Is Comparison Shopping Dead?


The Early Days

The late 90’s saw more than a few rises (and busts) in the Internet sector. One particular industry seemed to come out of nowhere and quickly made a name for itself: comparison-shopping. Names like NexTag, BizRate and PriceGrabber took the unorganized world of online retail shopping and listed it by price.

For consumers it was great. It gave them one place to view a list of competitors, prices and shipping. Since the comparison-shopping engines (CSE) were being paid by the merchants, there was no cost for the buyer. Consumers were free to window shop all they wanted, get the best price, all from the comfort of their own home.

For online merchants, it was a chance to use the comparison engine’s scale to get their products in front of a large, ready to purchase audience. An independent shop could sell their products right next to Circuit City, and in theory pay the same for the advertising. Since the model was pay-per-click, the larger companies with big marketing budgets were not able to push out the small guys.

These early days were truly the wild west of the comparison-shopping world, where it seemed like merchants of all sizes were making good profits off this advertising channel. The idea was pretty simple: throw your whole product feed at the wall and see what sticks. With CPCs ranging from five cents up into the dollar range, some items would be profitable while others were not. However, over the life of a campaign most merchants saw a positive return.

Today’s Comparison Shopping World

Looking at the CSE world today, you get a much different picture. Comparison-shopping is a multi-billion dollar industry with a laundry list of competitors. In addition, the number of merchants selling in today’s online economy has grown exponentially.

Is comparison-shopping dead? Absolutely not.

The game has changed, dramatically. With competition so high and consumer prices under so much pressure to be low, the old game plan of throwing an entire product feed at each engine does not work anymore. Merchants looking to exploit the benefits of CSEs need to be vigilant in tracking product performance, click costs and return on investment (ROI) if they want to be serious about turning a profit.

Fortunately for merchants there are numerous businesses that have cropped up to help. Companies like SingleFeed provide extensive data feed management and optimization tools across multiple engines, as well as statistic tracking capabilities for merchants of any size. By tracking conversions and ROI down to the subcategory or even product level, merchants can gain a competitive advantage over their competition. It also allows for less click waste and higher profits.

As with any mature industry, in order to be successful a business must stand out among their competitors. With comparison shopping it is not always about being the lowest price. It can often mean paying extra for logos with your advertisement or offering free shipping, even though the price is a little higher. It is also very important to maintain a positive rating with each CSE, since consumers take peer feedback very seriously. There are many shoppers that are willing to pay a few extra dollars to order something from Amazon because they know they can trust them.

The comparison-shopping industry may not be the same gun-slinging industry it was in the late 90s and early 2000s, but that does not mean it is in decline. With online consumers at an all time high and people looking to save money any way they can, the industry is alive and well.

In order to be successful as a merchant, a lot of due diligence is required. If you do not have the time to micromanage your campaigns, hire a firm that can.

Eric Stauffer is an entrepreneur, merchant, and comparison-shopping industry veteran. One if his latest projects involve assisting small businesses with their payment processing and reviewing merchant services organizations such as ProPay and Chase Paymentech.






Comments are closed.