This startup wants to turn crazy-popular unboxing videos into a new 'QVC for millennials'
Eric Feng's plan is built around one thing that's super popular with 20-somethings: Unboxing videos.
"It's not just people opening up the packs, but user reviews and comparisons, tutorials - the product review category is huge," Feng said.
On Thursday, Feng unveiled his new company, Packagd. The startup plans to stream live video of the stars of unboxing videos talking about new products. Consumers will be able to watch the videos through Packagd's apps and will be able to buy the products that are mentioned by just tapping on a "add to cart" button as the video plays.
Over the last year, Feng and his team have been working in stealth to sign agreements with more than 20 YouTube stars and strike partnerships with brands like Best Buy and Microsoft to sponsor the videos.
Packagd's business plan consciously drew inspiration from QVC, the cable channel where hosts showcased new products that viewers could order by calling a number displayed on their screens. Many placed their orders and many more watched just for the entertainment.
The live product demos are a bid to bring back the joy of shopping, something that Feng feels like has been stripped in the internet era.
"Ecommerce has gotten so efficient that it's not fun anymore," said Feng, who is Packagd's CEO. "People don't window shop. People don't shop with their friends. Amazon is relentless about minimizing the number of pages that you see before purchase."
He continued: "For us, we want to bring discovery. We want you to have fun while you're shopping."
The plan to beat YouTube at its own game
Feng, who is also a partner at venture capital firm Kleiner Perkins, got the idea for Packagd after learning unboxing videos were exploding as a category on YouTube. The top 5 unboxing channels on YouTube have over 33 million subscribers combined, according to Feng's Kleiner partner Mary Meeker.
YouTube has to cater to all kinds of different video creators and types of content. As popular as the unboxing videos have become, they could do even better if a company focused solely on them, Feng bet.
So Feng and his team built Packagd to work just for so-called unboxers, the group of YouTube stars that make their living un-packaging and selling products. Feng thinks Packagd can help them become as popular among young adults on their mobile devices as QVC hosts have been among the retirees glued to their TVs. And he's banking that they can help sell products much like the hosts have done on QVC and Home Shopping Network.
For its modern and mobile spin on QVC, Packagd is starting with a six hour block of live shows that it will stream through its app every day.
These aren't intended to be the "Buy! Buy! Buy! The clock is ticking down!" style of infomercials you may see on TV. Instead, Packagd is encouraging its new hosts to take a more informal approach. They'll chat with viewers live while streaming the unboxing videos they've already uploaded to YouTube. Feng hopes the effect will be more like interacting with a friendly expert than hearing a high-pressure sales pitch.
"Unboxers we feel have cracked the code on this content type. They created a content format that's super interesting, super engaging," Feng said. "We're not asking them to create new videos. We're not asking them to adopt it for our platform. We're saying we want to showcase them in a different way."
The company is starting with a new app called Unboxed that focuses on reviews of tech products, ranging from drones, laptops to smart home devices. Packagd plans to follow Unboxed with an app focused on beauty product reviews that it hopes to launch in two months. After that will come a toy review app.
During each live show, the host will field questions from Unboxed users who will be able to submit them using a chat feature in the app. Users will be able to buy whichever products the hosts are touting via a purchase button at the bottom of their screens. If they do, they'll earn loyalty points they can apply towards discounts on future purchases made through Unboxed.
Such purchases will benefit the hosts as well; they'll get affiliate commissions. And they won't have to share those with Packagd. Instead, 100% of the affiliate revenue will go the hosts, Feng said.
Packagd plans to make money by convincing brands to pay to sponsor certain time slots of its live streams. Those partners could either work with a product reviewer to build a show or create their own. Either way, Unboxed service will work the same for users. They'll be able to ask hosts questions and buy what they see.
"We want you to feel like you're in the live QVC audience and talking to the host," Feng said. "What drives a lot of transactions on QVC is affinity with the host."
Beyond live demos
The company will offer users more to watch than just the six hours of live, hosted videos. To accommodate users who may not be interested in the product being touted at a particular moment in the live stream, Unboxed will also offer a library of hand-selected videos for a range of products.
"You don't turn on QVC when you know you want the DJI Spark," Feng said.
It's still another app
Despite Feng's conviction that mobile shopping can be transformed, he acknowledges the challenge Packagd faces.
"Look, it's a crap-shoot," Feng said. "That's the thing with all these consumer companies, but it's one where we've tried to be logical about it."
While the company's been able to convince product reviewers to host its video stream, it will have to lure in consumers too, and they may be harder to attract. If they're already watching product videos on YouTube or finding products on Instagram, they may not see the need to download a new app to get similar information.
(Packagd plans to use product giveaways and a physical booth at the electronics show, E3, to convince them to give the app a try.)
Still, Feng is hopeful that if Packagd builds something better for both unboxers and consumers, success will follow. The company has already raised $7.5 million from top Silicon Valley venture capitalists, who are betting it will do for unboxing videos what Twitch did for gaming.
Even though YouTube is the dominant player today, it's investing too widely and not focusing enough on translating its popularity into purchases, Feng said. That's where there's an opening for Packagd, he added.
"I'm hoping the fact that these videos are so popular means there is demand to consume them. I think the bigger existential question is does that demand to consume those just stay on YouTube?" Feng said. "It may. We may not be able to pull it off. That may be a real competitive risk that we just can't solve. But we won't know until we launch and try."