Will Private Label Retailers Finally Get Public Online?

If you ask any smart e-commerce leader what site feature they've implemented in the last 2-3 years has been the most effective in driving sales and customer insights, most would likely answer that it's customer ratings and reviews.  While Amazon was early to the party with their book reviews, it is now commonplace to see reviews, usually powered by Baazarvoice or PowerReviews on most leading websites.  The statistics are hard to argue with. Customers love them, and have come to rely on them as the "real" source of helpful information when they shop online. Most retailers love them just as much, as they are a proven driver in search ranking, conversion, and customer satisfaction. The Baazarvoice website is loaded with great stats (in case you need to do an internal sales job to implement this feature), but here are a few highlights:

• 74% of online shoppers say they choose companies and brands based on what say about their customer service experience (2008, Society for New Communications Research)
• Over 58% of shoppers said they used product reviews to make decisions (2007, Shop.org)
• People who read a review are 30% more likely to purchase a product that those who do not (2007, Coremetrics)

Now, as an alumni of private label apparel, I have often wondered how long it would take for those selling their own goods to adapt to this level of public exposure.

Sure, it's one thing to be a brand aggregator (Wal Mart, Zappos, Petco, Office Depot, Amazon and the like). Customer reviews are about somebody else's product.  "Dell made that computer, not us, so go ahead customers, have at it, rip it apart. It only makes us look better for being so open and transparent.  Those reviews help us know which suppliers to covet or drop, and they provide valuable insights into brand preference."

So, now let's say you're a private label merchant.  You've poured your heart and soul into the Fall season line.  Everything looks beautiful together - the colors, the fabrics, the styling. It's a brand story that comes to life beautifully on the landing pages you've built, in the outfitting tools, in email... its YOURS. And then some crazy person on the e-commerce team has the audacity to suggest that you let customers make comments about YOUR product, right there on the website.  Are they crazy? Someone could say something bad and influence other people. Someone might mention a competitive brand in the review.  And for what? This is seasonal product, it's only on the site for about 8 weeks - by the time there are enough reviews to be meaningful, the product will be gone....why should one person's opinion spoil a whole season's worth of sales?

Now, I have no idea if this is really what happens in private label organizations.....but if I do a quick inventory of who has reviews on their sites, JCrew, Eddie Bauer, Gap (including Banana Republic & Old Navy), Land's End, Gymboree and a host of others in the private label game don't offer them. While these players were quick to adopt rich product imagery, outfitting tools and other "one way" forms of merchandising, they have been remarkably slow to move into the world of online interactive customer input. 

While I do understand the likely internal politics and fear, I would argue that the private label retailers have the most to gain from taking the bold move to let their customers talk.  Here's why:

• First, they have passionate followers. Brand loyalists will jump at the chance to say something good about you when you invite them to do so and thank them for their input.
• Second, a majority of the reviews you get will probably be positive. Statistics (thanks again, Bazaarvoice) show that 88% of people who posted or planned to post reviews said they would be positive reviews (2007, Neilsen)
• Third, if a review or two is negative, (get this) it can actually help conversion. Too many positive reviews can leave some people skeptical, and a constructive negative review can actually fuel shopping confidence.
• Fourth, if a bunch of reviews are bad, don't you really want to know so you can take care of the problem?  Why wait weeks/months until the returns flood in? You could catch a manufacturing defect or a fit problem and avoid an even bigger customer satisfaction issue.
• Fifth, what if you could harness those reviews and use the customer feedback to build better products for the next season?

And as for mentioning competitors, if your customer really likes your competitor better than you, again, don't you want to know?  And don't worry, you can screen out abusive, obscene or other reviews that are truly and unfairly damaging.

At the Shop.org Summit last week, I raised my glass to LL Bean, one of the first of the large private label apparel retailers to implement customer ratings and reviews.  While I am sure the internal battle might have been big, the company is already seeing  merchants embrace this powerful new source of customer insight, and thousands of reviews have been posted on the site.  So much for the worry about critical mass.

If you shop private label websites, I suspect there is good news ahead.  These retailers do tend to copy one another, and I would imagine the other private label sheep will follow LL Bean into the greener pasture of public exposure.

Comments

[Yury Polnar]

Hi Sally, Great insights here.

You are completely correct, private label retailers have in fact been slower on the uptake of UGC on their sites, but we are seeing more and more private label retailers adopting customer reviews. Since people are already talking about their products (both on and offline) they are realizing the value of hosting and taking part in these conversations in a controlled and transparent environment.

To echo some stats you mentioned above, of the more than 260 PowerReviews clients, we are seeing less than 8% of all reviews below 3 stars.

Having customer reviews also increases brand loyalty. According to the Center for Media Research, 70% of people write reviews to reward a company (Jan 2008).

And as you mentioned at the end, we too expect these branded retailers to start adopting UGC on their sites in record numbers following the lead of clients like Roxy, Karen Neuburger, Jockey and Quicksilver (just to name a few of our clients).

Thanks for the great post!

Yury Polnar - Marketing Analyst, PowerReviews

[Chris Westfall]

Nice post Sally. Thanks. I wanted to offer a suggested additional line of thinking, albeit slightly self promotional, so apologies.

Yes, what innovators are doing is taking reviews seriously, but also looking for reviews that aren't directly provided to them. In other words, they’re also spending time looking at user generated content that’s not directly sent to them -- on forums, blog posts and the like.

If I have a gripe or praise for United Airlines for example, I'm likely to say things differently if I'm telling UAL directly or if I'm blogging about them. Which is likely more honest about my real feelings?

To really 'listen in' on consumers talking amongst themselves in user generated content online, in combination with analyzing review comments, thecustomerinsightportal.com provides a unique, easy approach. For example: http://customerinsightblog.wordpress.com/2008/09/12/analyzing-yelp-reactions-to-dunkin-donuts/

Thanks again for the nice post.