Ideo Spinoff ShopWell Says Better Health Starts at the Supermarket; Part 3: Food as Data

11/3/10Follow @wroush

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adjust ratings downward for whole categories of foods that might aggravate a medical condition like diabetes. And that’s why it’s trying to build the Web’s most complete and up-to-date catalog of foods. Eventually, the catalog will include everything regulated by the USDA (fish, meat, poultry, fruit, and vegetables) and almost every food product with a UPC barcode, including store brands. (But it could take a while to get there—SymphonyIRI, a consumer packaged goods consulting firm, tracks at least 10 million separate stock-keeping units or SKUs in the grocery sector alone, according to Kim.)

But there’s another reason why people negotiating transitions in their eating habits are important to ShopWell: that’s when they’re actually thinking about food choices, and are therefore in a better position to educate food producers about what’s important to them. “I think the reason we have so much interest from potential customers is because they know that when people are this committed about nutrition and health, that is one of the most compelling things that can move the marketplace,” says Kim.

If major food companies are bad at predicting what consumers will buy in normal times, they’re doubly unprepared for a general shift toward healthier eating—an era when to use Kim’s words, “even people at Wal-Mart are demanding some level of organic” in the produce aisle. This fact has everyone at ShopWell, at its mother ship Ideo, and at its venture backer, New Venture Partners, convinced that the data the startup collects about consumer preferences will be highly valuable to food marketers.

“The real value of ShopWell is that they have figured out a way to monetize consumer traffic that is an order of magnitude more effective than selling clicks or impressions, and that is on the quantitative analysis and insights side for food producers,” says Robert Rosenberg, one of the partners at New Venture Partners who helped engineer ShopWell’s spinout and arranged a $2.4 million seed investment.

The genius of ShopWell’s system, Rosenberg says, is that in order to get personalized food ratings, ShopWell users “voluntarily part with personal information of the sort that marketers would kill for, figuratively.” And the startup has a channel for gleaning more and more personal information over time, about users’ health conditions, gender, age, and activity levels. It can even glean rough geographic information from users’ IP addresses, as well as the local brands they’re putting on their shopping lists. “So when consumers use the site, they leave this trail of breadcrumbs as a side effect, and this is where the insights for food producers come from.”

All of the data ShopWell plans to provide to food companies would be anonymized, of course. But it would theoretically be far more fine-grained than anything the industry is able to get by running a few small focus groups.

Say, to use a completely fictional example, that Unilever is trying to figure out why Kraft’s Miracle Whip is suddenly outselling Unilever’s own Hellman’s Mayonnaise in the deep South. They might learn from the products that ShopWell users are putting on their shopping lists that Southern women with heart disease are three times more likely to choose … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://www.dailygrommet.com Jules Pieri

    As an industrial designer turned entrepreneur, I have a natural bias to root for a team of “my own.” Designers are natural company builders….it’s the same process to pull together parts of a product as it is to pull together parts of a company.

    The bit of caution I feel in my gut over ShopWell is the team’s need to get smart about customer acquisition…that is not a discipline you would learn at IDEO, outside of the key component of building products that are worth time, money and love (no small feat). But there are nuts and bolts things about customer acquisition that are just hard work and expensive, unless they can unleash enough social and gaming components to get a social media-driven lift.

    IF they can get over this huge hurdle, I think the monetization side of the business is a very big opportunity. The budgets are more than there to fund this lower risk, lower cost route to market feedback, for the CPG companies IDEO knows very well. When we work with big companies at Daily Grommet, they are far more interested in the market feedback we can quickly garner than the units we might sell. In the case of ShopWell, I can see enormous savings in the R and D and product launch cycle being enabled.

    Loved the serialized approach Wade!