August 2018
Summary
⇾ In the process of researching live video for Chalk, we noticed “live sales” emerging on Periscope and Facebook Live. Some live sales garnered hundreds of live viewers who were spending $15,000 in 2 hours
⇾ We built a shopping cart for Facebook Live that helped SMBs’ grow their live sale revenue by automating their sales tracking and invoicing processes
⇾ SMBs paid us monthly for access to Baskets. In sum, Baskets helped our customers process $400,000+ in sales
⇾ Baskets became unsustainable. Frequent, unannounced and undocumented changes to Facebook’s API made supporting existing features and promising new ones difficult
The beginning
In fall 2016, we introduced live video to Chalk. We thought room owners should be able to express themselves through different media (text, images, recording video and now, live video) and move fluidly between them. Around this time, adjacent services – namely, Instagram and Musical.ly – began introducing live video as well.
For Chalk to succeed, we understood its live video experience needed to be dramatically different from the live experiences on these other services. To differentiate Chalk, we sought a niche live video behavior that was a) growing, b) constrained in some way by existing tools and c) had the potential to become mainstream if supported properly. Of all the behaviors we saw, live selling was the most promising in our view.
By the end of 2016, dozens of live sales were happening on Periscope and Facebook Live everyday. Some streams attracted thousands of live viewers. People were selling everything from leggings to collectible comic books and sports cards.
Product
After watching many live sales and talking to sellers, we were confident the format and behavior was “real.” To understand the behavior more deeply, we had a few of our most popular teen Chalk users try hosting live sales with their audiences on Chalk.
In total, we had 10+ influencers host live sales. Not everyone had success, but a couple did. @Codyorlove and @Hknter each sold $200+ worth of clothing in under 30 minutes without ever having sold anything in this way before. There was something here, enough to keep exploring. We thought our greatest likelihood for success would be to help existing live sellers generate more revenue, rather than convert an unfamilizarzed population of teen Instagram influencers into live sale hosts. And so, we shifted our attention from Chalk to this new tool, Baskets.
Initially, we focused on the comic book community. There was a thick population of sellers struggling to keep up with the growth in sales volume and viewership. Between describing the comic book for sale, answering buyer questions, keeping track of and announcing each high bid and logging the winner of each item, sellers were overwhelmed. This frustrated buyers and sellers alike.
With the problem scoped, we built a tool that integrated with Facebook Live to track incoming bids, post real time auction updates to sellers’ audiences and log the final sale details for each item. Hosts loved having more time to focus on book selection and entertaining; the audience loved the instant feedback of knowing their bids had been acknowledged and documented.
We gained good traction in the comic book community, with >50% of the most active sellers using Baskets and paying us for it every month. We then expanded into streetwear and womenswear. To broaden our customer base further and service bigger retailers, we added functionality to support fixed price style sales. While auction-style sales were great for collectors selling one-off collectibles, auctions were limiting for bigger retailers whose business model depended on moving large volumes of product quickly.
What changed?
Eight months in, we had developed a modest roster of customers and recurring revenue. With a degree of stability, we began to think on a longer time horizon. We started to design more involved features that our customers had been needing (i.e. integrated payment processing). Features that would, we thought, make Baskets a) more valuable to existing customers and b) attract larger businesses to become customers.
As we were building product, Facebook started to more frequently make unannounced changes to their API that broke existing Baskets features. Service outages ensued and it became increasingly difficult for us to guarantee uptime for Baskets’s existing features and promise delivery of future ones. We also had difficulty signing bigger stores who were skeptical of the live selling behavior.
With our momentum slowing on the back of Facebook’s shifty API practices and cash dwindling, we asked ourselves: Is it sustainable and worthwhile to continue trying to grow a business whose success depended on a platform that could, and had started showing signs of, cutting off our service? No. We didn’t think it was. At the end of 2017 we informed our customers that we would stop supporting Baskets at the beginning of 2018.
In the end
All together, Baskets helped sellers generate $400,000+ in revenue through Facebook Live sales alone. However, we became increasingly uncomfortable with trying to build a business whose success wholly depended on a platform whose interests were not aligned with ours, while struggling to scale the business ourselves.