Putting Consumer Reviews to Work: PowerReviews Takes on Amazon, Looks to “Social Navigation” for E-Retailers

10/17/11Follow @wroush

If you’re like me, you do a lot of research online before you make a big buying decision, and sometimes even before a small one. And you lean heavily on the reviews left by other shoppers. My favorite trick, when I’m zeroing in on a specific product, is to read all of the “1 star” or “most critical” reviews first. It’s a surefire way to find out about product glitches, misleading advertising claims, or poor customer service.

In fact, I’d say that the explosion of user-contributed reviews around the Web is one of the three biggest developments benefiting consumers in the e-commerce era (which dates back to mid-1995 or so, when Amazon first turned on its website). The other two are the rise of comparison shopping, which keeps prices in check, and the simple-but-still-amazing fact that you can click a “Buy” button on a website and make a book or a game or a DVD appear on your doorstep without ever leaving home. If you think about it, though, e-retailers themselves haven’t innovated that much around reviews. A review on Amazon today looks and acts pretty much like a review on Amazon in 2002.

But there’s one San Francisco company, PowerReviews, that keeps working to make reviews more useful for consumers and more profitable for e-retailers. I spent some time recently with Andy Chen, PowerReviews’ founder, and learned a lot about how the company sees the world of product research—and what it’s learning that could change the experience of shopping online.

Andy Chen, PowerReviews Founder

Chen says that when the company got started back in 2005, it had two interlinked ideas. The first was that a lot more e-retailers needed customer reviews on their sites, and that it might be profitable to build a white-label review system that companies could plug into their sites rather than having to build the functionality on their own. The second idea was that if you could build this system, it would then be possible to aggregate all of the reviews collected by all of the participating e-retailers into one giant product recommendations site, and use that site to earn money on lead generation and affiliate commissions. That’s exactly what PowerReviews has done with its sister site Buzzillions, which brings together a good chunk of the 23 million reviews sent in by customers of Power Review’s clients. That, by the way, is a group of almost 6,000 companies, including many high-profile bricks-and-mortar brands like Toys R Us, Staples, and REI.

PowerReviews has had to tweak its ideas along the way. It originally provided the review system to e-retailers for free, but the Buzzillions site didn’t turn out to be as profitable as the startup had hoped. So the company had to start charging for the review platform, just as competitors like Austin, TX-based BazaarVoice do. The good news is that “we’ve been growing extremely quickly” on the platform side, while Buzzillions is “still a good revenue source,” according to Chen, whose formal title is Founder and Vice president of Strategic Partnerships. (Pehr Luedtke, a veteran of Shopping.com and Levi Strauss, is PowerReviews’ CEO.)

With some $37 million in venture capital on the line from Menlo Ventures, Tenaya Capital, Draper Richards, Four Rivers Group, and Woodside Fund, PowerReviews needs all the growth that it can get. To speed things up, and to compete with e-commerce juggernaut Amazon, the startup has been trying new strategies like getting consumers to answer each other’s questions about products (that’s a feature called AnswerBox) and integrating the review platform with social media, especially Facebook.

But one of the company’s biggest opportunities, Chen says, may not lie in the reviews, exactly, but rather in what he calls “social navigation” based on all the data PowerReviews collects about the reviews and the reviewers. By analyzing what products people are … Next Page »

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

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  • Lawrence Kahn

    At least Amazon publishes negative reviews. I don’t know if PowerReviews or J&R decided to ignore my one-star review of an extremely expensive shower radio with major flaws, but I do know I can’t trust them. In 2005 I bought a very expensive Asus laptop from NewEgg. It turned out that negative reviews exposing the faults of this laptop had been written before my purchase, but NewEgg chose not to publish them. Reviews are useless if they’re censored, and I believe PowerReviews censors submissions. It’s all perfectly within their terms of use, of course, but they’re not honest reviewers – they’re promoters, and nothing from PowerReviews can be trusted.

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