment. Each step holds the potential for consumers to change their mind, get confused, and ultimately not follow through with the sale.

Cinsay, which launched its Smart Container Software as a Service (SaaS) product today at the 2012 DEMO Spring event, wants to simplify the aforementioned process.

The Smart Container service gives clients a way to put the online store inside the video player. Consumers aren’t taken to an outside website when they want to buy something, nor do the go through several entirely new pages. The transaction takes place entirely within the video player, even if it’s being watched through a social network or third-party website. Theoretically, the results will translate into higher revenue and fewer incomplete transactions.

“Anyone who has a product or service to sell will be interested in this technology,” Cinsay told VentureBeat. “We are the only company that has developed a platform of this nature that builds commerce right inside a video player and enables it to go anywhere on the web, social media, and on mobile devices via simple embed codes.”

While Cinsay is a pioneer in terms of offering e-commerce within videos, plenty of other startups are taking advantage of the social commerce movement, including Moontoast and 8thBridge.

Founded in 2007, Cinsay has 92 employees based in Austin, Tex. and Dallas. The startup has raised a total of $50 million in funding to date from PepperWood Partners, Red McCombs, and Christian Briggs.

Cinsay is one of 80 companies chosen by VentureBeat to launch at the DEMO Spring 2012 event taking place this week in Silicon Valley. After we make our selections, the chosen companies pay a fee to present. Our coverage of them remains objective.

If you haven’t heard by now, dumping your website’s e-commerce experience into a tab on your brand’s Facebook page doesn’t work so well. I’m glad for those of you who figured this out a long time ago, but some people are just now getting the memo.

But just because commerce on Facebook hasn’t worked for you in the past, it hardly means that there isn’t a place for selling goods on Facebook itself. In fact, the lack of selling is likely the one thing preventing most brands from getting the full value out of their Facebook presence. Why? Because it’s the thing fans want most from them on Facebook.

You may be saying: “You’re crazy. Social Media is not about selling things. It’s about content and conversation. Our fans want to be closer to our brand and show how much they love it.” If that’s your reaction, don’t worry, you’re not alone. Plenty of really smart marketers believe that exact line of logic. The only problem is, it’s wrong.

Having worked with some the biggest affinity brands around (that also happen to be pioneers in social engagement), I’ve learned that the most important measurement to focus on is not just how many dollars a Facebook “like” is worth to a particular brand, but rather what the return is on the impact each fan has — both quantitatively and qualitatively. At my company Moontoast, we call this the “Return On Fan” metric, which can be maximized by building loyalty through social channels, growing relationships with fans, delivering relevant offers, and analyzing the results for improvement.

A recent study from the CMO Council in February illuminated the wide divide between what marketers think a fan’s “like” means to a brand. The top two thoughts from marketers were: (1) The content is agreeable and (2) They want to be heard.

The study also showed that fans wanted two very different things when they click the “like” button: (1) Participation for games, contests and promotions and (2) To learn about new products.

That’s pretty off-target if you ask me. Marketers think fans want “content” and to “be heard” while fans are saying what they really want is a preferred consumer relationship with the brand. So how can we close the divide between what marketers think and what fans want without turning our programs upside down and inside out? It’s simple…

As marketers, we must add a loyalty component to our Facebook content, and be responsive to the fan feedback from offers we make to our Facebook fans. In so doing, we can hold true to the ideals of producing high-quality content and listening to fans, both of which are in fact very important. But now, we don’t miss the mark on the core value that fans are looking for, special treatment as a consumer.

This is where social shopping psychology comes in, and where selling things on Facebook wins by a landslide when it comes to what fans want. With a few simple tweaks to our thinking, we can sell more things through Facebook while also adding value to the dialogue between fans and brands. Those tweaks include:

1. Make any offer to your Facebook fans “exclusive” to them. Exclusiveness adds instant value to each fan’s like and makes the content more share-worthy.
2. Weave the offer into your content plan. Build anticipation, deliver in Facebook in a sharable way, and respond to the feedback on the offer.
3. Curate your offer so that it is the star of the show. Each offer is an event. And if it’s cluttered with too many products or deals, it becomes less compelling and less share-worthy.

That’s really it. If you take this simple and novel approach, your investment in selling things via Facebook will be much more manageable and much more effective. You will instantly see metrics like new customer acquisition, post engagement, fan page growth and revenue grow as you improve the value of your consumer relationships on Facebook.

Futurama image via 20th Century Fox

Marcus Whitney is currently the CTO of Boston-based social commerce platform Moontoast, which offers musicians, celebrities, brands and companies a way to turn their social media presence into a source of revenue. He’s founded four startups to date and somehow managed to maintain a love affair with his family, friends and hip-hop. He is a cyborg innovator in Social and Music Startups and a student of Founder Happiness.

Turning social media influence into gold is one thing, but measuring how you did it is quite another, according to social commerce startup Moontoast.

Moontoast provides musicians, celebrities, and brands with a way to generate money from the often large followings they have on social media platforms like Facebook and Twitter. The startup  does this primarily by letting its clients embed a “distributed store” into a social network status update or third-party website (Walmart, Target or an affiliate blog). Users can make purchases from those embedded stores seamlessly without having to navigate away from the site — thus enhancing impulse purchases and/or removing hassle that would prevent an online sale of things like merchandise, special deal coupons, digital music files, and more.

Today the company launched its Social Analytics Suite, which collects data from each time a client uses a “distributed store” as well as the corresponding social media activity. So for instance, if a client tweets three exclusive t-shirt offers and shares one exclusive signed poster offer on Facebook, the dashboard would show data for four separate “stores.”

“We found that most of our clients behave more like an agency than a brand, so we built the analytics dashboard to accommodate that,” said Moontoast VP of Marketing and Client Services Tim Putnam in an interview with VentureBeat.

Each client sees a one-page analytics dashboard consisting of four unique rows, which adds a touch of simplicity for people who aren’t super familiar with making sense of digital impact data (see screenshots below). The first row allows clients to customize the data by date range, brand, campaign type, and distributed store type. Below that is a row dedicated to social influence reach and revenue. Basically, the second row is an easy way for people to gauge their return on investment, but it doesn’t provide you with enough information to understand how to duplicate successes and avoid failures.

The third row consists of a comprehensive graph that combines all the different sales and social reach data with their social media activity. Looking at this should give people an accurate measure of how well they’re doing, as well as how they can improve. Each time someone initiates social activity (such as a tweet), a dot is placed on the graph, which clients can click for additional information. Clients can then see how the activity impacted sales, social engagement, etc. It’s a pretty cool tool most digital marketing managers are likely to fall in love with.

A collection of purely social media engagement and participation is displayed on the dashboard’s fourth row. It’s very similar to what you’d find in Facebook’s advertising dashboard, but far more useful since it tracks multiple social networks.

Moontoast currently offers all clients a free version of the analytics tool that doesn’t show the entire scope of social data collected from each campaign. The full Social Analytic Suite is, however, a paid service. We’ve embedded a video demo of the new tool below.

Founded in 2008, Moontoast originally began as a social knowledge base that allowed “experts” within specialized fields to turn a profit by performing various services. The company, which has offices in Nashville, Tenn. and Boston, Mass., pivoted in 2010 and brought on interim CEO Stephen Collins, formerly of DoubleClick. Its early investors include country music artists such as co-founder Bucky Baxter, Wynona Judd, Vince Gill, Amy Grant and Kip Winger. Moontoast closed a $6 million round of funding in January 2012 from The Martin Companies, with participation from prior investors. The startup has raised a total of just over $9 million in funding to date.

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Lockerz, a social commerce site that debuted its a self-expression platform earlier this month, said today that it will guarantee that no other online site will be able to match its prices.

Lockerz is similar to popular online pinboard site Pinterest, which lets users organize and share content and information they love. But Lockerz has put a monetization spin on Pinterest’s business model by offering rewards to its users for sharing content and driving users to make purchases at the site.

“We took our time — a little bit longer than Pinterest — to really come out with a full commerce solution,” Lockerz chief executive Kathy Savitt told VentureBeat.

The company recently announced its new “Locker” look, which allows users to curate “decals,” or the equivalent of a Pinterest Pin, on its website. Those decals can be categorized into groups such as makeup, clothing, and gadgets to be shared around Lockerz and other social networks. The incentive to share these decals is to get points. These points are similar to an arcade ticket. The more you earn, the bigger the prize you can buy at the gift shop. In Lockerz’s case, the more points you earn, the bigger the discount you get off of a “high-end product”. You earn points for each “grab” you get — a grab is when someone shares content you’ve assembled into your Locker.

The website includes a Lockerz shop, where you can use you points on inventory Lockerz has bought outright from retailers. Five-hundred points guarantees you at least a 50 percent discount off any item in the store. Brands in Lockerz’s shop include BCBG, Ella Moss, Xbox 360, and SkullCandy. With today’s low-price guarantee, users can be sure that if they purchase an item on Lockerz and find it cheaper somewhere else, the company will reimburse them for the price difference plus 10 percent.

“I think there are a lot of social companies that try to add commerce, and a lot of commerce companies that have tried to add social. We’ve tried to take a different path,” said Savitt.

Lockerz wants to be the big name in “social commerce,” where people buy products that they’ve seen their friends discuss online. Facebook’s Mark Zuckerberg has been saying for years that people are more likely to buy products if their friends have recommended them, and Facebook recently added new features to take advantage of that trend, such as the ability to “want” or “buy” something as opposed to just “like” it.

Seattle-based Lockerz launched in 2009 and currently has 20 million users. It has given out 3 billion points to be used in its store since its launch. Pinterest, on the other hand is rumored to have as many as 13 million users in the 10 months it has been open. If Pinterest finds a way to make money off its users and finally takes its website out of invite-only mode, it will pose a big threat to Lockerz, and potentially to its low-price guarantee.

Lockers image via Shutterstock

Moontoast gives musicians, celebrities, and brands a way to generate money from the often large followings they have on social media platforms like Facebook and Twitter. The company primarily does this by letting its clients embed a “distributed store” into a social network status update or third-party website (Walmart, Target or an affiliate blog). Users can make purchases from those embedded stores seamlessly without having to navigate away from the site — thus enhancing impulse purchases and/or removing hassle that would prevent an online sale of things like merchandise, special deal coupons, digital music files and more.

The process has proved very successful so far – netting early clients (such as country artists Reba McEntire and Taylor Swift) upwards of $10,000 an hour after posting via Facebook, according to the company.

“We believe social commerce is a very new market with a lot of untapped potential,” Moontoast CEO Blair Heavey told VentureBeat in a recent interview.”The new funding will allow us to enhance the distributed store and analytics suites as well as grow new aspects of the services like game commerce.”

The new funding will allow Moontoast to grow two other aspects of its service: a set of analytical tools designed to identify and maximize sales and a new “gamification” feature that will maximize sales by engaging a client’s social media following through games, puzzles, quizzes and more, Heavey said.

The funding was led by Nashville-based venture capital firm The Martin Companies, with participation from prior investors. Moontoast has raised a total of $9 million to date.

Founded in 2008, Moontoast originally began as a social knowledge base that allowed “experts” within specialized fields to turn a profit by performing various services. The company, which has offices in Nashville, Tenn. and Boston, Mass., pivoted in 2010 and brought on interim CEO Stephen Collins, formerly of DoubleClick. Its early investors include country music artists such as co-founder Bucky Baxter, Wynona Judd, Vince Gill, Amy Grant and Kip Winger.

It’s paradigm shift time — again.

Fab.com is the latest in a string of companies that is seeing huge success by applying principles to commerce that at first glance, seem like old hat; Thematic fire sales. Big deal… right? Actually, it is. And we (in North America at least) have Facebook, Twitter, Tumblr and (soon) Google+ to thank for it. But you already knew that.

So the real question is, why haven’t the biggest retailers and affinity-brands wiped the floor with these startups that go from launch to millions of members in 90 days? Is it just because they are offering discounts? Flash sales? Free shipping? Or is it because they have tapped into a collective force so powerful that they are in fact “drafting the masses”?

Perhaps it’s because a decade later, many in the marketing world have still not read and understood The Cluetrain Manifesto — a collection of concepts aimed at bringing a call to action for companies operating within a new marketplace of the internet age.

The collaboration of Doc Searls, David Weinberger, Chris Locke and Rick Levine coined the Cluetrain Manifesto term, and it shook the foundation of the marketing world in 1999. It starts with this paragraph:

“A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies.”

Now, maybe the ‘blinding speed’ part wasn’t so real in 1999. I know it wasn’t in 2003 when I joined a fledgling email marketing company named Emma that grew up to be one of the leaders in email marketing for small and medium-sized businesses. Back then, email was absolutely king, and the power that marketers had over their customers was heavy-handed.

Through their favorite email marketing system, marketers could simultaneously message millions of potential customers (open rates aside), and the best that any one of these recipients could do to socialize that communication with their friends was “forward to a friend”. But hardly anyone ever wanted to do that. It was clunky (still is), impersonal and felt too much like you were selling on behalf of some company since it just stuck your tiny message on top of their humongous email.

Then came Facebook and its 800 million members.

Suddenly, people (which is what they are on Facebook, not customers) were empowered to speak to their communities of friends from their phone, tablet or laptop, in their own voice with dominance over the brand. The brand they are talking about is merely the subject of the conversation, not the voice initiating it. And guess what, people react really well to messages from their friends, and even their acquaintances, when the topic is something they are genuinely interested in, something they have an affinity for. It’s why Gartner predicts that 50% of sales will come from Social and Mobile by 2015.

And here we are, in 2011, finally seeing what Cluetrain Commerce looks like. It took a while, but it is here now! No more mindless herding of ‘users’ through search engine optimization, insulting advertisements and inbox overload. Today, companies with an authentic voice, the desire to be part of a conversation rather than dominate it, and a novel offering are going to put the brands that don’t evolve into extinction. Why?, Because the people want it that way.

No, I’m not saying email marketing is dead. I’m saying that Email Marketing is now part of Social Commerce, not the other way around.

Brands that don’t get it, that don’t use Social to build consumer relationships, are now perceived as rude and primitive. But why shouldn’t they be? Rather than reach out to people, they seek to drive traffic. Instead of dazzling people with a great experience, they seek to convert users through a funnel (I don’t know about you, but I do not want to be converted by anyone, especially not through a funnel). And most importantly, they refuse to accept that their customer is their most powerful marketer. Social Commerce is the way to produce vibrant consumer insight and relationships that will have people wanting more, not opt-ing out.

[Mopping photo via ShutterStock]

Marcus Whitney is currently the CTO of Boston-based social commerce platform Moontoast, which offers musicians, celebrities, brands and companies a way to turn their social media presence into a source of revenue. He’s founded four startups to date and somehow managed to maintain a love affair with his family, friends and hip-hop. He is a cyborg innovator in Social and Music Startups and a student of Founder Happiness.

With that in mind, Nashville-based startup Moontoast set out to create a commerce platform that would leverage the vast reserve of social media fans. It’s premiere product, the Moontoast Distributed Store, can be embedded and shared on a plethora of different affiliate websites, social news feeds (Twitter, Facebook), email and more.

An early client to take advantage of Moontoast’s services was country artist Reba McEntire, who has 2,488,348 Facebook fans and commerce deals on a handful of affiliate sites. The store that’s accessible in Facebook is basically the same as the one embedded into another website (like Target or Walmart). All the data from purchases gets filtered into Moontoast’s analytics tools (see screenshot below) so the client can adjust orders and determine things like the best time to pitch Facebook and Twitter fans on a new digital download or t-shirt.

By optimizing a client’s store enables them to get the most out of their social fan bases on networks like Facebook, according to Moontoast CTO Marcus Whitney, who spoke about his company during a session at the BarCamp Nashville event Oct. 15.

“Our model is that social is very dynamic and not static. As a result of that, if you just put a store on a Facebook tab, it will not work,” Whitney said, noting that the real influence comes in a person’s news feed.

According to Moontoast’s research, about half of all engagement on a post happens in the first 80 minutes. After 24 hours engagement falls to almost zero. “So you have to post on a very regular basis and you have to incorporate it (your commerce) into social media to be successful,” Whitney said, adding that the company has achieved $10,000 in a single hour multiple times.

Moontoast’s Distributed Store gave way to a specialized Facebook app called Impulse, which allows Facebook fans to purchase physical goods, listen to music and buy digital downloads — all without having to leave the site. Moontoast clients actually see a boost in fans after integrating commerce into their social media efforts, according to Whitney.

Moontoast has competitors, but each of them focuses on a specific segment of the social commerce market. While there aren’t many companies dealing with celebrity social commerce, TopSpin competes in music/music artists and 8thBridge is a popular competitor among retail brands.

Founded in 2008, Moontoast originally began as a social knowledge base that allowed “experts” within their specialized field to turn a profit by performing various services. The company pivoted in 2010 and brought on interim CEO Stephen Collins, formerly of DoubleClick. The startup has upwards of $3 million in investments to date. Its early investors include country music artists such as co-founder Bucky Baxter, Wynona Judd, Vince Gill, Amy Grant and Kip Winger.

Screenshots via MoonToast

“[Facebook] wants to enable their developers to monetize,” said Naveed Anwar, head of community for X.commerce, in an interview with VentureBeat. “Who better to partner with than the people who are leading in social?”

Facebook recently introduced a new “vocabulary” to its open graph, a platform for developers on Facebook, which allows people to do more than just “like” something. Developers on X.commerce will now be able to use that extended vocabulary and the open graph in their own creations.

For instance, instead of liking Levi’s newest pair of jeans, it’s possible to have bought them, recommended them, and more. The idea is people are more influenced by their friends’ purchases than they are by official reviews from a source such as the Kelley Blue Book. If someone sees your action on a product, they may be more inclined to take action of their own.

“To make something truly social, you have to put it in at the start of the page, through to the end,” said Matthew Mengerink, vice president and general manager of X.commerce, at today’s press conference.

X.commerce wants to give developers access to Facebook at the very beginning and integrate it deeply into their applications. Mengerink explained developers could integrate Facebook features on the side, but having it baked into the X.commerce offering will make it a fuller product.

eBay also announced PayPal Access, which is a combination of Facebook Connect and the prompt you see to approve an app on Facebook. PayPal’s main concern is the loss of sale when the buyer has to fill out forms with shipping, contact, billing and other information. Access prompts you to share your pre-loaded PayPal credentials with an eCommerce website so it can remember you on return trips.

Commerce and social companies alike are recognizing the opportunities for marketing and purchasing in the retail world. eBay continues to deepen its relationship with Facebook. Last year the company announced PayPal would fuel all Facebook credits, and at the end of September it added Mitic as an advisor to its board of directors.

But eBay is not restricting itself to just Facebook. He explained, “We’re open and we’ll work with any partners who want to play in this ecosystem with us.”

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Big Data and Predictive/Real-time Analytics startups: Are you looking to jumpstart development & accelerate market traction? Sign up for the SAP Startup Focus program to receive technology, support, resources and community to help you develop new applications on SAP HANA, a cutting edge database platform. Get started here, and enter promo code “VB2013″ on the form.

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GoSteals, an online service that creates flash deals like those pioneered by daily deals site Groupon, launched today at VentureBeat’s DEMO Fall 2011 conference.

The company is an alternative to daily deals giants Groupon and LivingSocial, which charge fees for businesses looking to generate additional traffic from daily deals. Businesses pay out upwards of 50 percent of the revenue generated from a flash deal generated on those sites to daily deals sites like Groupon and LivingSocial in an effort to acquire new regular customers, which account for the lion’s share of any businesses’ revenue.

GoSteals uses Mediaspectrum, an online social commerce web service that can power daily deals services. So any business interested in creating a flash deal with GoSteals can do so automatically through a web-based service.

“GoSteals was founded to empower small businesses and their customers and help break the grip of the current “Daily Deal” players,” GoSteals chief executive Nick Barkett told VentureBeat. “By using GoSteals, businesses gain free exposure, new customers, and keep all the revenue generated in the process while customers have free access to a wide range of great deals, which they can reserve at no cost and no financial risk.”

Barkett founded the company earlier this year, which is located in San Jose, Calif. The company has raised $250,000 in seed funding. Barkett is the only employee at the company, through he has hired several freelancers and outsourced some of the company’s components.

The company is launching today in 12 cities this week as part of a closed beta.

GoSteals  is one of 80 companies chosen by VentureBeat to launch at the Demo Fall 2011 event taking place this week in Silicon Valley. After our selection, the companies pay a fee to present. Our coverage of them remains objective.

Terms of the deal weren’t disclosed, but it appears the acquisition will be fairly straightforward. Scoop St. members will begin receiving BuyWithMe deal emails soon, and Scoop St. deals will start appearing on BuyWithMe’s NYC site today. BuyWithMe also just purchased the customer loyalty servie Edhance. The two acquisitions should help it to better combat rivals like Groupon.

Scoop St. offers “scoops”, which are deals, “Experiences”, which are produced events like food crawls, and “Perks”, which is a rewards program for members.

The deal also lands BuyWithMe Scoop St.’s subscriber list of some 50,000 people, as well as the company’s eight employees.

Scoop St. was founded in 2009 by Ambrose and Justin Tsang and has raised $1.2 million in funding. BuyWithMe launched in NYC during the same year and is now offering deals in 13 markets outside the city.

There is no innovative technology at play here, rather a simple email op-in that asks consumers what regions or products they are interested in when they join the mailing list. Although Groupon likes to tout its tipping point algorithm where a certain number of users have to purchase in order for a deal to happen, there is such volume that all deals go through, every time. Net net, nothing social going on here.

The social revolution has made brands think they can invert how people think. Sure brand ambassadors are great, but they are few and few between, and lots of people on Facebook “like” Lady Gaga. But people do not want to broadcast what they bought, they want deals brought to them.

Last summer , Facebook chief operating officer Sheryl Sandberg claimed that email was dead, but she must have seen the light when it came to the recently launched Facebook Deals service. Consumers are now so programmed to receive deals via email that Facebook had to also send its deals via email, not through Facebook’s countless viral channels such as the newsfeed, messaging inbox, and notifications.

There is now such a heavy volume of activity on Facebook newsfeeds that no one ever goes back in time to see what happened, so branded posts in your newsfeed quickly gets buried. Conversely, most people still scan through all of their email and can see that Groupon sent them a deal yesterday.

Facebook’s other commerce initiatives have all faltered. The MarketPlace classified ad feature is outsourced to Oodle and has not had much traction. Adding Facebook storefronts to brand pages is currently the rage, but in my experience people do not like deep engagement on a Facebook page, and prefer a quick in-and-out, much like they interact with friends. So Facebook
storefronts are more useful for promoting a few items rather than incorporating an entire store. The one shining star is the fact that Facebook got its gaming masses to adopt Facebook Credits as a mechanism for paying for virtual goods in games, mainly by strong arming game developers to support Credits.

Traditional commerce success is very important to Facebook. Most of its ads are sold to small local businesses, game companies like Zynga, and deals companies like Groupon and LivingSocial looking to acquire new users. In order to fuel its growth, Facebook needs to be able to close large large ad buys with national brands and retailers.

However, Facebook keeps insisting on atypical “social” ad units, such as sponsored stories. Things like retargeting already creep people out, when they see a shoe or a car following them around the Internet. And people decidedly don’t like when they are the object of retargeting like with Facebook’s sponsored posts feature, for example “Your friend Joe likes Home Depot! You should to.” Most Joes really don’t like that. Let’s face it, most people don’t like ads, and making ads social by including people in them is just creepy.

Even the omnipresent Facebook Like button is not helping retailers very much. Most products have too short a shelf life to accumulate many likes. In addition, very few people are clicking Like on a product since it is broadcast to all of their friends, and instead are are using the “e-mail to a friend” feature so they can ask a select set of people if they like an item. Email is really making Facebook miserable when it comes to e-commerce. No wonder Forrester and Goldman Sachs are questioning whether Facebook can make it in retail.

So what is working? Justin Kistner, a young product manager at my company Webtrends, came up with the idea of using Facebook Ads as the equivalent of an email campaign. We all initially thought he was insane, but in fact we found that it works enormously well.

Here’s how it works: Get a consumer to Like a retailer on Facebook through a Facebook ad campaign where the consumer gets a coupon in exchange for Liking the retailer, which is the equivalent of a traditional banner-ad-to-email opt-in campaign. The retailer can then buy low-cost ad units that target people who have Liked their page, and also those peoples’ friends who are likely to have an affinity for the retailer as well. In the campaigns we have run, these units get a 7x higher conversion rate than other Facebook ad units. Those ads then click through to targeted, simple landing pages on the retailer’s Facebook Page or website that convert into a sale.

Replicating the proven email opt-in, email send, and simple landing page experience to Facebook as a Facebook Page Like, cheap ad buy targeted to the page’s fans, and simple Facebook landing page works remarkably well. The Facebook ad is essentially an additional newsfeed element that is placed off to the right. Adding a one-click Facebook Credits “Pay” option, support for normal ad units such as skyscraper units on the right rail (like Facebook used to display from Microsoft), and deep analytics that track what happens after users click on ads would increase conversions even further.

Is it social? No. Does it poise Facebook as a great place for retail ads and as a payment platform? For sure.

Peter Yared is the vice president of apps at Webtrends, which acquired Transpond, a social-apps developer he founded. You can  follow him on Twitter.

In an email to Groupon staff that was forwarded to VentureBeat, CEO Andrew Mason announced that Solomon (pictured), who joined Groupon just a year ago, is leaving the Chicago-based company to move back to northern California. (It’s not clear how settled Solomon ever was in Chicago: He never changed the location in his LinkedIn profile from “San Francisco Bay Area.”)

The story that sources close to Groupon’s board are peddling around town is that Solomon wasn’t the right executive to take Groupon, whose staff grew an astonishing thirtyfold from 200 to more than 6,000 employees under Solomon, to its “next stage of growth,” which appears likely to include an IPO.

I’m not sure I buy that, since Solomon was formerly an executive at Yahoo during its heyday, when it was a much bigger company than Groupon, and already public. (To be fair, I may be favorably inclined to Solomon, since he seems very ready to take VentureBeat’s advice on business matters.)

Here’s an alternate theory: Working for Groupon’s puckish, prank-prone CEO took its toll. A quick payday in the form of a sale to Google or another large company never materialized.

But the rise of secondary markets in the shares of private companies like Groupon affords lucky souls with impeccable timing another kind of exit. With Groupon now potentially worth $25 billion, Solomon must now be very wealthy even with only a percentage of his equity vested — so much so that the long slog of vesting the rest might not seem worth it.

So now, fast-growing companies like Groupon are seeing the downside of secondary markets. The presence of investors willing to take a gamble on private-company shares and the rise of marketplaces like SharesPost and SecondMarket for those equities is making it hard to keep executive like Solomon down on the farm — or in Chicago, as the case may be. When they can easily sell their shares even without an exit like an acquisition or an IPO, why should already-wealthy executives stick around for the hard work or the daily friction that comes with a company in hypergrowth?

It’s a new management headache for the likes of Mason. Our only advice for the Groupon founder: Look to your past as a musician, and figure out a way to keep the band together.

The company, which sells vintage clothing and apparel from independent designers, raised $19.8 million last year in a round led by Accel. Founded in Pittsburgh in 2002 by Susan and Eric Koger, the company is now headquartered in San Francisco and has offices in Los Angeles as well as its original hometown.

In January, CEO Eric Koger told employees in an internal meeting that the company had no plans for layoffs.

But today, chief marketing officer Kerry Cooper told VentureBeat that ModCloth is centralizing its designer-relations team, which was previously split between Pittsburgh and Los Angeles, in L.A. The company also found it had “misallocated” some employees in other departments, as Cooper put it, and took the opportunity to make those cuts at the same time. Besides the layoffs, it offered relocation packages to nine employees.

Cooper acknowledged Eric Koger’s earlier comments, but characterized ModCloth’s moves as a “strategic realignment” instead of layoffs.

ModCloth laid off some designers and photographers as well as a designer-relations team who helped bring new wares to the site. Cooper said the company also made cuts in its “experience” team which handles interaction design, engineering, and product management because it didn’t have the right resources in that team. LinkedIn lists 181 current employees at ModCloth. At the same time, ModCloth has 11 job openings listed on its site, chiefly in technology and product.

“We will not hire as fast as we did last year, but we will end the year with more employees,” said Cooper.

Could ModCloth ultimately move to deemphasize human curation by merchandisers and rely more on its community? Cooper said the relocation plan wasn’t aimed at cutting back the size of the department. But already, in its “Be the Buyer” program, ModCloth asks its customers to select dresses which it then commissions from sellers. And it could easily ask sellers to provide more of their own photography and design resources. By increasing such community-driven purchasing, ModCloth could well get by with fewer employees in its merchandising and design teams. And it’s easy to see its Silicon Valley investors pushing for more efficiencies.

“We’re a fashion company and a technology company at the same time,” said Cooper. “It’s a good balance we’re always finding.”

But ModCloth has made its name, so far, on the human touch. Will an increased emphasis on technology and engineering jeopardize its homespun appeal?

And will the Kogers remain in charge? Employees are now questioning Eric Koger’s management, noting the dissonance between the company’s cultural values of “empathy” and the move to cut some employees who had relocated to San Francisco from Pittsburgh, as well as his earlier statement about not planning layoffs. He may well be under pressure by investors to show results — or get his own pink slip.

And not the kind ModCloth sells, either.

Private-sale startups like One Kings Lane and group-buying companies like Groupon are hot right now. Mack’s company, which focuses on home decor, recently raised a $23 million round of funding from Kleiner Perkins Caufield & Byers (which has made a big push into social networking in the last few months) and Greylock Partners (the firm whose social investments include LinkedIn and Airbnb). Mack, who was interviewed today by VentureBeat’s Owen Thomas at the DEMO conference that we’re coproducing, pointed to the investment as a sign that this isn’t just a fad: “The thesis is that social commerce is transformative.”

That’s because adding social features fundamentally changes the shopping experience, he said. For example, it functions as “purchase validation,” so that shoppers feel more comfortable buying a product without seeing it in-person. So if someone spots a product that they’re not familiar with, they can tell whether it’s a good deal by looking at social signals like whether lots of people are purchasing the item or putting it on-hold.

Those social signals can come from strangers, but they’re even more powerful when they come from friends or experts. Mack reminded Owen of his article about Yardsellr, where he described buying a sweater for his dog Ramona. Before making the purchase, Owen posted a photo of the sweater on Facebook and got positive feedback from his friends.

Integration with social networks not only improves the shopping experience, it also helps these services grow more quickly. More than half of One Kings Lane’s members were brought to the site by the recommendation of another member, Mack said — which is a much cheaper way to get new users than traditional advertising.

One of the main results of this trend is a big shift in who’s doing the online shopping. The first wave of e-commerce was dominated by men who wanted to buy a product as quickly as possible, because it was more convenient than going to the store. This wave includes more women who see online shopping as a fun and social experience, Mack said.

Add all that together, and he predicted that social e-commerce startups shouldn’t have much trouble raising money, since investors are “clambering” to get into the market.

“Continue to break your pick on the rock, because it’s going to be worth it,” he said.

[Photo by Stephen Brashear/New Media Synergy]

From One Kings Lane to Plum District and Abe’s Market, from Stella & Dot to Bonobos, we’re seeing a generation of companies that are rethinking relationships with vendors and acting as middlemen and marketplaces as much as they are merchants.

Today, One Kings Lane, an online home-décor seller, announced a new $23 million round of funding from Kleiner Perkins, its earliest backer, and Greylock Partners, a firm masterminding the social Web from Facebook on down.

That follows right after Thursday’s announcement of $3.4 million raised for Abe’s Market, a marketplace for natural goods, in a round led by Accel Partners, an investor in Groupon. And just last month, we saw a purchase of a $37 million stake in Stella & Dot, a startup which sells jewelry through a network of independent sellers, by Sequoia Capital, and an $8.5 million investment by Kleiner Perkins in Plum District, a mom-focused, Amway-like Groupon competitor in the daily deals market. December saw Bonobos, an online menswear retailer, raise $18.5 million from Accel Partners and Lightspeed Venture Partners.

It’s clear that Accel and Kleiner are taking the lead in investing in the next wave of e-commerce, one that emphasizes social links and an engaging — even fun — user experience that matches the thrill of shopping offline.

But a common thread between these businesses is the extent to which they’re shedding the old image of e-commerce as a capital-intensive business laden with expensive warehouses and inventory and embracing a matchmaking role between suppliers and consumers.

Abe’s Market may be the purest example of this. Many manufacturers of natural goods are microbusinesses — lone entrepreneurs or mom-and-pop shops. They struggle to get their wares into stores, and when they sell through megasites like Amazon.com or eBay, they find themselves so low down in the search results that they fail to do much volume.

Cofounder Jon Polin told me that he views Abe’s Market as an online analog to the farmer’s markets where many of these vendors sell their products today. Abe’s is the merchant of record on purchases, meaning it shows up on customers’ credit-card bills, but it doesn’t stock any merchandise. Instead, it passes orders on to its 300 or so vendors. Its secret may lie in making the experience easy for vendors, who are usually stuck with awkward Web interfaces, arcane rules, and demanding fulfillment processes. In exchange for taking 30 percent of a transaction’s retail price, Abe’s handles shipping costs — and even provides a printable three-part order slip that a vendor can use to pick an order, pack it, and send it (on Abe’s dime).

Plum District, too, takes a different approach in dealing with the small businesses it solicits for deals. Unlike Groupon and LivingSocial, the two biggest players in the deep-discount daily deals market, Plum District doesn’t have its own sales force. Instead, it solicits independent salespeople, mostly moms, to both cajole local businesses into offering discounts and then signing up customers to take the deal. Since the moms get a cut of the action, they’re motivated to make the discount offer work for the local business. That’s an innovative take on a key part of the daily-deals model, which requires aggressive, one-on-one solicitation of offers from businesses.

Stella & Dot, like Plum District, uses a network of independent sellers. CEO and cofounder Jessica Herrin recently took some time out to demo her new mobile Web app. There are a ton of new shopping apps, from players like Amazon.com and eBay on down. But they’re all designed around making it easier for consumers to check prices and purchase goods on the go. Here’s the genius of Stella & Dot’s app: It’s designed for the independent style consultants who sell Stella & Dot jewelry from their homes at “trunk show” parties, letting them play videos and share ideas off a smartphone or tablet. Imagine handing your iPhone over to a friend to show them a gorgeous new bracelet: That’s far friendlier — and likelier to lead to a sale — than awkwardly turning a laptop around. By investing in technology for its sellers, Stella & Dot is making a smart bet on its business model.

One Kings Lane, the home-décor startup backed by Kleiner and Greylock today, may look much like Rue La La or Gilt Groupe, a flash-sales merchant which offers event-driven, short-term sales of limited quantities of merchandies at attractive prices. But unlike many flash-sales operators, One Kings Lane isn’t taking on much inventory, CEO Doug Mack told me.

Because of the startup’s low inventory levels, One Kings Lane’s inventory turns — an industry measure for how swiftly merchandise moves off the shelves — are “an order of magnitude above the industry average,” said Mack.

The metric isn’t even that meaningful, he adds, because about half of its orders are drop-shipped, or shipped directly from the manufacturer to the consumer; a third are bulk-shipped after a flash-sales event, which means they stay in a third-party fulfillment warehouse only as long as it takes to break them down and ship them out; and the remainder are kept in stock by One Kings Lane so that it can offer certain items, mostly ones suitable as gifts, year-round.

As a result, little of One Kings Lane’s latest round is going to working capital, Mack told me. Instead, he’s investing in technology, merchandising, marketing, and customer service — areas where there’s far more potential for long-term payoff than stocking more inventory.

Then there’s Bonobos. Like Mack, Bonobos CEO Andy Dunn is proud of his inventory turns. You might not be able to find a given size on Bonobos, but the site takes your email and notifies you when it’s back in stock — a way to quietly gauge demand before placing orders from manufacturers. Bonobos also “curates” some categories of menswear, like accessories, rather than designing its own, passing on orders to other menswear companies compatible with its brand. Both practices serve to keep inventory low.

These fundings total about $90 million — not a huge bet compared to, say, Groupon and LivingSocial’s megafinancings. But they show that e-commerce is heating up as a sector, and that venture capitalists are focused on businesses which are rethinking every aspect of selling.

In the 1990s, e-commerce took the catalog and the superstore online, but didn’t change anything on the back end: Amazon.com was just the reinvention of mail order, the Sear’s Catalog 2.0. eBay popularized the idea of inventory-free marketplaces matching supply and demand. And Groupon showed that everyone loves a deal — both consumers and businesses. Taking inspiration from the early players, these new e-commerce businesses are mixing and matching elements of all these models and creating something genuinely new. That’s why I suspect some of these investments may prove to be the real bargain.

[Photo via TA Lucas]

And this must weigh on the minds of Groupon’s board members, who are reportedly meeting today to decide whether to take Google’s offer.

How did Groupon get so big? The prevailing theory is that the social features of its deep-discount offers for local merchants — a certain size group had to sign up in order for the deal to be “on” — turbocharged its growth. I’ve long been a skeptic of this argument, which is pleasing to social-media mavens but has untested logic.

You can’t go anywhere online these days without spotting a Groupon ad. The company is clearly spending a lot of money with Google. And as Sency founder Evan Britton recently pointed out, Groupon’s ads are distinctly effective on Google’s AdSense platform, because they are targeted to a specific city, feature a compelling offer to cost-conscious Internet users, and have easily tracked return on investment, allowing Groupon to constantly tweak its ads for the best results.

The result: Runaway growth, with the two-year-old company estimated to have $500 million in revenues.

The problem is that growth is dependent on Google, which is famously opaque about the workings of its ad systems. As much as Groupon may know about what works when placing ads with Google, Google always knows more. And Google could change the rules at any time.

That information advantage may be what lets Google confidently bid $6 billion for Groupon. Google knows exactly what it’s getting and how profitable the company is. Right now, Groupon is arbitraging Google’s AdSense system, aggregating demand from customers and supply from local merchants, and raking in the difference. Google’s just getting its usual cut. Wouldn’t it be nice to own the whole shebang?

One thing to keep in mind, though, is that Groupon’s success has been the human touch — hand-selecting deals, cajoling merchants to offer discounts, and crafting witty, catchy offers. Recent moves to offer self-service deals and expand into Asia won’t change that appealingly soulful core of Groupon’s business. Perhaps Google’s geeky hackerocracy should simply aspire to own Groupon, not run it.

Yardsellr CEO and founder Danny Leffel just announced his company has raised $5 million from Accel Partners, the venture-capital firm best known for investing in Facebook, and Harrison Metal Capital, the investing vehicle of former eBay executive Michael Dearing, who’s quietly backed AdMob, Aardvark, CafePress and others. Besides Leffel, ex-eBayers on the team include Jed Clevenger, who ran paid search at eBay, and Rachel Makool, former head of eBay’s community team.

While Yardsellr has a website — Yardsellr.com — the shopping experience isn’t built around it. Take my dog sweater, for example: I found it on the Yardsellr Doggie Block, a Facebook page built for canine obsessives like myself. I saw the sweater but had my doubts: Was I one of those dog owners who dresses up their best friends in hideous outfits?

So I posted the sweater to my Facebook wall and asked my friends what they thought. I instantly got two thumbs up (orange is Ramona the Love Terrier’s signature color, after all), clicked to buy it with PayPal, and sent the sweater seller a Facebook message confirming the size.

Some call Yardsellr the “eBay of Facebook,” but I think that’s selling it short. Buying on eBay or Craigslist would have been a far more troublesome experience, from sharing the item with friends to deciding whether I could trust the seller. (In an additional twist, I paid Yardsellr’s fee, rather than the seller, so Yardsellr is making it easy for sellers used to Craigslist’s fee-free for-sale listings to make the switch.)

Yardsellr’s true potential may be redeeming the original idea behind eBay’s now sadly troubled marketplace, which was built around a reputation system that let strangers buy and sell to each other. eBay jealously guarded its reputation system, which meant that it never grew outside ebay.com. The company had a second chance with PayPal, which arguably knew a lot more about buyers and sellers through their bank accounts, credit cards, and purchasing habits on and off eBay — but it never developed PayPal as a reputation system.

Through its links to social networks, Yardsellr could be the fulfillment of the promise of social commerce. What will fuel buying and selling isn’t just cleverly targeted recommendations; it’s a sense of community and trust that transcends meaningless “A+++ WOULD BUY AGAIN” ratings. Because Yardsellr is organizing around communities of interest rather than a single destination site, it should be able to create groups where trust can thrive, backed by the validated reputation of Facebook and Twitter profiles.

And where trust exists, commerce usually follows.

Yardsellr, based in Palo Alto, has to date operated on seed funding from Dearing’s Harrison Metal Capital. The company currently has seven employees.

OpenSky, an e-commerce startup from veteran New York entrepreneurs, raised $6 million in a second round led by Highland Capital Partners and Canaan Partners. The round brings the company’s total funding to about $11 million.

The company helps bloggers monetize their businesses by making it easy for them to sell products directly to readers and earn a cut of the resulting sales. Bloggers choose what and when to sell; for example, it makes sense for makeup- or fashion-focused bloggers to sell clothes and cosmetics to readers that they have established a rapport with over many months or years.

OpenSky does some of the heavy lifting by signing on retailers, facilitating orders, and tracking purchases. It also uses a proprietary matching process to connect products and suppliers to the most appropriate potential seller. OpenSky splits the markup with publishers 50-50. That beats traditional affiliate marketing programs, which usually offer sellers specific fees below 10 percent of the retail price.

The company’s founder, John Caplan, was chief executive at Ford Models and head of marketing at About.com. (The other execs have strong e-commerce pedigrees, with stints at Gilt Groupe, Zappos, Bonobos and Target.) He did a soft launch earlier this month after finding 250 established bloggers willing to sell products directly to their audiences.

Caplan argues that OpenSky won’t compromise the perceived integrity of the bloggers, because they retain control over what they recommend.

It’s up to the publisher how much they might want to affect their credibility by selling products. The Federal Trade Commission moved last year to tighten regulations on product endorsements by bloggers, requiring them to disclose commercial arrangements or face possible fines. The agency subsequently backpedaled on the likelihood of fines, but the appropriate disclosures remain a confusing issue for bloggers.