A Business Model for Open Social Networks

Lately I have been very much interested in Lovdbyless and Insoshi for developing my own social network because they are based on Ruby on Rails, which make them super easy to extend and modify. However, there is one missing feature which I truly need. I need an integrated escrow service, as I explained in my previous posts. By exposing my need, I may be introducing a possible business model for these open social networks and I will briefly describe what I mean.

Based on current trends, we will be seeing many more new vertical social networks that revolve around a single topic, product, or service. We will also be seeing many more crowdsourcing sites. It is therefore easy to conclude that we will be seeing more crowdsoucing, vertical social networks. It is also to be expected that people will want to conduct shopping at these new sites. Some are coining these new types of sites “s-commerce” sites.

From an entreprenuer’s point of view, I would like an open social network to provide me an integrate escrow service that would appear seamless to my buyers and sellers. I would also like for the cost of the service to be under a dollar. The ultimate cost of the service is payed by the buyers, and I want this cost to be minimal to encourage a greater exchange of goods at my site. I would not mind this fixed fee, and perhaps a low percentage-based fee would be okay as well.

We now ask how an open social network could benefit by meeting this need. First, these types of sites can appeal to a global audience. Depending on the product to be sold (and crowdsourced), there is the possibility of a huge international exchange of goods between individual buyers and sellers. Read my earlier short story about this that points you to a story about the growing number of individual Chinese sellers. We therefore could be talking about billions of transactions.

Second, each transaction would be dependent on the escrow service for fulfillment, for both the buyer and the seller. If the escrow service collects even just a few cents for each transaction, the revenue would be tremendous. One possible service which may be seeing the potential in providing an escrow service is Alipay, which is providing such a service to the China market.

Here are some things which would make me choose to use your escrow service over another:

  1. The escrow service is integrated seamlessly into my social network. This provides a tight coupling with all the stored private messaging occurring on the site. It is during these conversations that the order details are ironed out and will serve as evidence of what was agreed upon in case of arbitration.
  2. It gives me a share of the escrow service fees so that I can profit, as the owner of the site. This would give me a very big incentive to keep the site running and to keep promoting it.
  3. The escrow service fees are below $1 to encourage more s-commerce on the site and a greater variety of products. Some products have very low margins and adding a very big fee for the escrow would not be good. A fee based on a percentage of the product price would also be okay, and this would encourage the sellers to keep the price down on their products.

Please let me know if you find this service for me or if you plan to develop one yourself and what is your expected date of availability. I am so eager to start using it because I may have the right product for it.

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3 Responses

  1. Someone suggested buySafe.com and I am looking at them now. They have an interesting concept about bonding. However, I am not quite sure how I could use their service. In my case, I am not a merchant but rather any of the members of the social network could become a merchant. It seems each member merchant would need to get bonded. This might be ok or a hassle or perhaps the best thing to do. This is altogether a different concept I had not thought about so it will take some time for it to sink into my head. I hope to come back and add my comments after I have thought about it.

  2. http://wheltent.wordpress.com/ explains my typical experience with Chinese electronic vendors.

  3. i am too very interested in same subject. i want to intergrate escrow service for my clients who are buyers of intangible services such as programing, coding, graphis, writings. i want buyers to interact with escrow service within my website and without leaving it. any new news of your escrow issue Mr. fidoogle?

    thanks alot looking to hear from you.

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