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My little social bargain hunting experiment

Do you remember Modoshi? It is a deal site that launched in November 2006 and implemented a few interesting concepts that turned bargain hunting into a fun contest. The project eventually shut down but it really got me thinking.

  • Can a deal site be turned into a fun game where participants get rewarded for the bargains they recommend?
  • Can the site modeled around this concept be a successful and profitable business?

Ever since Modoshi shut down in summer 2007 I have been sitting on this idea. But I wasn’t just sitting, I was actually doing something. Read on to find what kept me sleepless over the past several months.

What makes people share deals?

Why people come to deal forums to post the shopping deals they find? For the most part it is because of the community. Initially they come to get information, feel thankful for the support they find and eventually come again to give back to the community that helped them. You could say that the community feeds itself.

Sometimes the site owners make an effort to help the community grow. SlickDeals encourages participation via reputation points the deal submitters receive from the peers. With DealsPlus each deal submission brings you closer to the next level - another star by your avatar. All these small attributes help the participants build their place in the community, help them feel useful and rewarded.

What did Modoshi do differently?

Why did I like Modoshi when there is already a number of striving bargain hunting communities out there? Because the team made an effort to improve on what some of these communities are doing. They have attempted to give the members a monetary incentive to participate and contribute. The incentives were offered in a form of daily and monthly contests that rewarded quality submissions and intelligent deal picks/votes which in turn brought a crowd of regulars to the site.

modoshi contest

In addition Modoshi offered a huge number of tweaks for efficient bargain hunting on the site itself. The amount of product data they displayed made me think I am looking at a control panel of an airplane. It probably was a bit overboard but it appealed my geeky taste and built an invisible bond with the site creators.

I liked the idea so much that I decided to recreate it in a slightly modified form on Buxr, the project I started with my partner last year. Here are the basics (and I encourage you to comment on these!).

The daily contest

  • Users submit deals. Every day one deal is selected “the best of the day” based on user votes and our own judgment. The user who submits this deal is rewarded a daily prize (currently $10 via PayPal).

The monthly contest

There are two ways to participate, via deal submission and via deal votes.

  • Users submit deals. We select the best and the worst deal of the day on a daily basis. The user who submits the best deal gains 5 points, the user who submits the worst deal loses 5 points.
  • Users vote deals up/down. At the end of the day we compare user votes with our deal picks. If a user votes up the best deal of the day, or votes down the worst deal of the day, they earn 1 point. If a user votes down the best deal of the day, or votes up the worst deal of the day, they lose 1 point.

The user who collects the most points at the end of the month earns the monthly prize (currently Apple iPhone).

buxr monthly contest

We plan to tweak these rules going forward as we learn from the participants, but the goal will stay the same, to build an exciting environment for people to come and share shopping deals, given whatever limited resources we have at hand.

Modoshi failed. Why am I doing this?

I strongly suspect a part of the reason why Modoshi closed was the lack of experience from the team (or the individual) who was running the site. Both my partner and I have been in this niche for a while and have come here to stay. Buxr doesn’t bring any significant revenue right now, not even enough to compensate for the prizes we offer. Yet we believe that the community around a deal site is the single most important side of a successful shopping affiliate business. It brings life, triggers conversations, helps with viral marketing.

Personally for me, it also gives a meaning to my life. I have always said that comments on this blog make me wake up in the morning and write more. Buxr is my new (more bargains focused) way to talk to you guys. The good part is that now you can initiate conversations as well! :-)

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.

Why Modoshi will beat DealsPlus

Over the past 2 years I have seen many social bargain hunting sites launch. Most of them had very distinct features and quality design. Yet their flawed marketing strategy made their life very short. If I were to list a few you would most likely have to admit that you never heard the names.

The new kids on the block have been more fortunate in the sense that they started when Digg was already popular and many Internet users have adopted the idea so well that they were not shy digging things anymore. However if you look closely at these websites you will notice that they all suffer from the same problem: they have not built an active community — a community of users who would find and digg up the deals — the kind of community that only FatWallet and SlickDeals currently have.

This is not surprising at all. Bargain hunting is a very narrow niche. It took Digg over a year to become as popular as it is. It will take even longer for these sites if they follow the Digg model.

Social bargain hunting is plagued

We all know that Digg is not community driven in the sense that less than 1% of users control most of the front page news. This is partially due to the algorithms Digg has put in place to favor the top submitters but mostly due to the fact that only a small percentage of users is capable of devoting themselves to the long hours of sifting through the news looking for that Digg-worthy scandal story.

It is obvious that all of the bargain hunting sites currently don’t have even a fraction of the half a million Digg users. I will bet my car that the owners of these sites keep them on life support by searching and submitting deals daily and maybe even by manipulating the ratings to bring the most promising offers to the top for better visibility (for that same reason these websites usually don’t show who voted for the deals. Some don’t even show who submits the deals, at least not on the front page).

The conclusion — social element is there mostly to satisfy your feeling of freedom, to feed your desire to be in control, to create an illusion that you can make a difference. At this time the social part doesn’t do a good job of building a supply of fresh quality submissions for these websites.

How can this be fixed? What can be changed to make the system work? What will compensate for the lack of active users?

It sounds like Modoshi has the solution.

Who are the folks that submit news to Digg? They are mostly teens — school children and college students. They have a very strong feeling of community, they have the time and curiosity to try new things, they are willing to do it for free or for a very small pay. Modoshi is a community where users who submit or pick the best deals are financially compensated. Right now each user only has one shot a day at winning the two daily prizes — $5 for submitting a new deal and $5 for digging an existing one — however as the site growth the prizes will grow as well, according to Modoshi co-founder Vaishali Anga. $10 a day doesn’t sound a lot at all however keep in mind that Netscape was able to sway the top Digg users with a mere $1000 a month — and working for Netscape sounds like a full time job to me.

Modoshi Contest

This is not all however. With each new deal the submitter has to verify 3 existing deals for accuracy. This just sounds like a terrific idea! Once the bugs are worked out the only thing that Vaishali will have to worry about is that his servers are capable to support the crowds of teens who will flock to play the game and earn that penny towards next Wii. By the way, about Wii, the top Modoshi user in January will get one for free — it is another contest the team is running and the prize selection only proves my guess at what the target age is. Seriously though enforcing verification should hugely improve the overall deals quality and as the result will make the site more attractive to those who come to use those deals.

Different game requires different rules

According to Vaishali when Modoshi launched in November it “started on the premise that it was high time contributors to the Internet community in general (who) got a share of the revenue”. The team quickly abandoned the concept though. “Pricier items such as TV etc got unfair advantage. Deal (submission) was based primarily on commissions, not quality”. The contests in contrast provide “a uniform model irrespective of what deal is posted, be it a $10 toy or $1000 hdtv”. Makes a lot of sense to me!

Now what about that rank that social sites display next to each entry? It usually more or less reflects the number of votes the entry accumulated. It makes perfect sense in the Digg case — how else can you judge the value of a news story? It sounds like for shopping deals you could use more data to calculate that number. The item price (compared to the average price for similar items), the item popularity (number of clicks or sales it produces), the submitter credibility — all of these can be factored in to compute the deal rank. Isn’t it brilliant? I wonder why no one else has done it before?

Conclusion

I have been playing with Modoshi over the past month or so and the more I play the stronger the feeling is that they have implemented the best marketing strategy to make a social bargain hunting site a success. I am not saying they are already the best — the site navigation and functionality could be improved quite a bit — but they currently have the best bets at coming out the leader. Sorry DealsPlus, you are not my favorite any more. ;-)

Social Bargain Hunting Roundup

This year has been revolutionary for the Internet. It’s growing popularity has given birth to a new trend - “social”. What started as IRC and bulletin boards has now been adopted by all online services. User contributed content is the king this year and according to this Times magazine article its impact will only grow in the years to come.

In addition online shopping has experienced very nice growth this year. Online spending during this holiday season are 25% up according to comScore. The growth has created an opportunity for new players to join the game thus growing the already long list of participants. Many of them are adopting social features.

Let’s go over some newcomers featuring social attributes and check what they are really worth. I used several factors for selection, among them are usability, functionality, innovation and design. Popularity often influences usability with social websites therefore let’s look at it first.

Comparing Traffic

Alexa Charts

The only thing that is clear from this Alexa chart that Dealspl.us is leading the pack while Modoshi is far behind. The rest three websites are somewhere in between.

In an attempt to measure how many deals these websites have I did a search for “iPod” on each of them and counted number of entries posted within the last 30 days. Besides I attempted to measure how fresh the data is by looking up the latest deal. Here is what I found as of 12/25/07 4:30 am (no, Santa has not stopped by yet :-)):

Dealspl.us Dealigg Deals.com Dealplumber Modoshi
Search for “iPod” 137 105 10 12 100
Latest posted deal 10 hours 4 minutes 2 days 3 days 8 hours

Be aware that some of the deals may be submitted by the people running the websites and hence these counts cannot be used to judge how popular the websites are. Nevertheless the numbers give an idea what to expect.

Dealspl.us

Dealspl.usThe side-project of its parent website bensbargains Dealspl.us may soon overgrow its dad. Dealspl.us had a privilege to come to the market among the first (if you don’t count the early experiments like dealcritic) and managed to do a lot of things right. Ben’s 6 years of pro-bargain hunting have helped to avoid mishaps. The content, while user submitted, is constantly moderated and refined. I am sure Ben feeds a few of his own deals every day to keep the things running smoothly.

The simple and nice looking design along with pre-filled quality deals content is what made the website a success initially. The team kept adding functionality and now I cannot really find anything that I wanted from a bargain hunting site that Dealspl.us didn’t have. Maybe just some minor things like email newsletter, hot deals widget, and a submitter web browser plugin? (Ben, it is a hint ;-) )

Dealigg

DealiggFrom the first glance Dealigg looks like a “not very polished” Dealspl.us copycat. Nevertheless it doesn’t prevent it from bringing in nice user traffic. Overall it is very much one step behind compared to the original. The coupons section, the friends feature, and the talk groups are just a few things that Dealigg lacks compared to Dealpl.us. Read my earlier Dealigg review to get a better picture.

Deals.com

Deals.comThe creators of Deals.com have put aside sufficient funding for the domain name and web site branding yet they failed to assess the level of saturation in the bargain hunting market. A great domain name and a cute logo could bring crowds of visitors a year back but not today.

As the result the website is somewhat stagnant (see the table above). I wrote about Deals.com earlier and why it may fail. Another example of a nicely designed quickly forgotten website is Trezr — read my review here.

Dealplumber

DealplumberDealplumber started around the same time as Dealspl.us and originally boasted a higher Alexa rank due to slightly earlier launch and the “share deals & earn” program which allowed affiliate ids in the submitted links. The website however wasn’t as well designed as Dealspl.us and most importantly it failed to deliver quality deals which in turn didn’t work well as far as retaining a user base goes.

Very recently they have somewhat improved the website design and navigation however it is still not as convenient as I would like it to be. Just a few things:

  • The menu at the bottom is hard to see (and there are some important things there)
  • There is no way to access all related store deals from a single deal page
  • I cannot mark a deal as a spam or expired

The web site functionality overall is a subset of that of Dealspl.us

Modoshi

ModoshiLaunched just last month Modoshi is trying to succeed where Dealplumber failed — revenue sharing — hence the web site name which in Japanese means “giving-back”. “Typically, Modoshi will receive 7 to 8 percent from an affiliate for each sale, and on average, 40 to 50 percent of that commission will go to the user who posted the deal”, according to the website’s co-founder Vaishali Anga.

I remember the main problem with Dealplumber was spam. Users would submit low-quality deals and benefit from the clicks the website attracted after the launch. In an attempt to improve the deals quality Modoshi is running daily contests. There are two ways how you can win a prize (currently $5): post a best selling deal or pick the best selling deal. While you can post or pick as many deals as you like only one deal and pick can be submitted every day to the contest. This is a very smart move which will certainly pay off.

Modoshi Contest

While Modoshi may be a fun game to play for school kids it still lacks some must-have features. For example I couldn’t find any way to browse deals by a merchant. They also don’t seem to have a separate section for coupons/promo codes. The thing I liked is that I could rank deals up and down without being logged in (the vote is associated with my IP address). This should give a boost to the user activity that Modoshi needs so much.

Conclusion

I have ranked each website on a 1 to 5 scale where 1 is the worst and 5 is the best. Here is the run down:

Dealspl.us Dealigg Deals.com Dealplumber Modoshi
Usablility 5 4 1 1 4
Functionality 5 4 3 3 4
Innovation 4 2 3 3 5
Design 4 2 5 3 3

No question Dealspl.us is the current leader in social bargain hunting. Judging by the features and the innovating marketing campaign Modoshi seems to be the next runner up. Dealigg is playing catch ups while Dealplumber is recovering from the early mistakes. Deals.com has good potential (especially given its catchy domain name) but the team needs to introduce some more innovation into what they are doing.

2006 marks the first year when social bargain hunting really caught up. While reviewed here websites have satisfied the essential demand there are still opportunities to build on what’s accomplished. In addition I think the market penetration at this point is not yet high and new players (or old players with new ambitions) will have a good shot at grabbing a piece of the pie — a good example is the recent social revolution at JudysBook.

Inspired by The Social Shopping Faceoff
from ReadWriteWeb



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