Photographer: David Paul Morris/Bloomberg

Shopify Launches an Instagram for Classified Listings

The app joins a crowded field as Silicon Valley rushes to disrupt the used-stuff sector.

If eBay and Etsy were as easy as Instagram, would you sell more stuff? Old iPhones, unloved sweaters, and those Civil War sock puppets you’ve been working on?

A crowd of entrepreneurs and their investors are betting heavily that you would, building mobile platforms intended to strip some of the friction out of peer-to-peer commerce.

“Historically, liquidation channels have existed for the highest-ticket items, things like houses and cars,” said Josh Kopelman, a partner at First Round Capital. “What you’re seeing now is companies enabling people to recapture value for stuff that they never could before. It’s a major trend.”

The latest such offering drops this morning: Sello, an app launched by Shopify, which traditionally has helped small businesses set up simple e-commerce websites. Sello, in contrast, is only on mobile and looks and feels like Instagram.

Shopify's new Sello app is all about the photos.
Shopify's new Sello app is all about the photos.
Source: Shopify

Here's how it works. You snap a photo of something you’d like to sell, write a description, make a couple of choices about payments and shipping, and disseminate the listing on your choice of social networks—Facebook, Twitter, Pinterest, even something called Google+. Sello doesn’t charge for listings, instead taking a fee on transactions of about 3 percent.

“For someone who has never sold before, there are a lot of barriers to entry," said Christopher Lobay, Shopify’s director of product. "We wanted to remove those."

What value Sello might have lies in its simplicity. Sellers don’t have to worry about listing fees, auction strategies, bucketing their wares into the proper category and subcategory, or weeding out nefarious buyers. They don’t even have to worry about being rated by would-be buyers.

“Instead of defining the marketplace ourselves, we’re letting it go anywhere,” Lobay said. 

Sello is far from perfect. It isn’t searchable or browsable; in Silicon Valley terms, there is little in the way of a “discovery mechanism.” In other words, instead of creating a hugely liquid market that optimizes prices with an almost limitless pool of potential buyers1, Sello restricts commerce to sometimes sad little circles of friends and cyber connections. And Facebook users, already scanning through a healthy mix of targeted ads, volatile political arguments, and tedious child-care updates, might not fully appreciate classified listings for ratty couches and macramé coasters.

Another potential pitfall for Sello: competition. Tech entrepreneurs and their venture-capitalist champions are tackling the used-stuff sector with the same fervor they've shown for apartment swapping and car hailing. They're steadily ticking off categories from preowned furniture to collectible sneakers. In the past five years, resale startups focused on fashion alone have harvested at least $400 million in venture funding. 

The new services break roughly into two categories: those aiming to smooth out do-it-yourself selling and those offering valet services where the pitch is basically “send us what you want to get rid of, and we’ll take care of the rest.”

Sello, which has been in the works for about a year, is the former. First Round Capital is betting on the latter with investments in Move Loot (furniture) and ThreadFlip (clothes). “Our position is that the first step is going to be the intermediated commerce model,” said Kopelman. “You don’t force every seller to do a ton of work up front.”

EBay, which made much of the peer-to-peer market out of whole cloth, is taking a similar tack. In July, it bought Twice, an online consignment shop that offered sellers a single price for a box of clothes. EBay promptly shuttered the Twice store and charged its new brain trust with honing its Valet service, which lets users print a shipping label, zip their goods to eBay, and collect between 60 percent and 80 percent of the proceeds when (and if) they sell. 

Jordan Sweetnam, the company's vice president of seller experience, said the initiatives are aimed at persuading more people to sell stuff, rather than wooing those who already do. Although only about 100,000 sellers have tried eBay Valet, 70 percent of them are first-timers and lapsed sellers.

Which approach will win?  Well, we might not know for a while. As Silicon Valley makes a land grab for peer-to-peer consumers, the consumers themselves are just getting familiar with the new offerings. 

Jihad Kawas recently won a Thiel Fellowship, a $100,000 ticket for bright minds to skip college and pursue other projects. The 18-year-old poured much of his new funding into Saily, a photo-focused app that connects sellers to buyers nearby. Kawas has done almost nothing in the way of marketing and says he is still getting around 1,500 new users a day2

“There's a huge need," he said. "Worrying about market share right now is like fighting over a chocolate bar in the Willy Wonka factory."

Sweetnam at eBay estimates that the potential market is $100 billion, roughly the size of Amazon.com. That’s 12 figures' worth of crafts and used clothes, dusty LPs, and old appliances. A recent shipment to eBay’s Valet service included a mint-condition He-Man doll from 1984.

“There’s an amazing amount of inventory right now that’s just trapped in the closet,” Sweetnam said. “Well, in my case, it’s trapped in the garage.”

Correction: The business launched by Jihad Kawas is called Saily, not OfferUp.

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  1. 1 EBay has about 160 million buyers these days.
  2. 2 Kawas used the platform to buy a 1984 Mac computer for $120, a testament to how delightfuland irrationalthese markets can be in their infancy. On eBay, the same machines regularly fetch more than $1,500.