Social shopping is the new trend in Internet commerce these days.
Websites have sprouted up, promising great discounts if a certain number of people sign up to buy. Groupon and LivingSocial are some of the most prominent, but a small Maryland startup is also trying to make a name for itself.
Jasmere was started by Katrina Kugel, 40, and Jeremy Kugel, 38, a husband-and-wife team with marketing experience in corporate America. Their Silver Spring neighbor, Andy O'Mara, also is a partner.
The owners of the company, which will celebrate a year in business next month, believe they have carved out a niche by featuring items from upscale, little-known boutiques and offering lower prices as more people buy that day's deal. They think they can coexist with sites like Groupon that have a similar business plan.
Jeremy Kugel sat down with The Baltimore Sun recently to talk about the company.
Question: Explain how your website works.
Answer: Jasmere is social shopping marketplace that looks for unique retailers and offers their products every day for a 50 to 70 percent discount. It's higher-end, smaller merchants, usually with an eco-friendly or social responsibility angle. A company that has a top-notch product and a compelling story.
The more people who buy the product, the better it is for everyone because the price goes lower. We don't charge the credit card until the sale ends. So everybody gets the price. You buy the product, and then you go out and spread the word. That's why we call it social shopping. The more people who buy, you'll pay less because you helped spread the word.
Q: What is an example of a product you've sold recently?
A: We did New York gourmet brownies — an 8-pack normally retails for about $17. We started at $8. By the end of the day, it sold for $4. Shipping was $4.95. People loved it, and it caught fire virally. People decided to put it on Facebook and Twitter.
The bakery is a mom-and-pop business. They wanted the exposure. They don't normally get the national attention they got from us. I don't think they made any money for $4 brownies and then shipping them across the country.
Q: How do you make your money? Do you charge your merchants?
A: We don't charge them anything. The short answer is, we take a commission based on sales. We pay the merchant a certain amount if we sell so much. If the price goes down, we might not make money. We sold brownies for less than we were making from the brownies. Obviously, that doesn't happen every day. It's not going to hurt you to lose money one or two days. We lost a dollar or two per brownie [order], but we couldn't have paid what we got back in marketing and advertising.
Q: How did you come up with the idea for the company?
A: Katrina is a huge shopper. She is a very good gift-giver and was talking about how many great companies there are, and that there are great entrepreneurs but nobody knows anything about them. She wanted to know how to let people know these companies existed.
This was when Groupon was starting. There wasn't anybody that was leveraging group buying for smaller entrepreneurs. Groupon, I think, is a wonderful concept. I am a great admirer of Groupon. We thought that we could apply a model similar to Groupon to help these entrepreneurs gain exposure.
Q: How do you find the businesses you feature?
A: At first it was very difficult. Katrina was the start of that. She had a list of people who she had bought from. I liked to joke that she knew the UPS and FedEx guy from shopping. Now we have a following. We have [more than] 18,500 Facebook fans today. We used to have to do all the work finding these companies, and now we have to weed through the recommendations we get.
Q: What was the first product you sold?
A: "Beija-Flor" jeans. That is what we started with on Dec. 8, 2009. She did great. We sold tens of thousands of dollars' worth of jeans on our first day, and we knew we were onto something. It was all viral. People found out there were $170 jeans. We started at $79, and they were $64 at the end. We seeded it with our own friends. We've been fortunate to get a fair amount of media coverage. But we started with our friends, and it spread.
Q: Did you give up careers to do this?
A: I ran a company called Let's Dish (a meal preparation service). The owners ran it for the first two years, and then they hired me to run the company. Katrina has an event-planning business, though she doesn't do as much as she used to. She worked at General Mills on Yoplait for a long time in marketing. I did marketing for Caribou Coffee.
Q: So you guys have the experience for this kind of business?
A: We do, but it is different than when we were in the business. Facebook and Twitter. It's a new ballgame. That is one of the reasons it's so fun. We get to do the front end of some of this stuff. We greatly use social media to grow our business.
Q: How will you distinguish yourself from similar shopping websites so you stick around for a long time?
A: The most important thing is that we personally try every product that we feature. We try to present what we experienced in a way that is genuine and make sure it is something that we really, really like. Our biggest challenge as we grow is that we don't compromise the quality of what we feature every day, and we maintain the quality and feature a really first-rate product. We want to make sure we treat our customers right. We answer every e-mail and when people contact us on Facebook we respond immediately. Our customers are our best advocates.
Q: Are you profitable yet?
A: We're pleased with the path that we're on. We don't disclose financial information. As long as we can still pay the kids' day care bills, we're not doing too bad.
Q: Are you doing anything for the holidays?
A: On our site, we have specially selected merchants featured. You will be guaranteed to find a spectacular gifts at a good price. We are bringing back a lot of our favorites from the year. Many of our specials are coming back for the holiday.
See more business leaders interviewed by The Baltimore Sun