Saturday, 18 September 2010

What is Crowdsourcing?

With designs made by devotees, Threadless has helped Dell sell computers and Havaianas sell flip-flops.

Jake Nickell and Jacob DeHart, a pair of college dropouts from Chicago, had been running Threadless for six years before someone coined a term to describe the company's business model in 2006—crowdsourcing. Part apparel maker and part social network, Threadless has a website where artists can submit designs for T-shirts and have them voted on by a community of followers. The ones that gain the most votes are printed and sold for between $18 and $24 apiece. Artists receive a $2,000 payment and a $500 credit for purchases at the site.
In July computer maker Dell (DELL) unveiled 12 new designs that can be placed into the exteriors of its notebook PCs for an additional cost of $85. The images, which range from a scene in London to a tropical beach, were all made by Threadless devotees. The designs have caught on quickly, according to Dell, which won't give specific sales figures. "We wanted to bring the voice of the consumer in, so teaming with Threadless was an obvious fit," says Rachna Bhasin, general manager of strategic partnerships at Dell.

Earlier this year, Havaianas, the now ubiquitous brand of rubber flip-flops made by Brazil's Alpargatas, partnered with Threadless on a special line of sandals. For its first foray into the accessories arena, Threadless received more than 600 design submissions from contestants around the world. Sandals bearing the six winning motifs went on sale on Havaianas' website in July. Neither company will comment on how revenue is shared, but Jim Anstey, Havaianas' U.S. marketing director, says the Threadless line is now its No. 2 best-selling category online. "We were looking for a way to engage our target audience," says Anstey. "Conventional advertising doesn't work anymore."

More established companies also have experimented with crowdsourcing. In 2002, Mars ran a global contest to choose a new color for its M&M's candy, with more than 10 million chocolate lovers taking part (purple triumphed). And in 2003 more than 360,000 ice-cream aficionados voted to add Primary Berry Graham to Ben & Jerry's lineup of flavors.
"Threadless is an archetypal crowdsourcing company," says Jeff Howe, author of Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business. "They really redefined customer service and marketing as a much deeper, richer process, as opposed to a simple and straightforward means, it would be fairer to say that "conventional advertising doesn’t allow you to engage with your target audience in a way that partnerships can."
For manufacturers and retailers that choose to use this community-based design flavor of crowdsourcing, a major key to success is the excitement generated by the contest. Even the multitudes who don’t win are likely to build a strong link with the business, feeling they’re part of a community. Researchers at University of Colorado had amateurs design skins for MP3 players or mobile phones. When the task was presented from the first as competition against professional designers rather than as only an invitation to customize one’s own product, the amateurs were much more likely to feel pride in their participation.

This new consumer, called “PROSUMER” - a blend of producer and consumer. who is described as a type of consumer who would become involved in the design and manufacture of products, so they could be made to individual specification.
Apple has embraced this idea perfectly when they introduced the apps. Derrick de Kerckhove has called this mass customisation, in which everybody is in effect, a member of a niche market, something Internet e-commerce is encouraging through eliminating the middleman between maker and buyer.


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