What Happens When a Storefront and a Social Media Network Combine?

What It Is
San Francisco-based Storenvy is a mashup of two online platforms: an easy-to-use storefront and a social media network. The retail component is a boutique populated by roughly 26,000 artists and manufacturers selling their clothing, housewares, jewelry, books and other items. The social media part of the equation took off with the site's relaunch in December, which added a way for items to be promoted to the community of roughly 500,000 shoppers through "Envies"--the Storenvy version of Facebook's "Like" button. This allows users to follow the purchases of shoppers who have similar tastes. The site also puts out a periodic e-newsletter tailored to customers' past purchases and Envies.

How It Started
Jon Crawford, who ran a small web-development company in Kansas City, Mo., believed more small businesses would set up shop online if they had access to an easy, inexpensive do-it-yourself platform. He launched Storenvy in 2009 to fill that need, with drag-and-drop features that allow virtually anyone to set up a boutique in minutes.

But Crawford had a bigger vision--a place where any small business "can get discovered and be a star, the way YouTube has created stars out of people who wouldn't be famous on their own," he says. He moved to San Francisco in 2010 and developed the social media component of his site to help this pursuit.

Why It Took Off
In addition to introducing Envies and the ability for shoppers to follow each other, the site's overhaul included the development of the Storenvy Marketplace, which highlights bestselling items or those with the most Envies. During the 2012 holiday period, the Marketplace generated 42 percent of the site's 60,000 transactions each month.

The Business Case
Storenvy operates on a freemium model. Basic storefronts are free, but bells and whistles, such as a personal URL or the ability to accept coupon codes, cost several dollars a month. Crawford claims that "a few thousand" stores subscribe to premium features. To boost revenue, Storenvy plans to take an as-yet-undecided cut of any transactions generated through its Marketplace recommendations or newsletters.

What's Next
In January Storenvy closed on a $5 million Series A round led by Intel Capital and Spark Capital. The eight-person company is looking to hire engineers, designers and product managers, while investing in its mobile platform and improving recommendations to members. Crawford is also developing an online retail team, including merchandisers and e-mail marketing specialists, to position the site as a top shopping destination.