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Can This E-Commerce Site Charm Gen-Y?
 

Lot18's founders are hoping to strike gold again. This time, they're targeting young pop-music fanatics with Popdust.

Popdust, a pop-culture site launched this year, feeds hungry fans a steady diet of the latest pop-music news, reviews, and videos.

Philip James (pictured) co-founded Popdust with Lot18 co-founder Kevin Fortuna and former  Billboard  editor in chief Craig Marks.

Philip James (pictured) co-founded Popdust with Lot18 co-founder Kevin Fortuna and former Billboard editor in chief Craig Marks.

Popdust CEO Hugh Panero is a founding member of XM Satellite Radio.

Shutterstock

Popdust CEO Hugh Panero is a founding member of XM Satellite Radio.

By the Numbers

CEO: Hugh Panero

Founders: Philip James, Kevin Fortuna, Craig Marks

Year founded: Popdust, 2011; Popdust Style, 2012

Location: New York City

Employees: 12

Website: Style.popdust.com

Facebook: Facebook.com/popdust

Twitter: @Popdust

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Forget FM radio. Forget cable TV. Young pop-music fans are all online, all the time, and one new website—a hybrid media company and online retail site—is vying for their attention.

Created early in 2011 by Philip James and Kevin Fortuna, the founders of Lot18, a flash-sale site for wine and food, along with former Billboard editor-in-chief Craig Marks and David Wade of imeem, Popdust is on its surface a new-media company, which publishes a steady stream of the latest music news, reviews, and videos. But recently it has spun off into retail.

It in April, James, Fortuna, and Marks launched Popdust Style, a site that sells new styles worn by celebrities, as well as celebrity-themed or -branded items, and items endorsed by musicians. For example, on the site one can purchase a pair of studded garters like the ones worn by Taylor Momsen of Gossip Girl. Also available: an identical duplicate of the irreverent pink chicken-wing necklace worn by Nicki Minaj at the iHeartRadio Music Festival last year. 

Popdust, which is a "members-only" site, has 600,000 unique monthly visitors who are mostly young, mostly female, and plenty of whom have cash to burn. Data released from American Express Business Insights in February revealed that spending on full-priced luxury goods by Millennials increased by 31% in 2011. Purchases from luxury flash sites selling at discount prices is also up 19% among this group. Research firm eMarketer postulates that Gen Y's early adoption of flash sale e-commerce shopping has served as a gateway drug to purchasing goods at face value. 

Popdust is just one of many e-commerce sites riding the wave of auction, flash sales, and curation trends right now. Industry data from market research firm Plunkett Research notes that over the next year, e-commerce sales of merchandise in the U.S. will grow at a 12% rate and reach $246 billion in 2013. Founder and analyst Jack Plunkett says that much of this growth can be attributed to Generation Y, a cohort of 91 million people ages 10 to 30 whose technological proficiency gives them tremendous spending power on the Web, even in today’s economy.

"They're absolute digital natives," Plunkett says. "They'll increasingly expect to be able to do everything online, and a smart entrepreneur will be keeping an eye on them."

While the market is unproven, and Popdust isn't willing to share revenue figures, the team behind the company has solid credentials. David Hargis, the company's vice president of business development, has stints at Warner Bros. Records and Universal Music Group under his belt.  Popdust CEO Hugh Panero is a founding member of XM Satellite Radio, which merged with Sirius XM Radio last year. Panero, who first became involved with Popdust as a venture partner with New Enterprise Associates, agrees that Popdust Style's "all pop" image is great for a mass market.

"At XM, we sold subscriptions that appealed to large groups of people and to every niche of music fan," he says. "But when you looked more closely, the actual listenership was toward some of these big pop stars. That was my basis for a very deep understanding of how big a market this is."

The market is indeed a vast one, not only because of a highly-engaged consumer base, but also due to the sheer number of competitors entering the field. IBIS forecasts that nearly ten thousand more enterprises will emerge over the next five years. Popdust may have good handle on how to connect with its consumers (the company shares videos on the Popdust homepage, via Twitter and Facebook, and has fashion partnerships with Look TV and Lucky magazine's online "Deal of the Day" outlet), but must still back up its style with substance.

As IBISWorld retail expert Nikoleta Panteva sees it, the personality of Popdust Style will go a long way to capture the attention of its target audience. But without a wider range of products—or a higher price point to make up for its limited offerings—the young e-commerce outlet may find it difficult to break even.

"It's not just about the look of a certain item," says Panteva, "It's about the brand name behind it. Without a more extensive product selection, the pictures and video may overwhelm the consumer."

James affirms that both e-commerce companies he has started deliver on the promise of connecting people with their passions, despite their differing audiences.

"Amazon and eBay reign supreme if you know what you want," he says. "But if you're looking for something fun or cool, or need help finding something interesting, niche categories are flourishing. E-commerce hasn't done that very well in the past but increasingly it is. In Lot18's case, it's food and wine, and in Popdust's case, it's fashion and style from tastemakers, from the artists."

To make good on that promise, Popdust is shirking what Panero calls the "siloed" aspect of other businesses and is hoping to become a go-to e-commerce outlet for consumers under the large umbrella of pop-star content.

So far, with a consistent stream of celebrity editorial content and a smattering of key partnerships, the plan seems to be working. In the past month, Popdust Style debuted the Karmin pop-up shop: an online store where the up-and-coming pop duo Amy Heidemann and Nick Noonan model clothing that reflects their personal style and the style of other bands they love. Items from the Karmin collection can be purchased directly from the Popdust Style website. Site traffic has doubled, and the company is already considering future collaborations with musicians. 

"I think it's always been part of the plan," he says. "We have a pretty large niche that allows us to do something creative and serve that audience. Popdust in general will be a place where you can come for all things related to pop stars, and that's social, content, and commerce."

Last updated: May 30, 2012




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