Power to the SMB

Online shopping has its perks: We can stay in our pajamas; we can avoid the long lines; we can save ourselves judging looks from the pimple-faced sales clerk behind the counter; and we can get advice from others who have actually purchased and tried a particular product. Consumers have come to expect this level of service from e-commerce retailers, but only a handful of the country's hundreds of thousands of businesses actually have the technology to support such an effort. This week, PowerReviews, a provider of online-reviews software, is going live with an on-demand solution, and also launching the PowerReviews Express Web site.

PowerReviews Express is targeted at small and midsize businesses (SMBs) for what analysts say is a "very reasonable" price starting at $80 per month.

The company says it has signed up 300 retailers for the solution, 200 of which are already live. Smaller retailers, explains Andy Chen, chief executive officer of PowerReviews, are especially good candidates for reviews for two primary reasons:

• They're selling niche products that aren't commonly reviewed elsewhere, and therefore need the added credibility; and
• they need to offest the perception that, as smaller retailers, they're somehow less reputable than larger ones. That perception often makes consumers hesitant to purchase from a given site; reviews help add a layer of confidence.

The new solution boasts the strength of PowerReview's enterprise edition in terms of features, functionality, and service. Moreover, as developments are built into the enterprise edition, the same will be translated into the Express solution as well. In addition to an automated content-moderation algorithm, PowerReviews employs human content moderators for the enterprise edition, and the same people will also be responsible for moderating content on the Express edition.

There are some existing product gaps in the Express solution, Chen admits. Enterprise customers have a search engine optimization product, which will not be rolled out until January of 2009 for Express. Moreover, whereas Enterprise has the ability to syndicate reviews between manufacturers and their retailers, Express is strictly a siloed operation in that it merely posts a single customer's review directly onto a retail site.

"Many organizations are looking to their Web sites for new customer acquisition [and] customer retention, and to increase the [value to] their current customers," says Gene Alvarez, a vice president of e-commerce and CRM at Gartner. In order to do so, many are beginning to understand the power of customer reviews, and the increasing reliance on understanding a product from the perspective of "someone like me," as opposed to being fed catalog creative by the retailer. Given that, companies are looking toward solutions that don't center on simply having the technology department working in the background to create a new function that doesn't guarantee revenue, Alvarez says.

"PowerReviews is opening up a solution to [small businesses] that would not have been able to do this on their own and also leverage the experience of enterprises that have already been doing this," Alvarez says. He adds that the affordability of the solution will finally "enable the small businesses to raise the quality of their Web sites to what the consumers are expecting." This capability, he says, was not available before. That said, small businesses did have access to tools that allowed them to create and manage an online storefront, such as eBay Merchant, Amazon.com's E-commerce for Everyone (E4E), or Yahoo!'s Merchant Solutions. In addition, retailers who could afford on-demand e-commerce solutions providers could potentially have that capability built into the solution as well. However, Alvarez says, "at the lower end, there was no solution."

PowerReviews has a unique business model in that its primary source of revenue is through its review-powered e-commerce site, Buzzillions.com. Retailers using the enterprise edition do not pay for the technology or the service and moderation. Rather, retailers must agree to share their reviews on Buzzillions and PowerReviews earns revenues as an affiliate helping retailers generate sales. "The whole idea is that it's frictionless on the retailer side," Chen says.

The obvious problem with this model, Alvarez says, is that, "when you give something away for free, you get higher adoption. But how do you pay your bills?"  Services like Facebook and MySpace are prime examples of how free destinations have taken off, but both are now struggling to try to monetize their sites in a way that won't drive away its valuable user base. "Buzzillions.com is PowerReview's monetization engine," Alvarez says. "That's why they have to charge $80 right now [for Express] because they're not making money on Buzzillions."

In contrast to its direct competitor, Bazaarvoice, PowerReviews differentiates itself with its product-review summaries. With 2,600 different product review templates, each and every product being reviewed offers a short description of both the product and the reviewer (e.g., pros, cons, product fit, and describe yourself). This snapshot-level review, Chen says, allows consumers to browse more quickly and efficiently.

Aside from its revenue model, Alvarez believes that the only other significant challenge PowerReviews faces is creating awareness. Many small businesses today don't even know that well-known brands such as eBay, Amazon.com, and Yahoo!, let alone PowerReviews, have resources available that are tailored for SMB use. Nevertheless, Alvarez predicts that, within the next four years, 90 percent of e-commerce Web sites will have bought at least one on-demand service offering to enhance their retail store, whether it's product reviews, or solutions such as Baynote that aggregate behavioral-tracking information for product recommendations.

"More of these will become available only because that's going to be the most cost-effective way for enterprises to continue to improve their [sites] without [making] major investments," Alvarez says. "If it improves your Web site, great. If it doesn't, shut it down."

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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