A space that I’ve been looking at for the last couple of years is Social Purchasing. It’s the space that we were going after with Wigadoo, and whilst we didn’t crack it, I’m certain it’s only a matter of time before someone does.

So, first off, what is social purchasing? Well, very simply it’s all of those purchases where you chip in with one or more people to buy something. That could be a leaving present for a work colleague, a wedding present or - as is more frequently the case - a night out together or a shared holiday. All of these require co-ordinating a group to purchase something. And almost always, one person goes through a significant amount of hassle to make the end purchase.

The most interesting sector for this is the travel and leisure purchases. Each year over $140B is spent globally (source: PhocusWright) by groups of friends doing activities that they organise and pay for in advance … whether it be cinema trips, concerts, stag and hen trips or holidays abroad.

Obviously the magic comes in addressing the group co-ordination problem. Doing that means you can earn the right to be a valued intermediary, removing friction in highly valuable transactions, and hence earn value from the chain. Whether you choose to take that value from the consumers (who’s pain you are removing) or the merchants who are selling to them (and so who’s profit margins you’re boosting) is your call. Although, given the consumer expectation that everything is free on the Internet, I’d suggest the latter.

Social Purchasing’s positioning versus other online players is interesting. It effectively sits between two Internet giants. On the one side you’ve got online travel and leisure retailers who became successful in the first wave of the Internet and now represent one of the biggest areas of online spend. On the other side you have social networks who have successfully brought friend networks online, making the Internet an accepted means of communication between friends.

In between these giants is space for independent entities to help groups of friends co-ordinate themselves in order to prepare for a Social Purchase from an online retailer (where a Social Purchase is any purchase in which a number of friends are coming together to book something).

Neither the online retailers nor social networks will be able to stretch so far as to do this well. The user doesn’t want companies selling to them in and amongst their friends (and they want to maintain their independence up until the point of purchase). Social Networks will also struggle to monetise users in such an obvious way. What’s more, they’re more likely to let others innovate on their platforms than do it themselves.

There are challenges in this space. It’ll take money (or an already credible brand) to grow to the point that friends are willing to trust the site, to risk their social capital, and to ask their friends to enter their card details. It will also take a significant marketing budget as getting to the organiser at the right time is tricky. This is where Wigadoo came unstuck. Yet, if you can get this right, there’s a service that people and business want, a huge market to go after and no one yet really going for it.