ComparisonEngines

Scot Wingo of ChannelAdvisor has a great post talking about a potential deal between Yahoo! Inc (NASDAQ: YHOO) & eBay Inc (NASDAQ: EBAY). Even though this is nothing more than a rumor at this point, I still think Scot’s post deserves a read.

Update: Ran across this CNN Money article which contemplated a Yahoo/eBay deal in 2000.
-Valuations 6 years ago: Yahoo = $89B, eBay = $27B.
-Valuations today: Yahoo = $45B (down aprx. 50%), eBay = $54B (up aprx. 100%)

ShopWiki is almost ready to launch. The site claims to crawl “more than 120,000 stores” which, if true, would make it one of the most comprehensive comparison shopping engines. See yesterday’s introduction to the new crawler based engines. Here’s an excerpt:

Which brings me back to Dulance and similar shopping search engines which don’t depend on merchant feeds but rather crawl the web for merchants and associated products. These shopping engines don’t impose price floors and get paid through affiliate programs or reasonable pay per click fees. Which means that these services can move past 5,000 merchants, past 50,000 merchants, and maybe past 100,000 merchants…hitting the long tail and possibly becoming an order of magnitude better than the current field of shopping comparison engines.

I’m a little late to the game on ShopWiki and don’t know much about the company, so no review yet. The name of the CEO is under wraps right now…and I haven’t looked into ShopWiki as I did RedCarpet/Pronto…but the CTO & Founder, Eliot Horowitz, sent me the following information:

We are currently in a “soft launch” phase. The site is open to the public, but we have not started our pr or marketing campaigns yet. We plan on officially launching in the middle of April.

Besides crawling, we also have a more advanced search engine and a wiki. You can try searches like “digital camera under $300 at least 5 megapixels,” “1 horespower amplifier,” or “4 inch heels.” The Wiki is starting to reach a point where we have articles on most of the major shopping categories, and many of the not so major ones. As most wikis, anyone can create or edit articles.

More information can be found on the About Us pages of ShopWiki.

Considering that CEO Sergei Burkov is not getting back to me, I have to assume that Dulance has shut its doors. Which is very very odd to say. The history of shopping comparison engines is a very very positive story. Yes, there were some hickups along the way, but in general, every shopping comparison engine which had a VC investment over the last 11 years had a successful exit:

Jango acquired by Excite ($35m)
Junglee acquired by Amazon ($250m)
C2b acquired by Inktomi Product Search ($90m)
MySimon acquired by CNET ($350m $700m…sorry Michael!)
Dealtime/Epinions formed SDC acquired by eBay ($476m)
Bizrate renamed Shopzilla acquired by EW Scripps ($560m)
PriceGrabber acquired by Experian ($485m)
NexTag acquired by… ($850m+)

And the shopping comparison engines, IMHO, are at the beginning of a strong growth period which will see them morph into more comprehensive/relevant and therefore more powerful shopping search engines.

People talk of Google kicking Yahoo’s ass back in the day because Google’s search results were an order of magnitude better than Yahoo’s search results. The top shopping comparison engines, while profitable, growing businesses, have been sputtering along in terms of merchant adoption, which adversely effects their ability to develop a shopping engine an order of magnitude better than plain old Google or Yahoo! search results. Most shopping comparison engines only have around 5,000 feeds. This is due to 2 factors.

First, data feeds are difficult to create, submit, and manage compared to the relatively easy to deal with Adwords and YSM ads. Data feeds take a lot of time and effort to set up and because each comparison engine has different required fields and unique categories, it can take 2 hours to set up each feed. Then merchants have to deal with submission which many times comes down to a FTP upload. File Transfer Protocol is one way to read that. Fuc%&*# Troublesome Process is another, especially if you’re a small business with no tech resources.

Second, because most shopping comparison engines have price floors, they automatically limit the number of products which merchants will submit or will continue to submit to shopping comparison engines. If I sell an Ademco 940 Surface Contact for $2.89 with a 52% margin, that means I make $1.50 per sale. Unfortunately, many of the shopping engines put me in an electronics category with a minimum bid of $0.50. That means that I’d have to convert a sale once every three clicks for the channel to be profitable. HA! I’m the first to admit that shopping comparison engines can convert well, but a 33% conversion rate is not going to happen.

Fix just one of these 2 factors, and merchant adoption will rise, leading to more comprehensive/relevant comparison engines which wouldn’t need to supplement results with Google Adsense. These engines might even become the starting point for shoppers (imagine not having to spend all your marketing dollars to acquire shoppers through Adwords and YSM). Froogle, which I’ve been critical of in the past has amassed around 50,000 merchant feeds (no confirmation, just an estimate) and therefore has a very comprehensive database of products. If it weren’t for the infestation of affiliate and pornographic spam as well as a poor overall user experience (shipping costs and stock status should be required fields in the Froogle field), Froogle could be the top shopping comparison engine and an awesome service. But I digress…the point is, by not imposing price floors (Froogle is free), Froogle has gone from the standard 5,000 feeds to somewhere around 50,000. Let’s say that 50% of those feeds are clean and provide accurate and useful information…Froogle should theoretically have a much more comprehensive database of merchants and products than Shopping.com, NexTag, and PriceGrabber.

Which brings me back to Dulance and similar shopping search engines which don’t depend on merchant feeds but rather crawl the web for merchants and associated products. These shopping engines don’t impose price floors and get paid through affiliate programs or reasonable pay per click fees. Which means that these services can move past 5,000 merchants, past 50,000 merchants, and maybe past 100,000 merchants…hitting the long tail and possibly becoming an order of magnitude better than the current field of shopping comparison engines. Yes, there are still many issues to deal with around building an incredible user experience, but hopefully you’re getting the picture.

Dulance, according to Sergei, was a 2nd generation comparison engine because of the breadth of merchant coverage. While we’re still living in a 1st generation comparison engine world, I’m a believer that services like Dulance will soon become a powerful force in e-commerce. Shopzilla recognizes this as the company is supplementing its feeds with crawled results. Shopping.com as far as I’m able to tell, doesn’t recognize this. Shopping.com has the ability to crawl a site, but it charges $750 to do so…if Shopping.com believed in becoming a 2nd generation shopping search engine and providing the best shopping search experience possible, the company would cut this fee to just south of $0.01.

I don’t know how good Dulance’s technology is, but maybe the 1st generation shopping comparison engines should call up Sergei and check out his assets.

Ok, now that I’ve made the case for 2nd generation comparison engines, critical readers should be thinking I’m crazy… “how can Brian be such an evangelist for 2nd generation shopping engines after one of the first pure-play 2nd generation comparison engine just folded?” Good question. More to come…

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Related Posts:
Dulance – The Long Tail – What Happens When You Move Past Feeds – July 20, 2005
Where’s Dulance? – March 26, 2006

As feared, my email management system switch didn’t go as smoothly as expected with only 25% of subscribers making the transition. If you wanted to make the switch, check for an email from FeedBlitz asking you to confirm your subscription. No such email, but you still want to get daily updates from ComparisonEngines.com containing new posts from the previous day? Subsribe now from the homepage. Included in the daily emails are also posts for which new comments have been submitted.

Also, I’m looking for feedback. Merchants, what exactly would you like me to cover? Comparison engines, what am I not talking about that’s happening in the industry? Also, what do you think of the style/voice of the site? ComparisonEngines is here for you. Let me know what you want. Either post a comment below or email me at ‘brian at comparisonengines dot com’. Thanks! -b

So I’ve been trying to figure out what MSN Shopping is up to and Anotone Gonsalvez at TechWeb beat me to the punch with a short piece about the upcoming launch of Windows Live Shopping.

Antone points out the Beta site which currently links to Windows Live and a general job page which starts to explain what MSN Marketplaces is working on. Also, this Lead Program Manager job description provides additional details.

For those of you unfamiliar with the term MSN Marketplaces, an MSN spokesperson told me, “the MSN Marketplaces team focuses on all shopping and classifieds services for MSN which currently include MSN Shopping and Windows Live Expo (US beta). Stay tuned for a new additions to our product offerings this year!”

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The EW Scripps Company, under the name United Media, owns the worldwide copyrights to a number of comics including Peanuts. Peanuts is responsible for 95% of Scripps’ licensing revenue.

Snoopy.com is the official home of the Peanuts gang. It’s a great site with tons of content which can keep kids of all ages busy for hours. However, the SnoopyStore leaves a lot to be desired as it’s just a partnership with CafePress. Yes, CafePress allows you to customize a lot of apparel (and a few other tchotchies) with Snoopy or Woodstock, but there are thousands more Peanuts products which should be available through the SnoopyStore. How do I know? Check out these search results for ‘Snoopy’ on Shopzilla. I count over 100 categories of products well beyond shirts, hats, and mugs.

Shopzilla prides itself on being a technology company. In 2006 and beyond, this technology focus becomes even more important as all of the shopping search engines need to crawl the web to build more comprehensive and relevant databases of products and then figure out how to automatically categorize products and normalize product pages.

However, I still want an expert’s advice. This expert might be a hired gun creating original content like Ice.com produces with Sparkle Like The Stars. This expert might be a friend or a random group of passionate people – and there are a number emerging social commerce models. Yahoo’s Shoposphere is just one example. This expert might be an editor like Shannon McCarthy or Peyton Mays over at MSN Shopping who can recommend the latest spring styles or holiday gift ideas. There’s also a place for a less human touch that feels a bit human. Examples of this would be PriceGrabber ranking products by popularity or ChoiceStream figuring out my preferences through personalization. Some of these experts aren’t scalable, but all are important and will play a role in helping consumers figure out what to buy.

Which brings me back to Shopzilla and Peanuts. Shopzilla should power the SnoopyStore on Snoopy.com. That’s a no brainer. What I would LOVE to see, though, is a real Peanuts aficianado bring life to the huge selection of Peanuts products on Shopzilla. This list of 100 Snoopy categories doesn’t have the character I’d expect from a comic which inspired indelible Jazz pieces like Cast Your Fate to the Wind and Lucy and Linus (listen to previews) or a beagle who is a “virtuoso at every endeavor- at least in his daydreams atop his doghouse.” This Peanuts expert would bring the human touch to a comic which deserves nothing less.

Moving beyond my creative bizdev/marketing dream come true, doesn’t this just make simple economic sense for Scripps? Yes, Shopzilla still has to be very very efficient at monetizing clicks, but the Peanut’s expert can help consumers figure out what to buy and therefore increase conversion rate…a metric all merchants and all shopping search engines are trying to optimize. From a higher level perspective, Scripps benefits by selling more Peanuts licensed products, and I don’t think the company would have a problem pushing a limited edition, high end Snoopy watch from Fossil over a Snoopy mug from CafePress.

Related Scripps News:
Wall Street Wrong about Scripps (SSP) – March 20, 2006
Comments on the uSwitch Acquisition – March 20, 2006
Another Stellar Quarter for Shopzilla – February 2, 2006
Shopzilla – A Sharp Focus on Techology – November 21, 2005

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From VerticalSearch:

Mobissimo launches Activity Search, it’s first step on a journey to become the virtual travel concierge.

As opposed to that plain old travel search box we’re all familiar with, there’s no destination box on Mobissimo Activity Search, just (you guessed it) activities. A user specifies what he wants to do as opposed to where he wants to go. At this point, users can choose from a drop down list of 20 activities including Film Festivals, Opera Houses, Skiing, and Wine Tasting, but this list will expand over time. If sites like Flickr and Delicious are any indication. The list of activities will expand a lot…

Read more about Mobissimo Activity Search.

As I said last week in an email to my newsletter subscribers, I have updated my email management system to automatically send email updates containing posts from the previous day. It’s a great alternative or addition to RSS.

If you have subscribed to the ComparisonEngines.com email newsletter, in the next 24 hours, you should receive confirmation of your new subscription. This email will come from FeedBlitz and the Subject line will read:
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This is a double opt-in list, so you must click on the link in the email to activate. As always, you can unsubscribe anytime.

If you have any questions, please contact me anytime (‘brian at comparisonengines dot com’).

The day before the uSwitch acquisition was announced on March 16, SSP closed at $48. Counting the 2.8% drop this morning, the stock has fallen $3.39 or aproximately 7% in 2.5 trading days. Ouch! Part of the reason for the drop was a Merrill Lynch analyst note penned by Lauren Fine. In her downgrade, Ms. Fine questioned the strategic fit:

SSP already owns Shopzilla, one of the leading comparison shopping sites in the US and, to date, has enjoyed tremendous financial success top and bottom line as well as solid traffic trends. We would have expected them to leverage this technology geographically or to other areas of comparison shopping rather than make a hefty acquisition to enter a new area of comparison shopping. The business model is different as revenues are generated by commissions from service providers to whom uSwitch delivers new customers.

My Comments…
1. Would have expected them to leverage this technology geographically? I assume she means expanding into other countries. Shopzilla is already a force in the UK, Germany, and France. These are the only markets that really matter in Europe right now for comparison shopping. As for Asia, that’s a completely different story because of the double type character set. Yes, Asia has a number of very attractive markets, but building out Asia operations will not happen overnight.

2. Ms. Fine recognizes that the business model of uSwitch is different, but would have expected Shopzilla to leverage its technology to other areas of comparison shopping? Huh? What other areas of comparison shopping? Shopzilla is pretty darn comprehensive in terms of category coverage. I think Ms. Fine might be referring to areas like travel search, job search, comparison shopping for cars, comparison shopping for online degree programs, comparison shopping for cell phone service. But all of these areas are NEW, just like the services offered by uSwitch. Vertical/meta search and comparison shopping for services are pretty much the only comparison shopping areas which Shopzilla doesn’t cover. But these are completely out of Shopzilla’s core competency.

I think it’s really smart for Shopzilla not to get into these new areas of comparison shopping AND really smart for Scripps to acquire a company already working in these new areas of comparison shopping, also known as lead generation. For the uninitiated…

Read the rest of this entry »

Ok, I’ve been in Silicon Valley since November and it’s starting to grow on me. I’ll definitely be here through the end of the summer…which means I need a new place to live. Any of you mulit-millionaires have a wing for rent in SF or the Valley? Please email me at ‘brian at comparisonengines dot com’.

Also, while Starbucks, Coupa Cafe, and University Cafe have been good to me, I’m thinking that I might be a little more productive in a cubicle. Any non-comparison shopping start-ups in SF or Silicon Valley have an extra one? Please email me at ‘brian at comparisonengines dot com’.

As for you NYers, I’m very jealous that spring is here, and you’ll be able to enjoy the ShakeShack in just 4 days! Smart little viral marketing applet.