Yahoo has agreed to buy community-powered social commerce website Polyvore.
The company says that the acquisition, announced with a press release on Yahoo’s website, is meant to enhance its consumer and advertiser offerings. Yahoo gets to absorb an active community of over 20 million monthly unique visitors, and the purchase of Polyvore also strengthens the company’s commerce strategy. The two companies will work on native shopping ads to drive traffic and sales to retailers, and more broadly, Polyvore will help boost Yahoo’s growth strategy in mobile and social—areas in which the social commerce site excelled.
“Our core mission of empowering people to feel good about their style will remain the same, but with Yahoo’s help we’ll be able to make Polyvore even bigger and better for our user community,” Jess Lee, cofounder and CEO of Polyvore, said in a statement. Lee, it might be worth noting, was a protégé of current Yahoo CEO Marissa Mayer in the early 2000s, when the two worked together at Google. Mayer recruited Lee into Google’s famously elite associate product manager program, and Lee worked as a product manager on Google Maps for several years.
But Yahoo’s acquisition of Polyvore also points to an expansion of the scope of commerce via digital marketplaces, which draw in new makers, sellers, and different types of goods. Etsy, Minted, Threadless and Wanelo are all a part of this trend, not to mention Polyvore itself. Such crowdsourced marketplaces enjoy several advantages over regular online stores, such as not having the need to build out huge infrastructure to stretch into new products and new markets. These marketplaces can simply bootstrap the operation, drawing from the talents of designers, crafters, jewelers, and other artists who need an outlet to sell their wares.
There are signs that the digital marketplace is indeed on the rise: According to Amazon’s most recent earnings report, third-party merchants accounted for 45 percent of units sold in the second quarter, and ChannelAdvisor executive Scot Wingo, an analyst who tracks Amazon, says that third-party sellers accounted for 58 percent of the $48.3 billion in merchandise sold on Amazon sites during the quarter.
Which is all well and good for Yahoo, which still needs to prove to its investors that it is exerting a real effort to turn around its business, especially after the company’s announcement of some rather shaky earnings in the second quarter of the year. And it is trying. It just released a messaging app, which may sound like a tired old idea for one of the oldest incumbents of the tech world, but the app, LiveText, actually offers a pretty fresh idea as a kind of “silent movie” video messaging app. As Yahoo's ad business continues to ail and Wall Street scrutinizes what it does with the rest of its stake in Alibaba, its acquisition of Polyvore is a smart—and relatively low-risk—way for the company to tap into the growing trend of digital marketplaces.
