Has Modoshi social experiment failed?

You might remember Modoshi, the social site for bargain hunters that launched early this year. I wrote about them back in January and my overall impression was that the team has found that key ingredient of a successful social deal site. I have recently received an email from one of my readers complaining that Modoshi team has essentially abandoned its members.

The site has been dormant

I went to check out the website and it does really look like Modoshi is having problems. The last deal posted dates July 26 and the last message from the admins at the bulletin board says:

Hello everyone, sorry for the almost non existent responses. We are deciding the fate of the site and are acertaining whether we can continue to support this model.

It looks like the idea hasn’t picked up as much as expected and the team of early adopters who came to play the bargain hunting game Modoshi was running (read: earn prizes) hasn’t brought enough main-stream users who would actually come to shop at the site (read: spend some cash).

Is business model broken?

When I praised Modoshi for its social direction, I didn’t pay much attention to the financial side of the experiment. It now looks like the model used by Modoshi lacks certain attributes necessary for a profitable business.

For example members are compensated for bringing referrals who then post quality deals. This makes sure that the posted products are true bargains. However no one is compensated for referring people who will come to shop. This means that the members are not directly interested in bringing revenue to the site.

I am sure the founders hoped that viral marketing would take care of this issue and it is hard to speculate why it hasn’t been successful for Modoshi. I still think the team has done a great job with the site and with a little bit more luck Modoshi wouldn’t be having problems now. The idea is good and it might just need a little help to pick up.

What will happen next?

I have sent an email to Modoshi but didn’t receive any response. An eBay exit might be one option, or alternatively the current founders may choose to re-adjust the model a bit and restart the experiment. In any case I hope we will find it out very soon. It is very sad to see a good idea die like that.

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1 Response to “Has Modoshi social experiment failed?”

  1. 1 Scott Aug 18th, 2007 at 6:45 am

    Good write up Yan!

    From Modoshi’s LeaderBoard postings, it seems the incentive for people to post (earning prizes) can actually become a stumbling block, as people explicitly stated that they will stop posting as Modoshi has ceased to give out prizes.

    Well, you know the site is on the way out when the developers have lost interested on it. You do need more than a community — a “Benevolent Dictator” could be useful sometimes.

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