Reinventing Market Research: Why We Funded Showcase
We’re excited to announce our investment in Showcase, a next-gen product research company creating innovative solutions for today’s consumer brands. Direct-to-consumer (DTC) brands have been all the rage over the past few years. For the past three years, DTC brands have been growing three to six times faster than the broader e-commerce market. While at Wharton — which is known as the school for DTC startups — Dana Kim was exposed to dozens of these emerging brands all dealing with the same issue: they had no way to iteratively test their products with their target customers at scale.
Product research techniques aren't keeping up with e-commerce innovation
Product research is a difficult subsector of the slow-to-change market research industry, with many companies still relying on techniques like focus groups, mall intercepts, and in-home usage tests. These traditional methods are unlikely to attract the younger, higher-income audience that most DTC brands today are trying to reach. On top of that, traditional market research methods are expensive, (up to $5,000 per person), and results take 6-8 weeks.
Simply put: traditional market research just isn’t built for today’s most innovative and emerging consumer brands.
Showcase’s solution: vending machines and home mailing
Using her background as a market researcher for global brands like Uber, Coca Cola, and Facebook, Dana built Showcase to change the industry as she knew it.
Showcase began as a network of vending machines that allow consumers to get free products in exchange for feedback. Consumers simply walk up to the machine, go to the Showcase app to select the items of their choosing, then scan a QR code to receive their products. Users must provide feedback within 24 hours to maintain access to Showcase; Showcase monetizes this feedback by charging brands on a per-response basis. The first Showcase machine launched on Wharton’s campus in January 2020, with future iterations planned for coworking spaces and premium gyms.
In March 2020, with COVID-19 limiting vending machine traffic, the Showcase team launched The Boxed Club, which provides the same product-for-feedback service via bi-weekly boxes delivered straight to consumers homes. Due to high demand, The Boxed Club is currently referral-only — but we may or may not have the inside track to getting off the waitlist (sign up here with referral code DRFREADER). Ultimately, Showcase envisions their vending machines and boxes operating in parallel, creating a diversified and dynamic product distribution network and consumer insights ecosystem. Vending machines capture high value consumers via strategic placement — for example, MBAs in Wharton’s common area — thereby recruiting them into The Boxed Club database for further market research.
Today, Showcase is disrupting the $2.8B consumer product market research market with their innovative vending machine and in-home mailer solutions. Eventually, the startup aims to address more of the $22B market research market by leveraging their engaged, high-value consumer base across a portfolio of sales and marketing products.
Why We Invested
We believe that Showcase can modernize the market research industry by connecting brands with their target customers at the earliest stages of product development.
Dana is the type of founder who is able to open any door. Time and time again, we have witnessed her execute on extraordinarily difficult tasks, from getting her first vending machine and app built as a non-technical founder, to securing prime placement in the Wharton community space. These attributes, combined with strong founder-market fit, meant that we had to back Dana when she pitched Showcase. She also knows how to build a well-rounded team, having hired Ethan Kellough, from Penn’s Masters of Integrated Product Design program, as Chief Product Officer, to lead Showcase product development, rooted in customer-centric design and epic user experiences. Together, they’re well equipped to execute on the Showcase mission of better consumer insights, for better product development.
Market research is a large industry, and it isn’t going away any time soon. With the continued growth of e-commerce and DTC brands, we believe that companies will continue to actively search for new ways to reach their customers in a more personal, engaging manner. Additionally, the market research ecosystem is highly fragmented and has relied primarily upon the same methods for the past several decades — in other words, it’s ripe for disruption.
We believe that Showcase’s current solution will be an entry point to one segment of this space — consumer products — and that the company will be able to unlock additional expansion opportunities as they build trusted relationships with consumers and brands alike.
Showcase is fundamentally different from existing solutions in the market today. Because of the unique product that Showcase has created, brands can get insights that they would otherwise have to gather through expensive, lengthy, traditional market research at a much greater scale, a faster pace, and a fraction of the cost.
On top of that, Showcase only needs to run three projects per vending machine to break even, before generating 80% margins on every subsequent project. And the numbers for The Boxed Club are even stronger.
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