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E-Commerce Unicorns 2022: Whatnot Builds a Flywheel for Influencer-Driven E-Commerce

Posted on Wednesday, Jun 22nd 2022

According to a recently published study, the Global Influencer Marketing Platform market is projected to grow at 30.8% CAGR to reach $90.2 billion by 2030 from $8.4 billion in 2021. While social media giants like Facebook, Instagram, YouTube, and Pinterest are the biggest platforms available for this kind of e-commerce, there are other players, like Whatnot, who are making their presence felt in the market.

Whatnot’s Offerings

Founded in 2019 by Grant LaFontaine and Logan Head, Los Angeles-based Whatnot is a marketplace created to buy and sell authentic collectible items. It is a community marketplace where consumers can safely buy, sell, go live, and connect with collectors and other like-minded people. Initially, Whatnot was set up as a standard resale platform. It focused on authenticating Funko Pops through its platform. However, the onset of pandemic helped it expand to other categories including Pokémon cards, pins, vintage clothing, and sneakers.

The livestream shopping company allows both hobbyists and collectors to shop from thousands of categories. To sell on Whatnot, users have to apply to become verified sellers. The process of verification requires them to show proof of inventory, a good social following, and a history of selling. After the application, potential sellers are put on a waitlist before they are approved and able to sell through the app. Verified sellers can go on air at any time, hosting on-the-fly video auctions for their goods. Sometimes buyers know what they are bidding for, and sometimes they are bidding for a mystery bag. For instance, the “card break” concept allows users to buy assigned portions of an unopened, and often rare, box of Pokémon or sports cards and watch its contents revealed live.

Sellers set a starting price and time limit for the item and the audience is able to bid for the product. Whatnot is looking to expand to other products as well, and are now working on NFTs. It will allow streamers to import their NFTs into Whatnot, display them, and let buyers bid for them. Recently, Whatnot announced its acquisition of Pastel Labs for an undisclosed sum. The acquisition will allow Whatnot to help navigate through other areas besides NFTs. It will also allow the company to solve challenges like at scale, low latency environments or building discovery systems based on real-time data. Over the next year, it plans on expanding outside of collectibles and other enthusiast categories in addition to adding new consumer facing features and tools for sellers.

Whatnot does not disclose its usage metrics. But, the company says that it has a couple of thousand sellers on its platform. Analysts believe that Whatnot has created a growth flywheel for itself. Its app integrates mobile-based shopping with video in an elegant way. Its livestream offers hours of live content which engages the community to trade in various products, thus driving monetization and a subsequent increase in its community metrics.

Whatnot’s Financials

Whatnot charges an 8% transaction fee on all sales made through its platform. It does not publish its detailed financial information, but the market estimates its revenues of $45 million.

Whatnot has raised $224.7 million in six rounds of funding led by Andre Iguodala, Andreessen Horowitz, Zion Williamson, Logan Paul, Nilam Ganerthrian, Y Combinator Continuity Fund, CapitalG, Gokul Rajaram, and DJ Skee. Its most recent round was held in September 2021 where it raised $150 million at a valuation of $1.5 billion.

Whatnot is not the only player in the space. eBay has been in the auction retail market for a while. Bigger giants like Facebook, Google, and Amazon have also been expanding their influencer-based retail channels. Other players focusing on this market include Popshop and Loupe. Loupe, in fact, has been looking to expand into an online and an offline model as well.

Since financial metrics for either Whatnot or its competitors are not available, it is very difficult to ascertain if its billion-dollar valuation is truly legit. I would like to see them publish more metrics. Unless the revenue growth is exceptional, the valuation isn’t justified.

Photo Credit: Gerd Altmann from Pixabay

This segment is a part in the series : E-Commerce Unicorns 2022

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