ComparisonEngines

An editor at one of the major ecommerce magazines recently asked me a slew of questions for an article, but didn’t use any of my material (or at least I haven’t found the article). Didn’t want it to go to waste, so here’s the Q&A:

Can you comment in general on the growing complexity of comparison shopping engines over the past two years? Specifically, can you comment on how they are offering the ability to compare a broader range of attributes than price – and why?
I don’t think the main shopping engines have grown in ‘complexity’ over the last couple years. In fact, the improvements in user experience that have come with everything ‘Web 2.0′ has basically been lost on the shopping engines. Many of these sites have been set up to monetize traffic as quickly and efficiently as possible as opposed to providing a great user experience. In this way, the established shopping engines have not added many new comparison features. Some newer engines, though, like TheFind and Like.com are creating much richer shopping experiences, encouraging consumers to browse by comparing similar features or styles.

Is price still the main reason consumers look to comparison shopping engines?
Consumers are definitely looking for great deals, but they want those deals from quality merchants. So most consumers sort by price, but then look for the highest rated merchant with the lowest price. Price might be at the top of the list when consumers arrive at the shopping engine, but consumers have learned that some deals are definitely too good to be true.

What is your perspective on the ROI generated for retailers from participating in comparison shopping engines as compared with other PPC marketing channels such as paid search and affiliate programs? Have you seen any supporting data?
The shopping engines provide targeted traffic because consumers who visit these type of sites are often much further down the buying funnel; they are figuring out how much to pay and who to buy from. In this way, conversion rates should hypothetically be higher than other online marketing channels. In many cases this is true, but performance on the shopping engines can vary by merchant, by category, and even by engine. A merchant might be ROI positive on one engine and not on another. Compared to other online marketing channels, the shopping engines are competitive. If a merchant is using PPC engines or managing an affiliate program, that merchant also needs to test out the shopping engines. That’s the beauty of online marketing, with a solid analytics program and a little effort, a minimal spend, say $500, can quickly determine the utility of a new marketing channel.

What about the demands of the data feed? How often do retailers send data feeds to the major comparison engines now – Daily? Hourly? Real-time? Is it more frequently than previously, and why? Is this still a technical barrier to smaller merchants using comparison shopping engines?
Data feeds are extremely difficult for all merchants to manage. The shopping engines need to improve their technology to meet the demands of the merchants. Google AdWords is the standard for online marketing and the shopping engines are just starting to realize this.

The current reality is that merchants are fed up with submitting data feeds. Every shopping engine has a unique data feed specification. Every shopping engine has dozens of quirks which aren’t properly documented, making data feed submission a frustrating experience. So at this point, only the most technically advanced merchants or savviest marketers submit data feeds frequently. Most merchants submit it and forget it because it’s too difficult to deal with.

Data feed management and data feed submission aren’t problems for just small businesses, either. Major brand name retailers have difficulty normalizing their data for the shopping engines and because the shopping engines want data from Target, Wal-Mart, and Amazon, feeds are often processed with poor data quality.

Furthermore, many shopping engines only process feeds a couple times a day. During the peak holiday shopping season, this means that merchants might be paying for clicks, but sending consumers to out of stock listings and thus losing money. Even if the merchant had submitted an updated feed with updated inventory status, the shopping engine might not have processed that information yet.

What is your opinion of the value to retailers of being on second-tier comparison shopping engines as well as, or instead of, the major comparison engines?
The most important piece of advice I can give any merchant is to use an analytics program to track results. Once a merchant has this in place, I’d definitely recommend starting out on some of the main shopping engines, but also testing a couple of the second tier engines. The shopping engines get their traffic from a variety of sources and a merchant might find that Smarter or Become outperforms Shopping.com or PriceGrabber. Most of the world has categorized the engines by traffic – first-tier engines being the highly trafficked ones, second-tier engines being the lesser trafficked ones. However, traffic isn’t the only thing that matters to a merchant. The quality of the traffic matters, too. So if a merchant is properly tracking clicks, costs, and sales, that merchant might find through testing that some of the second-tier engines perform much better than the first-tier engines.

What is your opinion of the value to retailers of social shopping engines, such as StyleHive, ThisNext, etc?
I think that these sites are very much in their infancy and playing around to find a business model. And because Google AdWords allows anyone to monetize traffic, they can play around for a long time and get some buzz for being different. Social shopping has potential, but as opposed to looking at these small players, I’m much more interested in what sites which already have a large social network, like Facebook, or a large number of consumers, like Shopzilla, will do with social shopping. Facebook already has the social component. Adding a layer of commerce on top of that huge social network could be incredibly powerful. Shopzilla already has a huge number of consumers visiting the site. Adding a layer of social networking on top of that consumer base could be incredibly powerful. I think these opportunities are much more exciting than stand alone social commerce sites.

This entry was posted on Saturday, October 27th, 2007 at 8:08 am and is filed under Comparison Engines. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.