Retail

Floating The Next Big Idea For Social Commerce

Floating The Next Big Idea For Social Commerce

Since the dawn of the internet in the mid-90s, there have been some genius ideas and some completely innovative business models. We don’t search, we Google. We don’t shop at Amazon, we one-click. And we don’t need a ride anymore – we need an Uber. New companies now aim to be used as a verb by creating an innovative way to buy goods – such as: “I floated it.”

It’s the phrase that pays for Ali Rizvi and his new company that launched last week, called FloatThat. It could be one of those “great idea” business concepts that might have found an innovative niche, at a time when so many niches are already taken.

A “float” is defined as a process in which an item is put up for sale, with consumers paying increments of the price in hopes of winning the purchase. For example, say you're in the market for a new car. You go to FloatThat.com and see that Infinity has made an SUV available at $38,000. They will accept 76 floats at $500.00 each. After the Infiniti dealer that has provided the car gets its 76 floats, the FloatThat algorithm selects a winner, who gets the car. For the other 75 participants, their $500 is used as bonus points for further float participation. The Infinity dealer can then use the $500 floats as a discount to try to sell the participants a new car. That means every consumer gets a reward, even after an unsuccessful bid.

This process will apply in slightly different variations to every other item on the site, which is now featuring cars and other high-ticket items. Rizvi can see a day in the very short-term future when users will put their own goods up for float, and also a day where the site becomes a consistent commerce channel for manufacturers and community members. He can even foresee houses being in the not-too-distant future.

“We have that mechanism as well,” Rizvi said. “Let's say you've got a car and it’s worth $6,000, but you owe $5,000. Nobody's going to pay $6,000 for a car that's worth less, but you can go on our site and float it. And you can say you have 60 buying spots at $100. Now you can actually get the $6,000 for your car.”

Rizvi got the idea for FloatThat in 2017, when a close friend and his wife had a strong desire to visit Hawaii, but their financial situation kept them doing so. A group of his friends banded together to chip in and gift the vacation to the couple – and a business idea was born.

The time between Rizvi’s idea and last week's actual launch was spent in legal activities. Each of the 50 states has different rules and regulations regarding lotteries, contests and bidding, which is one of the reasons Rizvi believes that potentially huge competitors like Amazon and eBay will think hard before entering this space.

And then there’s tuition. Rizvi is working on a model in which college students can float $40 for a chance at one year of tuition. For the students who don’t win, that $40 can be used as discounts at local retailers. Rizvi believes this model will be just as powerful, as retailers have a chance to apply discounts above and beyond current means such as Groupon.

Rizvi has retained a marketing company to focus on brand awareness and customer acquisition.

“We have a good digital strategy around social media, YouTube and a couple of other channels. For example, we're going to have these digital billboards in Vegas. And at the end of the month, we're going to start launching this campaign for rooms in Vegas, so when you land in Vegas you see right on the billboard that you can pay for your room a different way. Maybe you can get an upgrade. Maybe you can extend to two nights. And if you don't win, you still have credit that you can spend.”

After the campaign, Rizvi will monitor usage patterns and learn more about how FloatThat will grow. Will it blow up?

“I’m so ready for that,” he said.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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