PowerReviews, a company that helps e-commerce sites show product reviews written by other customers, has raised $10 million in venture capital.
When you shop online at REI, RadioShack, Brookstone or 5,000 other Web sites, the reviews you read from other customers warning that the shoes run big or suggesting a digital camera are made possible behind the scenes by PowerReviews. It also sells review software to brands that aren’t retailers, like those in health care, financial services and education, which use it for real-time focus groups.
Shoppers are more likely to make a purchase if they read customer reviews, according to PowerReviews, even if some of the reviews are negative. At Diapers.com, for instance, the percentage of people who made a purchase after shopping on the site increased 14 percent after a month of showing reviews.
E-commerce companies have been slow to adopt social networking tools, even though shoppers say they want to make online shopping a social activity the way it is offline. Product reviews are a small way that Web sites make shopping more social.
Unlike many e-commerce sites, PowerReviews lets people add information about themselves in profiles. A mother reviewing a stroller could say that she has twins and lives in a hilly city, for instance, or a runner could say that he has wide feet. Reviewers can also connect their Facebook accounts to add their profile information.
“It provides a lot more contextual information about that reviewer so the shopper can actually feel more confident and comfortable with who the person is,” said Pehr Luedtke, chief executive of PowerReviews.
People can follow reviewers they relate to and see all their reviews on a site, and future reviews will appear in the shopper’s Facebook newsfeed. Seventy percent of reviews shared to Facebook get comments or likes, according to PowerReviews.
While retailers at first worried about allowing customers to write negative reviews on their sites, they have long since been forced to get over that because customers expect the information, said Cathy Halligan, senior vice president of marketing and sales at PowerReviews and former chief marketing officer at Walmart.com.
PowerReviews, whose biggest competitor is Bazaarvoice, raised the fresh capital from the Four Rivers Group and the Woodside Fund, in addition to previous investors who had already invested $27 million. The company plans to use the money to hire more engineers and salespeople to sell the product to retailers.
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