Introducing Karrot. The Social Pricing System.

I’ve nuked all my past posts. Clean slate. From now on I’ll be using this blog to exclusively track the development (and possible demise) of my current business venture. Karrot.

It’s more for me than for you. Since the launch two weeks ago, my brain has become the kind of crowded sweaty mess normally associated with a Nelly video clip. I’m hoping it will stop if I write something down.

What is Karrot?

Karrot is a social commerce startup. Maddi (cofounder) and I, have built a system for retailers to harness the viral power of social media in the context of online sales.

The idea is simple. At certain points during product life it is more valuable to have lots of people discover the product, than to have any one person buy it. Karrot is a way for online retailers to unlock this hidden value.

Social distribution is valuable to retailers. Over 60% of people learn about new products and brands when they discover what their social network is buying/sharing/wanting (Nielsen). In short – social sharing is more effective at getting products seen than conventional advertising. But ‘social sharing/discovery’ systems feel like a marketing play — so online shoppers don’t want to use them. Honestly, who gets excited about sharing a coupon or redemption with everybody they know? Ugh.

Sidenote: Rebekah Campbell makes this point as part of her rationale for pivoting Posse away from being a referral marketing play. Worth a read.

So how is Karrot ‘better’ at driving social product discovery?

In a word: altruism.

At the heart of Karrot, social connections (I hesitate to call them ‘friends’) are helping each other. Here’s how it works.

  1. Retailer offers a product at a discount. They promote it in the usual way: email, ads, posts, pins, tweets, blogs site links and whatever else.
  2. An online shopper claims the offer.
  3. The price is based on the number of facebook friends who support the shopper. Each claim is separate (it’s not group buying) so each price is unique.
  4. The shopper is emailed their ‘custom’ discount once the time or discount limit is reached.
  5. If the shopper likes the price, the retailer gets paid. And along the way every single supporter has seen their product, their brand and understood why they matter to their friend.
  6. Multiply this effect by every claim and every product offered.

It’s advertising that doesn’t feel like advertising. It’s the same subtle social branding as wearing a T-shirt with a cool logo on the front. It does not create direct sales. It creates awareness and engagement. But it’s a circuitous route to the same place. And I believe, a much more pleasurable journey.

Right now, social sharing/discovery systems are a kind of referral marketing with facebook. They’re noisy, obvious and sleazy. For example, incentives to ‘share this’ pop-up at checkout, or after purchase. Buyers then get a discount or credit when a friend later buys something. The focus is on sales. It means the buyer’s share is sales-y. Despite it coming from a friend, normal people tend to ignore obvious marketing in their news feed. So these kind of social referrals only attract bargain hunters. And most retailers hate that.

Karrot is different.

Buyers don’t feel like they’re shilling to their friends. Because they’re not. They’re asking for support. People respond when their friends ask for help. Even strangers asking for a puppy.

The bottom line is that more people are willing share the purchase, and more people respond. The promotional effect is just so much larger. This brand awareness at scale turns into new fans, sign ups and eventually, customers.

Or at least, that’s the theory. We’ll be putting it to the test over the coming weeks and months.


Will it work? Am I cray? Let me know in the comments…