Is Shopping What’s Next On Facebook? Sneakpeeq Combines Shopping And Gaming

Two of the more successful verticals to build social-focused applications on Facebook have been gaming companies such as Zynga and dating apps such as Zoosk.

But shopping and ecommerce is another category that may be ripe for change. A start-up Sneakpeeq has been growing with its game-like social shopping app, which incorporates some of the social and gaming features that have made gaming and dating sites popular. It now has more than 300 brands signed up and more than 200,000 members since launching in May.

Using the Sneakpeeq Facebook app people can browse through products and see what their friends are browsing. The product prices aren’t listed. But if people like products they click to “peeq” at the price, which looks like flipping over a price tag. The peeq is similar to a Facebook “Like” in that it shows friends that you like a product. Each time someone peeqs at a product, the price goes down. The catch is people then have 15 seconds to decide if they want to purchase. If they don’t purchase, it could be gone when they come back. People get 10 peeqs every 24 hours, but by peeqing at items you get game-like points and higher status levels that give more peeqs and perks like free shipping.

A peeq button on Sneakpeeq

The gaming mechanics of the app are an integral part of the shopping experience. Just as Turntable.fm is as much a social as a music listening experience, Sneakpeeq is also as much a game as it is shopping. The prices are visible only to the person who purchases it so brands do not have to worry about their brand being seen as heavily discounted and diluting its street price.

Sneakpeeq has provided some new data about how brands have done using the service. 479 Popcorn, a gourmet San Francisco food company used the service for three days. During the sales, 77% of customers shared their purchases with friends through the Facebook app and more than 1,000 customers shared a product with at least one friend. The company also received 25,000 peeqs, which are also seen by friends using the app. In total the company received more than 1 million impressions and more than 90% of purchases were first-time purchases.

Another customer, CC SKYE in Southern California is a high end jewelry company, which generated 805,000 impressions in five days with more than 18,000 peeqs. A full 100% of purchasers were first time buyers and 61% of people peeqing at a product shared with at least one friend on Facebook. Finally a larger brand, surfing apparel company O’Neill Girls got a2.4 million impressions and 52,000 peeqs in eight days in August. O’Neil boosted its Facebook Likes and has decided to expand on Sneakpeeq to include other lines such as swim and accessories.

The idea of Sneakpeeq is to create a shopping mall-like experience, says Henry Kim, co-founder of Sneakpeeq and a former private equity investor who worked for Ron Burkle investing in fashion companies like shoe retailer Zappos, which was acquired by Amazon, and Sean Combs’ Sean John. “We’re replicating the hustle and bustle of offline stores and bringing that online using game mechanics,” Kim says.

While in the past people used search engines like Google to search for products, now people are discovering new products on Facebook, Kim says. The social features are tightly integrated into Sneakpeeq to enable people to easily share and see their friends’ interests. Soon Sneakpeeq plans to introduce badges so that if you peeq at a brand often you could get discounts or invites to events from that brand.

Brands use Sneakpeeq as a way to advertise and acquire new customers. It also is a way to sell products. “From a brand perspective what they really like is that we’re one of the few or only concepts out there that are merging commerce with advertising,” Kim says. “Every time you peeq, your friends can see it posted to your social stream. (But) we’re not a marketing company. We’re an e-commerce company. All the advertising and impressions–all these things brands really like–they get that in addition to making sales on Facebook.”

Sneakpeeq offers limited quantity of each product, typically 200 or 300 items. But Sneakpeeq is not for unloading excess inventory at a big discount, in the way that some flash sales sites operate. It’s generally in-season or upcoming new products. The company typically runs sales for brands for three to five days every four to six weeks. The company has already sold out slots for brands for the holiday season, Kim says.

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Facebook Revenue Doubles in First Half Year

The privately-held Palo Alto-based company doesn’t release financial information, but an anonymous Reuters’ source “familiar with financial matters” disclosed the revenue figure, in addition to reporting a $500 million net income gain for same time period.

Facebook’s strong financial numbers underscores its growing popularity among its advertisers. The social network hosts over half a billion visitors and provides a steady stream of clicks to big-name companies such as Coca-Cola, JP Morgan Chase and Adidas, a popularity that boosts what advertisers will pay for display ads.

The company’s early move to capitalize on the power of social networking by attracting advertisers put it ahead of competitor Google. The search giant’s chairman, Eric Schmidt, admitted the company failed to embrace social networking, just prior to rolling out its own social network, Google+, this summer.

In addition to advertising revenue, Facebook is doing brisk business from social gaming companies, selling virtual goods to the tune of $500 million.

As of July 1, Facebook began requiring game developers to accept payments through its virtual payment system, called Facebook Credits, which takes a 30 percent cut of online purchase revenue.

Facebook isn’t standing still while advertising dollars roll in and gaming revenue takes off. The company reportedly plans an IPO in the next several months, besides hinting to media executives that it intends to ramp up media streaming on its platform and allow online music services like Spotify to publish user activity on Facebook pages.

The rumored features may work similarly to News Feed posts that display which webpages someone “likes,” besides possibly making music integration Facebook’s first step toward offering users unlimited streaming for a monthly fee.

Facebook’s reputed media expansion, which may include music, films and new gaming revenue streams, may allow the company to broaden its already wide audience and continue to attract advertisers and likely keep it one step ahead of the competition.

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