Auction-style and flash sales business models appear to have lost some of their luster in recent years: eBay has pivoted its focus to a more marketplace-centered experience, and companies like Gilt Groupe dropped from a valuation of $1 billion to an acquisition price of less than $100 million. But as a category, online auction marketplaces are actually estimated to grow 7% through 2022, according to Technavio.
Tophatter, an online platform that sells jewelry, electronics, fashion, beauty products, home goods and hobby supplies, is seeking to become a major part of that growth by linking the excitement of product discovery to its time-limited auctions. The Tophatter platform has more than 20 million users, with the company selling more than 100,000 items per day — and 85% selling within 90 seconds. Most of the 90-second auctions start at $1 and are designed to generate immediate excitement and competition among shoppers.
While the Technavio study highlights “ease of bidding” as the primary growth driver for auction sites, especially when placing a bid is as simple as one click, but the discover shopping concept gives Tophatter a different edge. The site showcases unique, unexpected products on the main page, because shoppers typically don’t visit the Tophatter site with a particular item in mind. In fact, more than 90% of the products Tophatter sells are not found through a search query.
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“We have built our business around a few key concepts: discovery shopping, price-conscious shoppers, and personalization,” said Tophatter COO Andrew Blachman in an interview with Retail TouchPoints. “Trends like flash sales come and go, but for decades consumers have shown a desire for those three concepts in various formats. So, as we continue to evolve as a company and offer different formats and options, we’ll stay true to our discovery shopping model.
“Many e-Commerce players, biggest of all Amazon, are focused on intent-based shopping,” Blachman added. “You want a backpack, go to Amazon and find the exact make and model that is right for you. But this type of shopping only makes up about 50% of the retail market. The other 50% is about discovery shopping, shopping as a pastime, and that is what we are focused on.”
While shoppers can attempt to outbid others in the auctions, they also can find deals on products sold in a more traditional buying format. On Aug. 1, ahead of the back-to-school season, Tophatter launched a platform specifically designed for the season’s shoppers. Shoppers could purchase school supplies and accessories in the “Buy Now” format instead of the traditional auction style.
Mass Market Appeal Continues To Power Tophatter Growth
An additional differentiator for Tophatter compared to other auction-style competitors is its general appeal to every type of consumer, according to Blachman.
“We target the mass market,” Blachman said. “So many e-Commerce companies are focusing on coastal shoppers with niche products and are forgetting the majority of Americans. The mass market consumer values deals over brands and enjoys having fun while getting them. While our platform is not tailored for any one target demographic, our experience is personalized to each shopper. With the amount of options out there, both where to shop and the products available, it is paramount to personalize the act of online shopping for each customer.”
While Tophatter has been vague regarding the specifics of its personalization strategies, the company uses AI to tailor each individual experience, and continues to tweak its algorithms to ensure shoppers have an experience that suits them. As the company seeks to continue gaining ground, it has stepped up its marketing initiatives in 2018.
“We launched our first TV commercial this year, which was a great moment for us as company; it has helped us introduce our brand to new people,” Blachman said. “Across all of our marketing channels, our goal is always to tell the story of who we are and what we do. Shoppers have no shortage of platforms to shop on, but we are offering a fun and exciting experience — we want our marketing to reflect that.”
