Written by Jitendra Gupta of KarmaWeb
and edited by Richard MacManus

At the NewTechMeetup
on Tuesday, I saw a presentation from Robert Chea, Founder and COO of PowerReviews.
PowerReviews is a new startup that provides free Amazon.com-like
user reviews to web retailers. Amazon.com reviews are one of the main reasons why the giant retailer is considered the
premier product research site on the Internet. Also, these user-generated
product reviews have contributed to Amazon.com’s spectacular revenue growth.

PowerReviews creates a central repository of user reviews collected from its
retailer customer base. If a
retailer doesn’t want to share the reviews generated on its site,
PowerReviews will charge a monthly fee. Otherwise it is a completely free service. When a retailer signs
up, they get access not just to their own user reviews – but to
all user reviews in the system. By leveraging this distributed model of collecting and
displaying reviews, PowerReviews provides web retailers with many more reviews than a small retailer will typically have. This allows
small retailers
to compete with Amazon.com, by providing shoppers with extensive user-generated
information at the point of sale. In addition, PowerReviews provides several
interesting features that make it easy
to use the user reviews content – like PowerTags, PowerSummary, TagSuggest.


Example user review

Business Model

As we mentioned, PowerReviews provides the reviews service
for free. The business model is based on monetizing the review content through advertising and
pay-per-click mechanisms from their shopping portal (not yet launched, but you
can get a sneak peek). The popularity of
the shopping portal will probably hold the key to monetize PowerReviews
services, so a lot hangs on its success when launched.

This distributed user review model might just succeed in breaking Amazon.com’s stranglehold on
user-generated product
reviews. No wonder other players – e.g. Bazaar
Voice
and Mwave –
are also active in the market, albeit with different monetization models. 

Potential Issues

The
devil though might be in the details. To sign up retailers, who are focused on pushing products
and generating revenue, PowerReviews has to provide flexibility for retailers to pick
and choose reviews (imagine a review which recommends a product that the retailer does
not carry!). This means that PowerReviews
has to maintain a custom set of data for each retailer and a process for
handling all new reviews, on a day-to-day basis. Which potentially increases the cost of
providing the service.


User Reviews Aggregation

Another significant issue is likely to be UI and data
integration. Web retailers are usually very concerned about developing a
site that is easy to use and has a consistent look and feel. As such, embedding
PowerReviews content is going to require significant customizations. For example
see the
depth of integration needed at RitzCamera
(a PowerReviews customer). 

Also, retailers are expected to have slightly differentiated products and bundles in order to provide unique value propositions
to their customers – and to retain some pricing power. Indeed, beta users can
already see some duplicate products being displayed on the shopping portal (see
Cameras). To address this, PowerReviews will need to maintain a master catalog
of all different products and bundles, with information about which products and
bundles map to each other. The need
for this kind of data integration and UI integration is going to impose
significant costs on PowerReviews and the retailers.

Review quality

Any business that provides product reviews as its core
value is likely to only be as successful as the quality and credibility of those
reviews. Now, ensuring the quality and credibility of reviews generated by users in
such a distributed environment — is going to be a tough task. Even Amazon.com,
despite having a unified site, struggles
with ensuring the quality of its user reviews.

To address the issue of credibility of reviews,
PowerReviews has introduced the concept of ‚ÄúVerified Purchaser‚Ä?. A ‚ÄúVerified
Purchaser‚Ä? is a person who a retailer identifies as having purchased the
product under review. While this mechanism is likely to address some
credibility issues, it still might not be effective – as retailers might be
reluctant to share information about the reviewer’s purchases with
PowerReviews. Since most retailers allow anonymous users to post reviews, it is
easy to see how people might go about gaming the system. To address this
potential issue, PowerReviews moderates each review (some of it is delegated to
the retailers). Again, this could be a very expensive process and might introduce
unforeseen biases in the data. A potential solution here could be to build a
reputation system for reviewers (similar to Amazon.com’s top reviewers) that
incentivizes and rewards reviewers for submitting quality reviews. But again, such a system is going to be hard to setup and manage, in a
distributed environment.

Conclusion

In summary, PowerReviews sounds like an interesting startup
with a lot of promise. They are likely to run into a number of marketing,
burn-rate and data quality issues – none of which seems insurmountable though. It’s
going to be challenging, but if they pull it off then they will be a significant
player in a big money segment.