November 20, 2013 | Written by: Julia Chen Davidson
Categorized: Industry Insights
We’ve all heard of the crowdsourcing trend. But just how big is its potential impact on CP? A recent report stated that the overall crowdfunding industry raised $2.7 billion in 2012, and is projected to grow to $5.1 billion in 2013. Helping to fuel this growth, here are three examples of new startups that are poised to seriously change the game for Consumer Product companies.
CircleUp links consumer brand startups with investors
CircleUp is an equity-based crowdfunding platform that helps innovative new brands acquire funding from accredited investors, having helped a dozen small businesses raise more than $10M since 2012. The company recently sealed partnerships with two major CPGs that gets supported new brands a seat at the table. Although the nature of the relationship can vary from mentorship to licensing deals, CircleUp ultimately acts as a screen for large CPG firms on the lookout for the next hot brand.
Yabbly crowdsources trusted advice on consumer products
Seattle startup Yabbly allows consumers to get thoughtful, relevant advice on which products are best suited for their needs from perhaps the most reliable source—other consumers. Users can pose questions about product choices and get concrete recommendations from others who have made similar decisions and in many cases already own the products in consideration. Yabbly emphasizes a ‘karma system’ amongst users to maximize engagement and encourage quality responses.
Quri uses a mobile taskforce to gather in-store intelligence for brands
With the surge of mobile, task-oriented, consumer-to-consumer marketplaces such as TaskRabbit (founded by a former IBMer), Zaarly, and PostMates, Quri is targeting the specific series of workflow tasks around CPGs and retailers. Using a free app called EasyShift, the company incentivizes a mobile workforce of willing consumers to capture feedback around what has traditionally been a huge—and costly—blind spot: the accuracy of key in-store inventory metrics, such as pricing, displays, and out-of-stocks. After only 16 months on the market, Quri’s software has already been adopted by half of the top 25 CPG brands.
So what for CP?
- It enables rapid injections of innovation: Product development sites like CircleUp and its C2C counterpart Quriky are, in essence, innovation machines. CPGs that partner up with these sites not only have access to up and coming new brands, but it gives them a finger on the pulse of cutting edge product innovation.
- It gets consumers engaged: We’ve all heard about how brands must remain relevant in order to survive. And remaining relevant means constantly being engaged with the consumer. Crowdsourcing for consumer input is an avenue for firms to do so in a meaningful way.
- It hedges risk: Fundamentally, crowdsourcing is distributed problem solving. By allocating tasks to a large group of people, firms are able to mine collective intelligence and ultimately generate superior results. For consumer products companies, this means that they can place their bets on output that has already been vetted by the most important stakeholder—the consumer.
- It gives access to consumer insights that matter: The power of sites like Yabbly isn’t just about harnessing purchasing power—think of it as a 24/7 focus group that CPGs can tap into in order to get real feedback about their products.
- It’s cost efficient: Quri’s solution has the potential to save CP companies billions of dollars by allowing firms to prioritize field force efforts and target problem stores at a relatively low cost.
- It’s not just for external purposes: Companies are starting to use crowdsourcing to foster internal ideation and innovation. Asking for everyone’s input is not only democratic, but it gets employees engaged and gives them a sense of responsibility and ownership.
What do you think? Is crowdsourcing just a temporary fad or will it have long term business model implications for CP?