Selling Widgets

Little widgets are sprouting tiny shops and mini-affiliates across the web

Personalized apparel and gifts e-retailer Zazzle.com Inc. is encouraging some customers to take their custom goods and sell them somewhere else.

No, Zazzle.com hasn’t lost its marbles. It’s found a widget, a tiny application that is enabling bands creating and selling merchandise on Zazzle.com to launch a miniature version of a Zazzle.com store on their MySpace pages.

A band can download the widget from Zazzle.com’s MySpace Music page to its page and use an interface with Zazzle’s data feed to select its own merchandise and create a product gallery within the widget. There, the band’s fans who have MySpace accounts can browse the merchandise, select a product, hit Complete Purchase, and be automatically sent from the widget store to Zazzle.com, which handles payment and order fulfillment and tracks commissions for customers creating products.

The idea is to let customers set up shop in an environment where fans already congregate and interact with the bands, a setting where bands have their entertainment and promotional web content.

“We’re giving customers the ability to sell their goods online in a place contextually relevant to them,” says James Heckman, chief strategy officer at Zazzle.com. “The bands want to keep people interacting on their MySpace page, so they have this dynamic shopping subsection.”

This is the primary direction widgets are taking in e-commerce: personalizing the Internet retailing experience. While web page widgets can be used for myriad purposes throughout all industries on the Internet, in online retailing they’re letting customers become sellers.

Widgets are small applications designed to enable a specific function or set of functions in a contained visual space. They can be placed on a web page or downloaded to a desktop (for story on desktop widgets, see Internet Retailer, September 2007, p. 26). E-retailers, application development companies and individual Internet users create widgets using programming languages such as HTML and Flash.

Widgets are designed to be self-contained and portable so web site operators or Internet users can place them anywhere they like on any HTML page. They also can be developed using the application programming interface of a particular web site—social network MySpace, for example—to integrate functionalities unique to that site.

A shopping blogger might create a widget that searches the blogger’s favorite merchant’s e-commerce site, reaching out to engage the merchant’s site search functionality and displaying some results within a box residing on the blog. A widget development firm might create a news widget that takes the RSS feeds of major news organizations and displays by user-selected categories headlines and brief story descriptions within a box that can be placed on any web site.

An e-retailer might create a widget that entertains or informs shoppers on a subject related to products they sell, placing the widget on the home page or a product category page, or offering it to shoppers for the shoppers to place on their own pages. These widgets are designed to engage shoppers with brands, not turn shoppers into sellers.

For example, makeup and skin care products retailer Clinique offers Sun Buddy, a widget that delivers to a shopper her local weather forecast, UV index rating, sun tips, recommended SPF products and special offers. After downloading the widget from Clinique.com, the shopper can place it on her web site or social networking page so she can keep track of weather conditions, provided by the e-retailer through a link with a national weather forecasting service. This way, the information she desires exists on her page and she does not have to go elsewhere to retrieve it.

Meaningful communication

Widgets drive a brand’s reach and are important because they expand the options for maintaining meaningful communication between a brand and its customers, says Steven Plous, CEO of Direct Message Lab, which builds widgets as well as applications for social networks and m-commerce. The company developed Clinique’s Sun Buddy.

“Now brands can engage the user in places that the user selects and where the user spends time online,” Plous says. “The ability to move the same branding between diverse environments such as an e-commerce site and a social network profile and a blog with just a few clicks makes widgets unique. This flexibility enables widgets to be shared virally and drive exponential growth in the user base.”

While use of web page widgets to deliver content, as Clinique delivers sun-related information, is just beginning to blossom, widgets used specifically to sell products, like Zazzle.com’s widget, are starting to take off. These widgets essentially are mini-affiliates that showcase products offered by e-retailers, enable Internet users to shop, and typically link shoppers to an e-retailer’s site or the widget’s host site to complete a purchase.

Zazzle.com decided to first roll out its new widget to bands with MySpace pages because its customer base includes a great many musicians and because MySpace has a young demographic and is a hub for musicians and music lovers. The e-retailer’s in-house programmers took four weeks to create the tiny shopping widget and incorporate MySpace functionality.

“Anyone can build a widget,” says Zazzle.com’s Heckman, adding that widgets are a quick and inexpensive way to extend a brand’s reach and increase sales. “The investment is very low. It’s not like you have to build a whole new web site. And your return is almost immediate.”

The Zazzle.com widget is new, and Heckman declines to report total revenue created by the widget. However, more than 15,000 bands are operating widget stores. This is in large part due to the e-retailer signing agreements with MySpace and some record producers. As part of the MySpace agreement, for example, the social network’s founder, Tom Anderson, sent a bulletin to all bands with MySpace pages informing them of the Zazzle.com widget store functionality. Zazzle also ran an ad campaign on MySpace.

Customers selling the goods

The bigger picture for shopping widgets, though, comes from third parties aligning with retailers. Three shopping widgets have emerged in the last 18 months as the early leaders. They include Lemonade Inc.’s Lemonade Stand, bSocial Networks Inc.’s MarketLodge and Shopit.com’s Shopit Store.

The widget operators form partnerships with e-retailers either directly or through affiliate marketing companies such as Commission Junction, DoubleClick Performics and LinkShare. Once partnered, an e-retailer typically provides the widget operator access to its data feed, which contains product information and images. The widget operator funnels that information through its web site so users can select which products they would like to appear in their widget product galleries. Widget users get commissions on sales generated through the widget on their web sites, social network pages or blogs.

“Shopping widgets like Lemonade are allowing Internet users to become what amounts to peer-to-peer affiliates for e-retailers where the users can make money,” says Laura Evans, executive director of the retail practice at Resource Interactive, an interactive marketing firm that follows emerging technologies such as widgets, social media and m-commerce. “Individuals setting up shopping widgets are keying in on a product mix personal to themselves and what their interests are and what they stand behind.”

Lemonade, which launched in September, hit a milestone this spring: 30,000 sellers with Lemonade Stands. Bloggers and social networkers have been driving the growth of Lemonade. The more stands that appear, the more new stands subsequently open as a result of the viral nature of widgets and social media. The stands appear everywhere from Facebook to MySpace to individual blogs.

To set up a stand, a user creates an account at Lemonade.com. The user names the store, selects the look and picks products to sell. The user can select items from more than 200 retailer partners of Lemonade, including Apple, eLuxury, Fragrancenet.com, The Gap, Lands’ End, Macy’s, Nordstrom, Old Navy and Wal-Mart.

Retailers pay commissions of 5% to 15%—sellers get 80% of the commission, Lemonade gets 20%. All commissions are handled through PayPal accounts. Retailers send commissions to Lemonade, which then deposits users’ shares in their PayPal accounts.

Lemonade.com, through various networked connections with social networks or through sharing widget code, then transfers the widget to where the user wants it displayed. Widget functionality is enabled through a link from the widget to servers at Lemonade.com, which has access to the numerous e-retailer’s data feeds for product information.

Visitors to a site with a Lemonade Stand widget shop products on display, drilling down by categories to see more products and their prices and descriptions. When they’re ready to buy, they select the product, which sends them to the e-retailer’s site to complete the purchase.

“You don’t need to hold any inventory, ship items, deal with returns or manage payment for the products you recommend,” says Tim Smith, chief strategy officer at Lemonade. “All transactions take place at the retailer’s e-commerce site. You are simply referring people to products you like and the retailer takes care of the rest.”

Protecting the brand

Because shopping widgets are so portable and can proliferate across the web so easily, though, they potentially could pop up on web sites, blogs and social network pages that e-retailers may not like. The question becomes: How can an e-retailer protect its brand and image?

While the nature of widgets is very viral, shopping widget operators take multiple steps to ensure their widgets do not appear on web sites their retail partners would find objectionable.

Lemonade, for example, runs a language filter on information as it’s entered during the account set-up phase. Further, Lemonade Stand owners must agree to terms of use that include the terms of all retailers that are part of the program. These terms include not operating a Lemonade stand on objectionable sites that include, for example, gambling or pornographic content.

What’s more, Lemonade includes a Report Abuse section on its site where Internet users can file information on stands they believe to be on objectionable sites. Because all Lemonade stands operate through Lemonade.com servers, Lemonade can pull a stand at any time.

“With a half year under our belts, our retail partners have become comfortable with how the experience works,” says Smith of Lemonade. “But this also is in part due to how retailers now realize that people are speaking about their brands in all these new ways they can’t control, like in blogs and social networks. They are having to give more control to shoppers and leverage new developments to build their brands and get the word out.”

Widget operators also use blacklists and whitelists to control where widgets can be downloaded and viewed. “A brand can complete its own blacklist, or use Google’s free blacklist, and when coupled with the widget downloading system, the lists will not allow objectionable sites to download a widget in the first place,” says Plous of Direct Message Lab.

Zazzle.com can monitor use of its widgets through a system in MySpace that shows who is downloading the widget to which social network pages. However, it says it generally must let its band customers be who they are—to a point.

“Philosophically, we cannot have a thought police group in our company,” Heckman says. “But if there is an organization that we get negative feedback on and that is clearly objectionable, we will not fulfill their orders. It’s as simple as that.”

bill@verticalwebmedia.com

E-commerce from scratch

Unlike the shopping widgets that enable consumers to become mini-affiliates, recommending products from retailers and earning commissions based on those referrals, one shopping widget, Ustrive2 Inc.’s Cartfly, enables merchants or Internet users who wish to be merchants to set up bare-bones e-retailing functionality on a web site, blog or social network page.

Music apparel retailer Black Eyed Saint sells at concerts and events and used to operate a bricks-and-mortar store. It decided it wanted to get into e-commerce but was wary of what it took to do so.

“One of the most intimidating things in selling is e-commerce, especially for someone who doesn’t know much about the game,” says Ryan Norton, owner of Black Eyed Saint. “All the systems required and the initial investment to get an e-commerce site up and running—it really took the wind out of my sails.”

But Norton came across a way to create an e-commerce store in a matter of hours. What’s more, it would cost him nothing to set up shop online.

Using widget technology from Cartfly, Norton set up an account at Cartfly.com. Through an interface on the web site, he entered promotional text describing the business, uploaded the store’s image, uploaded product images and text describing the products, entered apparel sizes and prices, and clicked finish. The site then displayed HTML code he copied and pasted into BlackEyedSaint.com’s home page and the merchant’s MySpace page and began selling.

He then sent e-mails and MySpace bulletins to customers, artists who create designs for apparel, punk rock bands, and punk fans who also are fans of Black Eyed Saint through regularly seeing Norton and his apparel on the concert circuit. Even though they do not share in the profits, many of these people used the HTML code and posted the widget on their sites.

Norton set up his widget shop online a year and a half ago. Today he’s doing $500 a day through the widget. In March he shuttered his lone shop, getting rid of the bricks-and-mortar overhead to focus on e-commerce and selling at events. “I don’t need a store anymore because I have online stores all over the Internet,” he says.

Shoppers place orders through the widget, which accepts PayPal. Customers’ funds are deposited directly into Black Eyed Saint’s PayPal account. PayPal charges a 3% transaction fee. Cartfly charges a 3% commission on all sales, billing Norton on a monthly basis.

Cartfly sends order information to Norton via e-mail. Norton is responsible for order fulfillment, which he manages from a small warehouse and office. Black Eyed Saint staff manually enter all orders into a Microsoft Excel spreadsheet, used for all order management tasks and inventory (manually conducted once a week). Staff members manually create mailing labels. The business soon will be migrating from Excel to Intuit Inc.’s QuickBooks.

“The widget was an easy way for me to establish the store in the e-commerce world. We’ve done more business in the past three months than we have in the past two years,” Norton says. “I don’t have the time to manage an e-commerce site. Now, the widget handles online shopping for me.”