Steve Case’s $20M investment in Lolly Wolly Doodle proves the value of social commerce

AOL founder Steve Case’s investment company just put $20 million into a little-known kids clothing manufacturer in Lexington, N.C. But more interesting than the massive investment into the tiny company is that this is a major, major endorsement of a version of social commerce that actually works.

As in, makes money, baby — buckets of it. From Facebook.

“Our strategy is really to invest in companies most people haven’t heard of yet and make them into household brands,” Case told us this morning on his way to the airport. “We like finding things off the beaten path — that’s what we did with AOL — and we think the category they’re targeting is a $50 billion business that hasn’t really changed much in centuries.”

But a company that mostly makes money via its Facebook community? How sustainable is that, many have been wondering, with a Monetate study that essentially said social commerce is like a unicorn: beautiful, alluring, and almost totally imaginary.

How does Lolly Wolly Doodle make it work?

“Most of what happens in social commerce is that the larger companies are looking at social opportunities through the prism of the past,” Case explains. “They have the view that it’s ancillary, a curiosity, an extra.”

For Lolly Wolly Doodle, however, social commerce was not the extra, it was the only. Founder Brandi Temple, a mother of four who started the company to make some extra money when her husband was getting laid off, needed Facebook to get the word out. And the just-in-time clothing manufacturer still uses Facebook — and its 584,000 Facebook fans — as its principle marketing vehicle.

That’s right: just-in-time manufacturing. And design, too.

Most clothing brands, including those for kids, design in New York, manufacture in Bangladesh, ship to America, and sell in the mall. Lolly Wolly Doodle, however, designs in Lexington, shares on Facebook, takes orders via its website, manufactures in North Carolina, and ships cute, funky, unique, and customizable designs of Macy’s quality but Target’s pricing to its customers in about a week, Case said. Today alone it posted about 10 designs to Facebook.

And social is the key part.

“It’s the audience of moms and girls, they feel part of the community,” he told me. “It’s like a personal seamstress in North Carolina building clothes to spec.”

The clothing is unique. Designs can sell out, and each can be customized with add-ons and accessories, and that’s part of the social experience, too — customers get to share in something if they jump on a design quickly and get to share in the experience of creativity and exclusivity with other moms around the country.

“Traditional retailers generally do social commerce in an accidental or a fringe way,” Case says. “But their core business really is manufacturing offshore and selling in malls.”

In contrast, Lolly Wolly Doodle was born on the web, and social is fundamental to how the company began, grew, markets, connects, and, frankly, exists. It’s how the company managed to grow without inventory and marketing costs, and how it built a unique mass customization model, Case said. It’s a true social enterprise.

And not just in sales, either.

“Ninety percent of our employees in Lexington,” Case said. “It’s the core of the company. We’ll continue to expand there and will grow to other cities as well. It’s a ‘Made in America’ manufacturing play.”

Image credit: Lolly Wolly Doodle