TikTok Store Competitor Flip Expands Social Commerce with Handpicked Acquisitions

Screenshot of the Flip app

Courtesy of Flip

The emergence of social commerce is upending traditional e-commerce in its digital form. Instead of a brand opening a digital store and using digital marketing to promote it to shoppers, social commerce attracts shoppers by engaging them through their social media connections.

Social commerce has really taken root in China, thanks to TikTok Shop, Alibaba, WeChat and other platforms, but it’s just starting to gain a foothold in the U.S. Boston Consulting Group (BCG) estimates that China’s social commerce market will grow from $350 billion in 2021, or 13% of China’s e-commerce sales, to about $900 billion in 2025.

By comparison, McKinsey estimated the U.S. social commerce market would be worth $37 billion in 2021 and is expected to reach about $80 billion by 2025. BCG predicts it will grow even more, to $110 billion; however, a potential TikTok ban could change that trend.

TikTok Shop launched in the U.S. just last September and now reportedly has about 500,000 merchants in its affiliate program, who sell products via shoppable videos created by influencers, with creators sharing the sales. Bloomberg reported that TikTok Shop expects to reach $17.5 billion in sales by the end of 2024.

But another social commerce player, Flip, has been on the scene since late 2021 and has similarities to TikTok Shop — video demos anchor product presentations. But its significant differences could make it more appealing to U.S. consumers.

To date, the Flip app has been downloaded by 5 million users, and its site features over 5,000 brands. Unlike TikTok Shop, Flip curates every brand it features. Over 70% of sellers who apply to be featured on the platform are rejected, giving customers peace of mind that they’re getting the real deal, not a dud.

Venture capital firm WestCap has been a major backer for Flip, leading a $144 million Series C investment in April, more than doubling its $60 million Series B funding in 2022. Flip has raised $236 million in venture capital to date.

And Flip just made a big move by acquiring social commerce company Curated for $330 million in stock. Flip and Curated operate different business models and target different types of customers with different shopping needs, but they share a belief that e-commerce has eliminated the in-person experience of digital retail. They’re looking to bring it back.

“With the acquisition of Curated, we are accelerating our strategy to transform e-commerce with a focus on authentic human interaction and high-quality products,” Flip founder and CEO Noor Agha said in a statement.

“In a time when most shopping platforms rely heavily on algorithms, we remain focused on creating a human-driven shopping experience that promotes real relationships and personal recommendations, ensuring our customers have the best possible guidance and satisfaction,” he continued.

WestCap Founder and Managing Partner Laurence Tosi believes in that mission. “Flip has thoughtfully combined complex technologies to redefine and elevate the way we discover and shop online. Their cutting-edge social commerce model is here to stay and ready to scale.”

Flip features real customers telling their stories

Unlike TikTok Shops, which has a mercenary nature due to the influencers it pays, Flip has strict standards for who can post content, giving them complete freedom in what they say.

Flip’s policy prohibits paid influencers from creating posts to promote the brand’s products and restricts brands from influencing product reviews. Only real customers can post reviews, limited to one minute of screen time.

“People really want honesty when it comes to product recommendations because there’s just so much content out there,” Agha shared with PYMTS. “Consumers are immune to that, and we see that in the numbers. Interestingly, the most successful creators on Flip don’t even have an Instagram account.”

Video creators must first be verified as a buyer of a product on the site – the camera feature on the site is only enabled once the product is delivered to a customer’s location via integration with the company’s logistics system. Creators receive scalable rewards based on sales and views, which can be used to make additional purchases on the site or transferred to a bank account.

Flip users can also gift their social media contacts with credit to spend on the site, adding a viral element. Personally, I’m not keen on inviting valued friends to be inundated with commercial messages, but then again, I’m not the kind of customer Flip was designed for.

Between 60% and 65% of Flip users are between the ages of 25 and 45, with the 30-and-under demographic being the fastest-growing segment. I see appeal in them, especially since beauty is a cornerstone of Flip and inspiring impulse purchases is its main attraction.

Curated’s Consideration-Based Buying Model

Unlike Flip, which excels at retail therapy and instant gratification, Curated is designed for thoughtful, high-investment shopping, where expert advice brings huge benefits to potential customers. The average order value on Curated is $700.

Curated gained a foothold in the outdoor sports category, where carefully vetted experts in skiing, snowboarding, camping, fly fishing, golf and tennis consult with potential buyers to discover their needs and provide honest and reliable product recommendations. It has since added home products to its offerings, including cookware, knives and other kitchen tools, coffee and espresso machines, air purifiers and floor care products.

“People love the opportunity to talk to someone knowledgeable before they make a big purchase,” said Curated founder Eduardo Vivas. “We do it every day in our personal lives, but we don’t have someone to do everything. We built a platform to connect these people with experts who can give them objective advice.”

A meeting of minds

While there’s a small overlap between Flip and Curated’s customer bases from an age perspective, both target customers with the disposable income to make discretionary purchases. And they share a commitment to people power in retail, especially e-commerce, where it’s largely lacking.

“Flip is about discovering cool new products by browsing posts from people who bought something, loved it and want to share it. Curated is about talking to an expert who is super passionate about the category and can help the customer find what’s best for them,” Vivas said.

Over the past year, he and Agha from Flip have gotten together to share advice and war stories. Vivas is a big believer in the value of networking, having sold his last venture, LinkedIn.

“One of my investors suggested that it might make sense for us to join forces since we both have unique models in the social commerce space. So I called Noor and within minutes we decided to do it,” he said.

Going forward, the two companies will continue to operate independently, but Vivas will take on the role of Flip’s COO. They plan to bring experts to Flip’s platform and add customer videos to Curated. The acquisition is expected to double the company’s combined revenue from last year.

“By combining our strengths, we are committed to providing an honest and authentic shopping experience, supported by people who are passionate about sharing what they love. Together, we will continue to promote authentic recommendations and create a vibrant, community-driven marketplace,” concluded Vivas.