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How This Startup Is Disrupting Social E-Commerce For years, product reviews and ratings were the only features to socialize the online shopping experience. So Tom Kwon created Blucarat to take interactive online shopping to a whole new level.

By Tanya Benedicto Klich

Opinions expressed by Entrepreneur contributors are their own.

For years, product reviews and ratings were the only features to socialize the online shopping experience. So Tom Kwon created Blucarat to take interactive online shopping to a whole new level.

E-commerce might be convenient, but there's nothing quite like a mall day with friends. To unlock sales growth online, the founder of a new startup hopes to recreate the group shopping experience by better integrating social media.

Platforms like Facebook and Pinterest can be a powerful driver of purchases. Average orders made by users coming from these sites can range from $40-$80 apiece, according to a recent study by research firm Monetate. Still, conversion rates from social lag behind email and web search.

Average Order Value By Social Referrer and Conversion Rates by Source
Average Order Value By Social Referrer and Conversion Rates by Source
Source: Monetate, Ecommerce Quarterly, 2013

Major retailers have taken notice and last year eBay and Amazon were among the first to embed their own social e-commerce tools directly into their websites. Soon after, other big names followed, such as QVC, Sears, Nike and Sephora. But it can be harder for small shops to compete since big names have the manpower to build custom social e-commerce experiences.

Enter Blucarat. Launched last year, this patent-pending platform activates social engagement between shoppers directly on retailers' websites, so users can connect with friends, sharing photos and shopping advice, chatting and viewing trending products – all in real-time, right on the retailer's website.

Companies upload Blucarat's "Social Bar,' a toolbar, to existing web layouts. The tool was designed to be an easily installable enterprise solution for niche, startup or smaller retailers, says Tom Kwon, the company's chief executive officer and founder.

Tom Kwon (center) with the Blucarat management team
Tom Kwon (center) with the Blucarat management team
Source: Blucarat

Kwon is an e-commerce consultant who was the lead developer of WhiteHouse.gov at its launch and founded web development companies DMIND and Altruik. He says that e-commerce platforms haven't changed dramatically since the 1990s and still operate "like a card catalogue with product offerings. It's a solitary experience that serves the merchants and doesn't take into account what customers are looking for."

To better understand shoppers, Kwon's team delved into market research and discovered three core drivers for consumer purchases: affirmation, information and inspiration. When buyers shop in physical stores with friends, they can get instant, trusted feedback on all purchases, poll strangers for opinions and ideas, and see firsthand which items are flying off the shelves.

But online, affirmation remained a missing link. "Online ratings and reviews alone can't provide affirmation because shoppers are acutely aware that these posts have been manipulated," he adds.

And those seeking a friend's opinion online must copy and paste the URL into an email, leaving the virtual store to do so. This lag ultimately leads to a weak sales conversion rate. Retailers lose consumers during that "golden moment," Kwon says.

Specialty brands are pioneering the Blucarat social commerce platform
Specialty brands are pioneering the Blucarat social commerce platform
Source: Blucarat

Users on sites with Blucarat, on the other hand, can always go shopping with their brutally-honest-but-trusted shopping buddies online. If they aren't logged on, they can always turn to a fellow-shopper in the same section for an opinion. Shoppers can also virtually stroll through an online store's "Trending Products' section and find what other shoppers are commenting on and viewing most and why.

In November 2013, NYC-based Blucarat received $1 million in seed funding from private investors. Early adapters include cosmetics brand Laura Geller Beauty, Greenwich Jewelers, SoCo Vintage, Classic Hostess, as well as Beyond Clothing, the official clothing manufacturer of the U.S. Special forces. Another 12 are integrating the platform and will go live this month.

Since adopting the Social Bar in October 2013, Laura Geller Beauty has seen a 2.5x increase in sales conversion rate.

sales conversion rate chart
Source: Blucarat

Kwon admits the tool isn't a fit for every retail category online. "Blucarat isn't for sellers of milk and eggs," says Kwon. Still, categories like electronics, camping gear, DIY home improvement products, health and beauty seem to be where social comments matter most. "If the brand has a product where there are multiple ways to use that product with various combinations, then that's where opinions matter."

Tanya Benedicto Klich

Data & Featured Lists Editor

Tanya Benedicto Klich is a data and lists editor at Entrepreneur.com.

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