Thursday, August 7, 2008
Crowdsourcing: New Retail Concepts Give Power to the People
By Tom Ryan, RetailWire
Editor’s Note: This article is an excerpt from one of RetailWire’s recent online discussions. Each business morning on RetailWire.com, retail industry execs get plugged in to the latest news and issues with key insights from a "BrainTrust" of retail industry experts.
Although consumers have long been involved in helping companies develop products and services through focus groups, some companies are looking to the internet to tap into consumer input on a much wider scale. In business speak, the concept is being called "crowdsourcing" and is yet another play on the "wisdom of crowds" theory.
For instance, Threadless, a t-shirt company, and Ryz, an athletic shoe manufacturer, are making it possible for consumers to design shirts and shoes, according to The San Francisco Chronicle. Consumers vote online for their favorites and determine the products these companies sell over the internet.
Crowdsourcing is particularly appealing, according to its supporters, because a new generation of internet users expects that kind of input and interaction.
"They were born digital," Frank Cooper, vice president at Pepsi-Cola North America, told the San Francisco Chronicle. "They get the process. It is not technology to them. It is another great experience to engage."
This summer, consumers were given the opportunity to vote at DEWmocracy.com to decide new flavors for Pepsi's Mountain Dew brand.
"Hundreds of thousands of people have given us feedback" on the flavors, Mr. Cooper said. "There is a wealth of information we can leverage. This is unprecedented."
Rob Langstaff, a former president of Adidas' operations in both North America and Japan, is putting $4 million into shoe startup Ryz because he believes there's too great a disconnect between businesses and consumers. Often, consumer input is only involved at the beginning of the product design process and little afterward.
Said John Butler, the creative director at Butler, Shine, Stern & Partners, which has worked on a project to get consumers to create their own Converse Chuck Taylors, "It's a smarter way to mass-produce things, getting them in the hands of people who want them, customizing products to meet individual consumer needs, and I think it is literally right around the corner for many businesses."
Web 2.0 tactics have been a hot topic in the retail industry. Some analysts say it’s the way of the future for retail. “We are increasingly embedding the consumer in the ordering and inventory process of distribution through the web; embedding them in innovation makes sense,” says Liz Crawford, president of Crawford Consulting. “Wise companies will learn to use the information effectively, however, using solid testing to ensure success.”
The input of customers is retailers’ best tool, according to one analyst. “Nothing is more valuable than consumer input as long as you are talking to the right consumers,” says Robert Gordman, president of The Gordman Group. “Your best customers understand your business and products and can provide valuable feedback. If you simply solicit feedback from random "crowds" you are likely to get information that is generic at best and misleading at worst. Any research should be limited to your Core Customers.”
“It isn't hard to segment the replies into demographic and psychographic groups, weighting the replies accordingly, says Mark Lilien, consultant with Retail Technology Group. “It's a lot less expensive than a failed marketing campaign or a failed product launch. Like any other market research, it doesn't have to be precise; it just has to provide a reasonable direction.”