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Power of Crowdsourcing

Crowd sourcing is a fairly new phenomenon that has shaken the basics of various industries, business models and enterprise decisions. Right from getting inputs to product designs to utilizing pictures from Instagram for running marketing campaigns this practice of leveraging collective intelligence is now becoming  main-stream.

With the success of this practice manifesting in many walks of life, we can take a look at some of the examples to see how well this model has been adapted.

a) Quirky - Adopted Crowd sourcing into their Product Development process and called it Quirky Social Product Development. Individuals submit product ideas which is then curated by the community, reviewed by a product evaluation team before its designed, engineered and mass produced. A percentage of resulting sales from the product is then shared with the person who proposed the product idea. With projected revenue of 54 Million USD by 2014, Quirky is quietly becoming the Mass Market consumer product manufacturer.

b) Wal-Mart: In 2011-12, Wal-Mart started with the Get on the shelf initiative, where it invited public to submit great product ideas and then through a review process and thrown open for voting. Finalists were chosen based on the votes and rating and their products were available online and in stores. Human Kind in 2012 and Elvis Presley Home Bedding Collection in 2013 were chosen as winners (see https://getontheshelf.walmart.com)

c) InstaCart:  Grocery service provider that leverages the power of crowd sourcing to delivery grocery to homes within an hour of order getting placed. Company began operations in San Francisco but has rapidly scaled up to cover cities like Boston, Chicago, NYC and has also expanded partnership with retailers like Whole Foods, Shaw's, Market Basket, Harvest Coop and more. With revenues rising more than 2X times in the last few months, there is a great growth story for the company.

There are numerous other examples of L'oreal, Coach and other fashion retailers seizing this opportunity to put together marketing campaigns and/or product images that borrow on photos and amateur images from social media sites like Instagram and Pinterest.

Real benefits in Crowd Sourcing? Clearly the benefits are not very hard to see

  • For brands that weave in crowd sourced images for product display or marketing the benefit is plain and simple - imaginative, original and authentic
  • Crowd sourcing helps disrupt the existing business model and creates new opportunities for startups.  A classic example is that of Instacart that has successfully launched same hour Delivery for Grocery orders where larger players were struggling with same day deliveries.
  • For companies like Quirky, it is about accelerating innovation and cutting overheads and operating costs associated with typical New product Introductions.
  • For Walmart it's about finding the next Billion dollar of sales by identifying those high potential new products and getting it on the shelf
  • For players like Utest it is unlimited access to an expanded set of skills and sometimes hard to find skillsets.

Problem Areas: While we certainly want to focus on the benefits and the key drivers of this model, there are few problem areas that needs to be addressed as well

  • The first and foremost would be that of Intellectual Property. Who owns the IP in case the idea is transferred from the founder to companies like Quirky or Kickstarter. Can there be non-exclusive license transfer instead of completely transferring the IP rights?
  • How to sufficiently compensate the founders? Is it a onetime lump sum or gain sharing or a commission on sale?
  • How do we ensure quality of product or service? Take the case of Instacart - for some orders if items are not found in a store then those items might not be fulfilled leading to lower customer experience.
  • Lack of Confidentiality
  • Lack of Proper Communication

Key Considerations: Finally for retailers, service providers and manufacturers trying to leverage the power of Crowd Sourcing the following key points needs to be considered to ensure a very effective process and resultant output

  1. A rating mechanism for the participants in Crowd Sourcing to identify their significance of past and present contributions, social influence, originality of design or ideas. Ex: In case of Instacart rating parameters could include order fill rate and on time delivery by personal shopper. Higher the rating, the better the compensation or assignment for future orders.
  2. Search Mechanism (using an extensive algorithm) for systematically sifting through enormous amount of data, photos, videos, ideas and products and also considering the rating to identify those opportunities that aid future growth, address under served  customers or geographies. 
  3. A workflow driven technology platform that will help the collaborative nature of work right from submission of ideas to reviewing, evaluating, allowing public to register vote and eventually identifying the top picks.
  4. A palatable profit sharing mechanism to reward the Founders (of idea) based on the outcome - sales of the product or service.
  5. Re-defining the various roles in the Internal Organization - Product Incubation, Marketing or service teams to adapt to the new model and to deliver creative outputs (campaign, service, product) both from within and outside the organization. 
Clearly these are interesting times for the various participants in this model - be it the contributors/founders of ideas, new age companies that aid to translate these ideas to sellable products or the retailers that borrow upon the end products for final sale. With more funding and with proven case studies on sustainability and success this model will become a huge source of disruption to as-is business models in the coming years. As they say, the collective intelligence of community (local or global) can very easy surpass the intelligence of corporate giants.

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