Product Review Services - Online Product Reviews By Consumers

ONLINE PRODUCT REVIEWS BY CONSUMERS

Competing with sites like ConsumerSearch are a wide range of sites that use product reviews written by consumers. According to a January 2001 article of PC World, "the difference between an expert site and one that uses consumer reviews can be the difference between a well-written opinion full of facts and a vague endorsement or a flaming condemnation of a product." To increase the credibility of its consumer product reviews, one consumer product review site, Epinions.com, allows users to rate reviewers; it also labels the reviews of writers who earn the "trusted reviewer" distinction. Reviews by those who have proven untrustworthy can be blocked via filtering software. Epinions.com also stands out because it pays it writers a nominal fee, one to three cents each time their reviews are read.

Brisbane, California-based Epinions.com was founded in May of 1999 by executives from Yahoo!, Netscape Communications Corp., and @Home. August Capital and Benchmark Capital gave the startup roughly $8 million in venture capital. A preview of the product evaluation site was launched that September, which prompted Goldman Sachs, Dell Computer Corp., and Bowman Capital to issue another $25 million in funding. Epinions spent the rest of the year forging alliances with portals like Lycos, Inc. and Excite@Home, both of whom agreed to add Epinions' reviews to their shopping channels. Microsoft Corp.'s MSN network began using Epinions' reviews at its eShop in July of 2000. The success of these partnerships prompted the site to create its Content Partner Program, which allowed Web sites to incorporate the reviews into their existing content for a syndication fee.

During its first full year of operation, Epinions won several awards, including being named Best Product Advice Web Site by Yahoo! Internet Life. Its reviews database includes more than 200,000 products and services and more than 1 million reviews. The site also houses buying guides, product definitions, and how-to guides. Along with selling its reviews to other Web sites, the firm makes money by sending shoppers who had decided on a product to online merchants like Amazon.com and Travelocity.

Another online product review site based on consumer input is ConsumerReview.com. The site was first created in 1996 as Mtbreview.com, a site for mountain biking devotees that included reviews of bikes, seats, handlebars, and related biking accessories. Eventually, the site expanded into a hub that now encompasses 18 product specific sites, one of which is the original mountain biking site. Other sites include AudioReview.com and SailingReview.com, "where enthusiasts of different activities can get news and information and product reviews," writes CNET News.com columnist Troy Wolverton. "These amateur experts provide detailed reviews—without the expense of hiring an editorial staff." The site makes money by licensing its content to shopping portals such as Yahoo! and AltaVista, selling advertising on its site, and allowing users to click through to various online merchants, who paid a fee for each product purchased by a shopper coming from ConsumerReview. In July of 2001, ConsumerReview and auction giant eBay reached an agreement whereby ConsumerReview will provide product reviews to eBay and provide links to eBay from several of its sites.

Product review site Deja.com got its start in 1995 as Dejanews.com, a site that allowed Internet users to access postings from newsgroup service Usenet. During its first five years of operation, Deja underwent two major overhauls. According to a June 2000 article in BusinessWeek Online, "In May 1999, it shortened its name and relaunched as a site where consumers could swap opinions on thousands of products and services, from VCRs to veterinarians. In March, Deja molted again, this time into what it calls a 'precision buying service,' where consumer reviews are bolstered by expert opinions, related magazine articles, and numerical ratings."

The firm's planned 1999 initial public offering (IPO) never panned out, mainly because non-cash advertising agreements accounted for nearly one-fourth of its revenues, a fact which concerned investors, particularly those already growing leery of dot.com startups. Deja withdrew its (IPO) application in June of 2000. The troubled firm eventually reduced its staff from 140 to a mere 20 employees.

Like many dot.coms, several of the leading product review sites, including deja.com and epinions, were forced to cut costs in 2001 as investors began demanding profitability. In January of 2001, epinions laid off 27 percent of its workforce. Deja continued its downsizing efforts, cutting another 10 percent of its staff before being acquired by Google Inc. in February of 2001. Less fortunate product review sites, such as Productopia.com and Brandwise.com, declared bankruptcy.

While the need for online services such as product reviewing will likely continue to grow as the rate of online shopping increases, the viability of the online product review site business model, as with most other e-commerce models, has yet to be proven.