On the shelf: crowdsourcing

What's key to success for CPG manufacturers to strengthen retailer relationships and win at the shelf? It’s all about relationships and relevance. When it comes to moving goods, manufacturers rely on their sales representatives to build trust and a strong affiliation with distribution channels. Maintaining this relationship includes not only being in contact with store managers, but also having a good grasp of each retailer’s profile and statistics, such as size, customers, competitors and sales data. A variety of sources—from the retailer’s POS data to Nielsen data—can readily provide this information and help the sales representative determine the best course of action to optimize offerings, promotions and placements and ultimately boost sales.

The Challenge

But what if a manufacturer wanted to know if the actual buyers of their product matched their target demographic? Or if their product display improved sales? Such information could be useful in helping understand their customer base and store dynamics better and make decisions to improve instore performance. Sales representatives or merchandisers, who are responsible for checking in-store displays and campaign executions, could collect this specific data—but such a time-consuming, albeit valuable, activity could impinge on the performance of their primary functions.

The solution: Crowdsourcing

In a 2006 blog post¹, Jeff Howe defined crowdsourcing as “taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.” Before Howe coined the term, companies had already been tapping these large, undefined networks for marketing and ideation purposes. Australia’sMarketing magazine feature² on the “State of Crowdsourcing” showed that fast-moving consumer goods (FMCG) companies had been crowdsourcing ideas since at least 2004, with Coca Cola, Pepsi and Danone using it most actively and with significant results—Coke’s 2011 “energizing refreshment” contest pulled in more than 2,600 entries from 74 countries and logged 92 percent cost saving efficiencies for the soft drink giant versus its standard agency fees and production expenses.

The Forbes piece “Crowdsourcing: Your Key to a More Effective, Engaged Organization?”³ cited businesses that used crowdsourcing to generate ideas, including invention platform Quirky. Product ideas that pass Quirky’s evaluation process get mass produced, and the creator receives a percentage of the sales. Similarly, Wal-Mart’s Get on the Shelf initiative⁴ invites inventors and entrepreneurs⁵ to submit their ideas, with the winning products making their way onto Wal-Mart’s website and store shelves.

Aside from ideation and product development, the retail industry can use crowdsourcing to accomplish a variety of tasks in-store: