Investing in Shopping Comparison Engines

January 30, 2006

The third most popular question I get is ‘are there any pure play stock picks for comparison engines?’

The answer is no, but here are some ways to play the comparison engine game. In most cases, revenue and profit contribution from the comparison engines are insignificant when looking at the whole picture.

Indirect investment opportunities:
EW Scripps (NYSE: SSP) – the company owns Shopzilla which is a strong contributor to EW Scripps’ profit

GSI Commerce (NASDAQ: GSIC) – Like ChannelAdvisor, Channel Intelligence, Performics, and Mercent, this company will benefit as more merchants realize the benefits of advertising on the shopping comparison engines. In case you missed it, GSI Commerce released a note last week about the company’s success in generating a higher ROI for clients who advertise on the engines.

CNET (NASDAQ: CNET) – the company owns MySimon and CNET Shopper. CNET doesn’t break out results for the shopping comparison engines.

Even more indirect investment opportunities:
eBay (NASDAQ: EBAY) – the company owns, although’s revenue contribution is probably less significant than a rounding error.

Amazon (NASDAQ: AMZN) – technically not a shopping comparison engine, but with Amazon Marketplace, the company comes close. Also if you’re looking at online retailing, you have to consider Amazon.

GUS plc – the company owns PriceGrabber as well as a number of online marketing/lead gen businesses through its Experian Interactive unit.

Yahoo! and Google both own shopping comparison engines, but when you’re in the multi-billion dollar PPC game, the shopping units aren’t even a blip on the radar.

Private companies:
NexTag, ChannelAdvisor, Channel Intelligence, DoubleClick (which owns Performics)

Related Posts:
GSI Commerce Swings Back – February 17, 2006

SideStep Lands at Amazon

January 30, 2006

As reported back in November, SideStep has replaced Hotwire as Amazon’s travel partner. Well, the SideStep/Amazon co-brand site is now up and running.

Here’s the old Amazon travel page featuring Hotwire:

Hotwire on Amazon

Here’s the new Amazon travel page featuring SideStep:

SideStep on Amazon

At this point, the link to the above page is still pretty much burried at the bottom of Amazon’s busy home page and SideStep doesn’t show up on any of Amazon’s travel related pages: Books, Magazines, Luggage, etc, but I assume this will change over time.

I have not received any emails about the new travel section from Amazon, but I assume they will promote the service to people who have travel related products in their wish list.

Below the fold, Amazon has added some links promoting its various travel related content such as Romantic Travel Destinations, Where to Ski, Swimwear:

SideStep Travel section on Amazon

Once you click through to SideStep by performing a search, there’s a bit of Amazon branding at the top of the page. I assume SideStep’s logo will fill in the blank space currently showing:

Amazon on SideStep

So that’s it. When the deal was originally announced, neither company had any comments, but I will follow up and see if I can find out anything new. SideStep is a travel search engine, so I hope the company doesn’t clutter its site with a ton of travel content from Amazon, but Amazon definitely has the opportunity to elegantly push SideStep along side its own travel related content.

In other SideStep news today – SideStep launches in Ireland

Related Posts:
Rob Solomon books a trip on SideStep – January 16, 2006
Mobissimo $100 Offer – November 23, 2005
Travel search hitting tipping point – November 23, 2005

ChannelAdvisor Expanding in Seattle

January 26, 2006

ChannelAdvisor Seattle
ChannelAdvisor recently opened up a Seattle office and the company is looking for talent. Current openings include:

Enterprise Sales Manager – Retail Focus
Enterprise Sales Manager – Manufacturing Focus
Corporate Account Manager

See all the job openings.

Free Clicks at Become

January 25, 2006

Become is running a ‘free clicks for a month’ promotion. Smart idea, and I encourage merchants – especially in the hard goods categories (think consumer electronics) – to take advantage of the opportunity. Sign up with Become here.

As I said, I think this is a good move for the young company…but why not take it a step further? A couple people have told me that Pricewatch offers a free month of clicks to every merchant upon sign up. This deal isn’t part of a special limited time promotion, but rather a standing offer to all merchants.

What Happened at FirstLook 2006?

January 25, 2006

Since I wasn’t able to attend…would love to know what everyone thought of the conference. Please comment below.


Yahoo! Shopping Holiday Recap

January 25, 2006

This was released by Yahoo! at


Back in December, I tried to compare apples to apples and highlight unique user data for all of the shopping comparison engines. Unfortunately, not all the engines were interested in releasing the information AND the audience measurement data from comScore, NetRatings, and Hitwise was a bit messy. I’ll try to figure out a workaround, but in the meantime, I wanted to at least push some of this information out there.

What’s interesting about Yahoo! Shopping’s traffic data is that Cyber Monday actually lived up to the hype. Most comparison engines I talked with leading up to the holidays said that traffic usually spikes around the second Monday in December.

Geoffrey Colvin – Angel Customers and Demon Customers

January 19, 2006

From the Future of Information Summit:

Angel Customers and Demon Customers by Geoffrey Colvin

Colvin’s book is about how a company can find future profitable growth…

“The growth will come from customers – customers are where the money comes from. So obvious that no one says it. We say Europe had a great year…yogurt was down 10%. That’s not completely accurate. It’s more that Europeans bought more profitable services…less people bought our yogurt.”

“You should think of your portfolio of customers and what each of them is worth. Just think about the concept, not lifetime value of a customer. Most customers don’t have the faintest idea. We ask a couple questions to clients: 1) Do you have any unprofitable customers? Most people say that we have some customers who are more profitable than others, but not that they have unprofitable customers. 2) Who are your best and worst customers? Most people can give us names, but when we do the analysis, most people are wrong.”

“Profitablility = economic profitability = total profit minus cost of all capital used in the business. Economic capital is the closest measure to what effects the stock price.”

“Royal Bank of Canada (a customer of Colvin) calculates the economic profit of each one of its 10m customers each month. You can do it too.”

“What do you find when you do this? The profitability of your customers is distributed in a fairly extreme way. Putting them into deciles (most profitable = decile 1, next most profitable = decile 2, least profitable in decile 10). Example was for a company worth $2500 of economic profit. The top decile had profitability equal to the profitability of the entire company. The last decile had economic profitability of -$2000. The average economic profit per customer = $250. Most people are surprised that some customers can be so profitable and others can be so unprofitable.”

“The questions: Do you know which decile which customers are in? Some companies spend money to bring in customers which are reducing the value of the firm (deciles 8, 9 & 10). But at the same time, it’s not necessarily smart to cut off the last couple deciles. While deciles 9 & 10 might include people who are losing you money, you want to turn them from negative to positive, not just get rid of all of them. Sure, there are customers who you want to get rid of – Fidelity Investments example – a customer who called his broker 3900 in one year…but you first want to understand why customers are profitable or unprofitable. You need to understand the needs of the unprofitable companies.”

“Example = Best Buy. They are competing against WalMart and Dell – obviously tough competition. But they are doing well. Why? Because they are dividing customers in terms of needs” (from CIO Magazine – link below):

* Affluent professionals who want the best technology and entertainment experience
* Active younger males who want the latest technology and entertainment
* Family men who want technology to improve their lives—practical adopters of technology and entertainment
* Busy suburban moms who want to enrich their children’s lives with technology and entertainment
* Small-business customers who can use Best Buy’s products and services to enhance the profitability of their businesses

“Best Buy looked at pilot stores and who lived around a particular store. They then change the stores to serve the particular customers living in the area. During the first year, Best Buy stores had same store sales increases on 9%. The pilot stores had same store sales increases of 30%. Why? Because the stores were designed to meet the needs of their customers and the employees (even the ‘Blue Shirts’ on the floor) were empowered to make changes. See this CIO article for more information.”

Colvin’s began his talk about a high network customer of a bank which had a trading account and depository account; both of which were extremely profitable for the bank. The customer then wanted a mortgage, but when he went to the mortgage department of the bank, they weren’t able to do anything special for the customer as the mortgage department and the other departments weren’t in sync. The customer eventually left for another bank to get his mortgage and later transfered some other money to the new bank.

Bringing this back to his talk, the point is that someone at the bank should have been looking out for that kind of customer – the one in the first decile who is already responsible for much of the profitability. As opposed to having people in charge of certain fiefdoms – in this case, mortgages, banking, trading, insurance, trusts, etc., the focus should be on customer segments.

“Treat different customers differently because they have different needs.”

Related Posts:
Future of Information Summit – January 19, 2006
Conferences/Travel – January 12, 2006

Future of Information Summit

January 19, 2006

Ok, I’m sitting in a ballroom at the Grand Hyatt in NYC – at the Future of Information Summit run by Simmons (Market Research Division), an Experian company which “collects information on over 8,000 brands in 460 product categories, creating detailed consumer profiles with over 600 lifestyle characteristics linked to every media genre accessible in the United States. Then we turn that information into illuminating consumer studies, innovative segmentation systems and the most advanced integrated marketing solutions in the industry.” As soon as I sat down, I ran into a representative from another Experian company, FootFall. The company is the “market leader in retail pedestrian monitoring. Our advanced digital cameras and electronic equipment help us provide you with fast, accurate information on pedestrian movement in an easily understood format.”

Ok, so the question is why I’m here? Well, with Experian’s acquisition of PriceGrabber, I thought I needed to understand Experian a lot better. While there are simple and obvious synergies between LowerMyBills and PriceGrabber, I’m trying to understand the bigger picture – where do PriceGrabber and other Experian Interactive companies fit into the incredible wealth of information about consumers which Experian holds?

I’ll be blogging from the conference, so bear with me…some of this might seem a little off topic, but everything should come back to how companies reach and engage their consumers – which is a theme we can all relate to.

Oh, and I just learned that Vice President Cheney is in the hotel – no he’s not speaking at the conference.

Related Posts:
Geoffrey Colvin – Angel Customers and Demon Customers – January 19, 2006 Earnings – No Show

January 18, 2006

Just arrived in NYC. Always nice to return.

As expected, eBay is not breaking out numbers in its earnings release (although I haven’t yet listened to the call, so I don’t know if there’s more to learn).

I believe that if was a huge success story and outperforming expectations that we’d see the numbers. As is, with Shopzilla kickin’ ass for Scripps and PriceGrabber producing incredible margins, I think eBay might be embarrassed to release any financials.

The official company line will most likely be that is just a small operating unit, and that eBay does not break out numbers for all its businesses…but eBay did break out the numbers for Skype ($24.8m since the acquisition or a run rate of about $116m) and has stronger revenue than that.

I’ll listen to the call and contact Hopefully I’ll be able to share a bit more information.

Rob Solomon Books a Trip on SideStep

January 16, 2006

It’s official, Rob Solomon is SideStep’s new CEO.

Rob graciously gave me a call this morning to share the news. He’s on vacation for the next week and will start at SideStep around January 23rd.

He said that “not many people know about SideStep right now, but the people who use SideStep love the service and tell everyone they know about it. The company is where was about 5 years ago.”

As I’ve been saying for a while, I think we’re hitting a tipping point for travel search:

As for travel search (or travel meta-search engines), no one is releasing numbers, and total bookings are tiny compared to those from Online Travel Angencies (OTAs). However, there are a lot of factors which seem to be pointing to a tipping point in the industry: AOL driving traffic to Pinpoint Travel, Yahoo putting FareChase on its main travel page (as opposed to keeping it separate from Travelocity), Google working on travel search, established travel suppliers like Hilton Hotels and American Airlines signing deals with the travel search engines, Amazon choosing to partner with SideStep as opposed to an OTA, DCA3 carrier agreements up for renewal at the same time travel providers are seeing success with direct bookings, Mobissimo (and others) searching Orbitz, Kayak working on cool Google-like aps and an impressive travel only PPC engine, etc.

SideStep is the leader in the meta-travel search arena, but the market itself is tiny in comparison to the online travel agencies (OTAs) like Expedia and Travelocity. For me, the company (and the travel search industry in general) took off with SideStep’s downloadable toolbar application – but I think the whole adware/spyware debate probably leveled the rapid adoption of the toolbar – I swear the # of downloads has been right around 8m for a while now. So what’s in store for Rob as he helps the company get to the next level?

Word of mouth adoption will continue to be important for the company, but SideStep needs to step up internet marketing and more importantly, business development activities. When I say internet marketing, I think there is a place for PPC marketing on Adwords and Yahoo Search Marketing, but the problem is that the OTAs make more money on every sale/lead so they are going to be able to outspend SideStep, Mobissimo, and Kayak.

That’s why business development deals like SideStep’s relationship with Amazon or Kayak’s relationship with About make a lot of sense. Expedia and Travelocity can spend more to acquire a customer, but I think the travel search engines have a better story and therefore some forward thinking sites might be willing to forgo short term financial gains for a partnership that will make users happier in the long run. Or maybe the travel search engines have to pay the big bucks to get the big partnerships and lose money in the short term in order to gain mind-share.

So why is Rob a good choice for SideStep? According to the release, “A veteran of portal and search wars, Rob has seen and touched all aspects of Yahoo!’s business – from startup to hyper-growth. He possesses the knowledge and leadership to take SideStep to the next level and capitalize on a search engine on the verge of mass expansion.”

I just spoke with Susie Marino at SideStep and she added “Rob brings a combination of commerce, advertising, travel and search experience. It’s a hard combination to get in one person.” I hope to catch up with Rob and his new team early in February…so stay tuned.

With all the buzz about SideStep, Mobissimo, and Kayak, it’s easy to forget about the shopping comparison engines’ efforts in travel search. PriceGrabber recently launched it’s travel search, launched it’s hotel search this summer (but quickly got caught up with other activities), and NexTag has long had a travel search feature. While these travel search services are not as powerful as those offered by SideStep, Mobissimo, or Kayak, I think it’s only because the shopping comparison engines have not made them a prioroty. Shopzilla, the leading shopping comparison engine in terms of revenue, has simply partnered with a number of OTAs; the company is dedicated to making sure its shopping search is as good as possible before venturing fully into other areas.

While shopping search still has a long way to go, the shopping comparison engines definitely want a piece of the $60Billion+ online travel market, and I’m sure we’ll see some exciting announcements to that end this year.

Selected Travel Search Posts:
New CEO of SideStep – Rob Solomon – January 12, 2006
Kayak – Interview with Steve Hafner – October 24, 2005
Google Travel – Crash Landing? – November 8, 2005
Travel Comparison Engines – SideStep’s Phil Carpenter – August 24, 2005
Captain Picard and SideStep vs. Captain Kirk and Priceline – July 26, 2005
Mobissimo – More Comprehensive Than Expedia & Travelocity? – June 7, 2005
More Travel Comparison Engine News – May 31, 2005
Interview with Brian Barth, Former CEO and current Board member, SideStep – May 14, 2005


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