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July 23, 2013

How Consumers Become a Part of a Business

Posted by Sandeep Dadlani (View Profile | View All Posts) at 7:58 AM

uFaker [Source:uFakerTube http://www.youtube.com/watch?v=oPQp0FBhLGQ]

Have mobile device. Will work in return for special deals.

That could very well be the classified ad of the digital age. We consumers are a feisty bunch. Armed with various computing platforms and a dazzling array of apps, each of us has become a one-man consumer army of sorts. We're not shy about sharing our comments with the companies from which we buy products. In fact, we like to think we're an integral part of their supply chains.

Turns out that we are, at least in certain cases. Whether we know it or not, digitally savvy companies are leveraging people like you and me to do some of their work. In fact, companies are coming up with new business models that include giving power to consumers. They're reimbursing them for their services by offering them special deals and sales. Which means consumers become even closer to their supply chains.

Sometimes consumers are able to do the kind of work that companies wouldn't have been able to do on their own. Consider, for example, a new app that creates a business around consumers reporting potentially counterfeited goods. UFaker is an app that works on a mobile platform that allows people to take photos of items like knock-off luxury goods, food, and hardware, along with the location of their purchases. Companies that hold the patents and trademarks to those items can swoop in and investigate the claims of the consumer. Before the development of a consumer app like uFaker, companies were fighting a global counterfeiting battle they had no chance of winning. The global economy is such that it was relatively easy for a counterfeiter in, say, an East Asian workshop to remain off the radar screen of a large consumer products enterprise. But armed with smart phones and high-res cameras, suddenly there are as many consumer detectives flooding the marketplace as there are fake products.

You might be asking yourself: Does a society lady from Manhattan's Upper East Side really have that much loyalty to a luxury brand such as Hermes or Louis Vuitton to scour the storefronts of Chinatown on a hot summer day in search of knock-off handbags? Hardly. But companies that participate with the uFaker app are offering consumers who report fraudulent goods certain retail discounts to encourage their participation. If there's one characteristic about the typical digital consumer, it's that she expect deals in return for the specialized information she shares with companies. It's a two-way street.

It's that same concept that drives consumer packaged goods companies doing business in emerging markets to offer rewards to consumers. They get points for reporting when certain items are out of stock in small "mom 'n pop" stores. In the West, we've grown accustomed to the über-efficient, just-in-time inventory processes of the big box retailers. Yet most of the planet's consumers don't buy from large retail chains. It's more difficult for CPG companies in those markets to gauge consumer demand. If structured properly, the right group of consumers can supply information to a CPG company in a way not unlike the inventory manager of a Target, Kohl's, or Wal-Mart.

If consumers can be theoretical inventory managers, they can be literal car rental agents. Residents of big cities have come to appreciate the ease by which they can get a car for a day of shopping or moving. Zipcar is a club that shifts certain administrative and operational tasks onto the members. In return, they can pick up a no-frills car that's fuel-efficient in their neighborhood and return it when they're done. In other words, they don't pay by the day if they intend to use it to run to a suburban shopping mall for a few hours. Zipcar members don't mind doing some of the legwork (like leaving a clean, refueled car on a certain block for the next member) if they receive convenience in return. Plus, in large cities it can sometimes cost as much as a studio apartment rental just to keep a car in a garage. A membership club like Zipcar allows members to remain liberated from the often-outrageous costs and responsibilities of being urban car owners.

The good news is that we're at the very beginning of the digital transformation of consumers and their relationship to the enterprises that serve them. It could very well turn out that consumers end up serving them as much as they currently serve consumers.

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