Already Profitable, StackSocial Announces Seed Financing and Launches Publisher Commerce Platform

By Michael Carney , written on July 24, 2012

From The News Desk

Daily deals and curated marketplaces suffer from a number of hurdles, not the least of which are inbox fatigue and a limited inability to drive return business. Publishers, on the other hand, have loyal audiences, but in most cases limited ability to monetize them beyond advertising and the occasional (and typically unsuccessful) paywall.

Ecommerce platform for publishers StackSocial has created a solution to both problems by offering online publishers easy to integrate, white-labeled, curated ecommerce marketplaces that can exist directly within their sites. As a result, users receive additional value alongside existing editorial content, while publishers get an alternative revenue source and additional brand engagement.

StackSocial is also announcing $800,000 in seed funding from 500 Startups, Tim Draper, Paige Craig, Siemer Ventures, EchoVC Partners, Penny Black, Jim Pallotta, Rick Merrill, Josh Resnick, Mark Schwartz, and Jeff Lapin. StackSocial was a member of the inaugural class of Venice Beach accelerator Amplify.

“Commerce on the web is absolutely exploding, yet the majority of Web publishers lack the resources or expertise to take advantage,” says founder and CEO Josh Payne. “Our solution not only generates significant revenue, it also deepens the relationship between the publisher and their readers by creating additional value for readers, and providing more ways to interact with the publisher’s brand.”

StackSocial started out as a “Gilt for Geeks” according to Payne, offering daily flash sales of digital goods. With a vast majority of its early sales coming through web publishers who shared its offers, the startup pivoted into its current model. The company began offering white label ecommerce stores to publishers who, in most cases, had been largely unsuccessful selling products previously.

Nearly all publishers in the beta received multi-thousand dollar checks in their first month and have been satisfied, loyal users since. Early partner Cult of Mac reportedly increased their commerce earnings 18 times over in the first month after integrating StackSocial.

The company currently specializes in serving the “tech, lifestyle, and Apple enthusiast crowd,” according to its CEO, although future target verticals are gaming and startup entrepreneurs.

The items offered are curated based on the editorial content and inferred audience interest of each publisher site. The majority of products being offered are digital goods like apps, software, video tutorials, and other creative resources, all available at a discount. This means no fulfillment costs and, at least thus far, unlimited quantities. The typical store has five to ten products listed at a given time, with each item available for two weeks.

For independent developers and designers, the startup offers otherwise unavailable distribution. For consumers among each publisher’s the online audience, it offers discovery and value.

StackSocial recently completed a private beta including publishers Cult of Mac, Macgasm, Lifehack, and iPhone Hack, among others. As part of today’s announcement, the company also revealed a new partnership with technology publisher Future US, the sites of which include TechRadar, MacLife, Maximum PC, and GamesRadar, among others. With this latest partnership, StackSocial now reaches a total network of 6 million monthly unique visitors.

The platform is free to implement for publishers with sufficiently large audiences -- the company is targeting those with a minimum of 100,000 unique monthly visitors. Smaller sites, or those seeking additional custom design or API integrations will pay for these services.

StackSocial’s stores are designed and “merchandised” to match the look and feel of each publisher and its audience. Publishers promote the stores and products through social media, widgets, navigation tabs, and editorial. The early results have shown an increase in brand engagement with readers on the publisher end, and an increase in product awareness for developers. Surprisingly, 30 percent of its sales have been international, despite no publishers based outside the US.

Since launching in beta in October of last year, StackSocial reports completing over 50,000 transactions and saving users over $7.5 million. Assuming 30 to 50 percent discounts, this would translate to $15 million to $25 million in sales. (The company has not disclosed any financial results.)

For purposes of illustration, a hypothetical transaction might be a $100 valued item, offered at $50. StackSocial would then collect a margin on the order of $20 and share a negotiated percentage of this income with the publisher (terms vary in each case, but StackSocial typically collects more than half of this gross margin). According to Payne, StackSocial is already profitable and plans to use the new capital to accelerate growth.

“The key is that we make offering commerce on site as turnkey as possible,” says co-founder and CTO Stefan Wrobel. “We do all the heavy lifting from building the platform to sourcing inventory to taking customer support calls, and let publishers focus on what they do best, which is write great content and make their readers happy.”