Whatnot: Livestream Shopping's American Revolution

Livestream shopping, an eCommerce spectacle that has become an integral part of China's retail landscape, is poised for a seismic shift in the United States. Whatnot, a Los Angeles-based company founded in December 2019, emerges as a pioneer in this burgeoning market, transforming collectibles into an enthralling online experience. The convergence of entertainment and commerce has catapulted Whatnot to the forefront, making it the most valuable independent livestream shopping company in the U.S.

Founders' Odyssey: A Journey Rooted in Collectibles

Whatnot's inception is woven into the collective passion for collectibles by co-founders Grant LaFontaine and Logan Head. LaFontaine's early ventures into selling Pokémon cards and sneakers converged with Head's role as a senior product manager at the sneaker marketplace GOAT. The duo's journey began with Whatnot as a "high-end Craigslist-style platform" before evolving into a focused marketplace for buying and reselling collectibles.

In the summer of 2020, Whatnot took a transformative leap by integrating livestreaming into its platform. Despite initial skepticism from investors, the first livestream on the app, where they sold $5k worth of FunkoPops in a few hours, marked a turning point. Whatnot's founding team, with a blend of entrepreneurial spirit and market insight, weathered challenges to shape the future of livestream shopping.

A Symphony of Collectibles: What Whatnot Offers

Whatnot's foray into livestream shopping witnessed exponential growth, with sales skyrocketing 20x year-over-year in 2021 and tripling in 2022. Initially centered around collectibles like Funko Pops and sneakers, the platform has expanded its repertoire to include watches, trading cards, NFTs, and over 50 other collectible categories. CEO Grant LaFontaine affirms the company's ambition to diversify further, aiming to capture more market share in the U.S. eCommerce landscape.

The Visionaries: Grant LaFontaine and Logan Head

CEO Grant LaFontaine, a Cornell University Economics graduate and former Product Manager for Facebook, steers Whatnot with a keen understanding of both the creator economy and collectible markets. CTO Logan Head, with a background in Management Information Systems, brings a wealth of experience from senior roles at GOAT and a previous acquisition by GOAT. Together, they lead Whatnot in redefining the eCommerce narrative.

Whatnot's Unique Appeal: Experience-Based Shopping

Whatnot's appeal lies in "experience-based shopping," blending elements of traditional online marketplaces with the immersive nature of livestreaming platforms. Described by a16z as an entertaining and discovery-rich environment, Whatnot transforms shopping into a lively experience akin to a group treasure hunt. The platform resonates with enthusiasts across various categories, fostering a community where shopping is not just transactional but a form of entertainment.

Market Dynamics: Livestream Shopping's Ascendance

Whatnot's ideal customer profile revolves around collectors and enthusiasts, predominantly Gen Z with disposable income and a penchant for items like Pokémon cards, designer toys, and trading cards. As the livestream shopping market burgeons, Whatnot's growth mirrors the trajectory in China, where livestream shopping accounts for a significant portion of retail eCommerce sales. The U.S. market is primed to witness a surge, with Whatnot anticipating revenue to reach over $60B by 2025.

Competition: Navigating a Crowded Landscape

Whatnot faces competition from both livestreaming startups and incumbent platforms. Rivals like Ntwrk, Popshop Live, and others vie for market share, while industry behemoths like Amazon and TikTok enter the livestream shopping arena. Whatnot's unique blend of a marketplace model with a touch of social media engagement sets it apart, offering a distinct value proposition in a crowded field.

Business Model: The Engine Behind Whatnot's Success

Whatnot's business model revolves around an 8% take rate from every item sold on the platform, supplemented by a 2.9% + $0.30 payment processing fee. The platform positions itself for potential ad business in the future, leveraging user engagement averaging over an hour of video per day. This dual-revenue approach aligns with the evolving dynamics of livestream shopping.

Traction and Valuation: Scaling Heights

Whatnot's growth trajectory is marked by impressive milestones. From a 120% month-over-month growth after the launch of livestreaming to a 20x increase in sales in 2021, the platform has demonstrated resilience and appeal. Partnerships with influencers like Logan Paul and substantial funding rounds have propelled Whatnot's valuation to $3.7B in its latest Series D round, solidifying its status as a force to be reckoned with in the livestream shopping landscape.

Takeaways for Founders: Lessons from Whatnot's Journey

1. Embrace Fusion: Whatnot's success lies in seamlessly merging eCommerce with entertainment. Entrepreneurs should explore synergies between different realms to create a unique and engaging user experience.

2. Listen to Your Audience: Whatnot's pivot to livestream shopping was driven by customer demand. Founders should actively listen to their audience, shaping their products based on genuine user preferences.

3. Community is Key: Building a community around shared interests enhances user engagement. Entrepreneurs should focus on fostering a sense of belonging and shared enthusiasm among their user base.

4. Diversification Breeds Resilience: Whatnot's expansion into various collectible categories showcases the importance of diversifying product offerings. Founders should explore avenues for diversification to mitigate risks and appeal to a broader audience.

5. Adapt to Evolving Trends: Livestream shopping is a dynamic space. Whatnot's ability to adapt and integrate live streaming reflects the importance of staying ahead of evolving trends in the industry.

Whatnot's journey from a high-end Craigslist-style platform to a livestream shopping giant is a testament to the founders' vision and adaptability. As livestream shopping takes center stage in the U.S., entrepreneurs can draw inspiration from Whatnot's trajectory. The fusion of entertainment and commerce is not just a trend but a paradigm shift, and Whatnot stands at the forefront, orchestrating a revolution in American eCommerce.

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