ComparisonEngines

I really hope sweeping changes are in the works. Right now the site is down.

I’d like to think that all my nagging had something to do with it, but I have a feeling the new management team at Shopping.com recognized early this year that not all was right for merchants submitting products to the shopping engine. Because of this, Shopping.com is announcing a slew of programs for Q4 to help merchants sell more effectively on Shopping.com.

The press release highlights:
-Value Based Pricing – addressing some concerns over its syndication partners, Shopping.com seems to realize that not all clicks are created equal. Merchants will be charged different CPC rates based on a number of factors including the quality of the leads they are being sent. I have some concerns about the transparency of the program and the inability for merchants to opt out of the ‘content’ network, but I’m encouraged by this step. Here’s what Shopping.com is sharing with its partners

-SKU Level Bidding – FINALLY. After getting the party line for the last 2 years that merchants aren’t ready for SKU Level Bidding or that it’s on ‘the list’, Shopping.com is moving forward with this program. Merchants will actually be able to move beyond the category level and optimize individual SKUs. After harping on this point for about 2.5yrs, it’s odd to think that this is actually going to happen. Thank you, Shopping.com.

There are a number of details about these programs which I discussed with Alisa, Tomer, and Dariana last night, but I’m actually not sure what was on or off the record, so I’m going to hold off for now discussing specifics.

I think these moves show that Shopping.com actually wants to improve its relationship with its merchants. I can’t remember the last time I associated such a thought with Shopping.com. Have we reached a detente in this chilly relationship which started years ago?

There were two other ‘innovations’ highlighted in the press release:
-shopping cart program – now connected with eBay Express
-distributed commerce program – monetize the 99% of your traffic that doesn’t convert

I’ve covered both of these programs before to some extent, so I’ll let eTail dTail or CSE Strategies pick up my slack…will probably re-visit soon.

Previous Posts
-SKU Level Bidding – June 5, 2006
-JP Werlin’s comments on SKU Level Bidding – June 6, 2006
-Impending Ecommerce Doom – September 4, 2007
-Shopping Engines, Beware of Google Checkout – July 6, 2007

Out with the old management team, in with the eBay…er…um…I mean, in with the new management team.

The following people have left or will soon leave Shopping.com:
CMO, Mike Aufricht
VP Internet Marketing & Business Intelligence, Rob Goldman
CTO and co-founder, Amir Ashkenazi
Vice President, Global Operations and U.S. Merchant Operations, Deana Bergquist
CFO, Rob Krolik sorry about that, I think Rob is still there, just not on the management team page.

Read more about the old kids on the block.

The following people have joined Shopping.com:
Jason Brown has joined as the GM of distributed commerce.
Alisa Weiner has joined as the GM of comparison shopping.
Pehr Luedtke (aka Perh) has joined as the GM of Epinions. He’s been a member of the Epinions community since October 26, 2006 and wrote his first review on January 4, 2007.

Read more about the new kids on the block.

There has also been plenty of turnover in the director/mid-manager/support roles. Director, US Sales & Client Services, Trent Scoffield is leaving soon, not many ‘key’ account managers around, etc.

Huh? As one merchant put it: The biggest shopping engine in the WORLD cannot take one of the most recognized forms of payment in the WORLD!!! What is the WORLD coming to?

The official response from Shopping.com: We are experiencing some difficulty with updating MasterCard credit and debit card information. As a result we removed MasterCard as a payment option.

Look, there are always issues with credit card processing companies. Unfortunately, this has been a problem for over a week and it’s the busiest time of year for Shopping. Ouch.

Meg Whitman, President and CEO of eBay, said a couple strange things in regards to Shopping.com in last week’s eBay earnings call.

First, she said “Shopping.com remains the number one shopping comparison site covering all kinds of products from shoes and iPods to hotels and mortgages.”

I have to question this statement, and I’m really surprised that all the analysts let it slide. What does ‘number one’ mean?

#1 in revenue? I don’t think so. Shopzilla now has had better revenue the last 2 quarters.
#1 in mortgages? No. I think NexTag probably kicks Shopping.com’s tail here.
#1 in hotels? Ahhh…are you communicating with the Shopping.com team? Iggy Fanlo said in an interview with me that “Our hotels category got a little bit clouded because of our talks with eBay. It’s something that we’re still exploring.” Meg, maybe you should sign up for my blog – email newletter and RSS feeds can be found to the right.
#1 in traffic? Hmmm. That’s a distinct possiblity. But if that’s what you mean, then be specific!

In fact, traffic is exactly what Meg meant. According to a representative from Shopping.com, “based on unique visitor numbers from ComScore, we’re number one.”

The problem I have here is that #1 in traffic does not necessarily translate to #1 in revenue or earnings. This should be a major concern, not something to be proud of. The real question here is why Shopping.com is not able to monetize its traffic as well as Shopzilla does. If I had to guess, I’d say that it has something to do with the sources of traffic for Shopping.com. While Shopping.com and Shopzilla both get a ton of traffic from the PPC engines, Shopping.com also gets some traffic from Adware providers where the quality of traffic is often questionable.

Second, Meg said:
“Shopping.com, which we acquired on August 30, had revenues of $29 million, $10 million of which is included in our Q3 results” AND
“Considering these factors, we now expect full-year 2005 net revenues to approximate $4.5 billion, including approximately $45 million from shopping.com, and up to $20 million from Skype”
WHICH TAKEN TOGETHER MEAN that eBay is expecting Shopping.com to have revenue of $35 million for Q4.

Just $35m for Q4? Seriously? What happened to the growth? In Q4 of 2004, Shopping.com had revenue of $31.7m which means that Shopping.com is only expecting year over year growth of 10%. This is abysmal considering that most online retailers expect 15-20% sales growth and everyone talks about the incredible growth within the comparison shopping space. With eBay backing Shopping.com, I’d expect to see an acceleration of growth…like you see at Shopzilla.

Shopzilla has seen their revenues climb consistently the last 3 quarters, bucking the seasonal trends at Shopping.com.

Take a look at the chart to compare Shopzilla’s revenue growth to Shopping.com’s stagnation? seasonal drift? [insert clever phrase]?

Q4 2005 revenue numbers are obviously estimates. Since eBay gave guidance for Shopping.com of $35 million which equals 20% quarter to quarter growth, I applied the same growth rate to Shopzilla which would produce revenue of approximately $42 million.

So who do you think is #1?

At Shop.org, I sat down with Iggy Fanlo, Shopping.com’s President of Worldwide Field Operations. Thanks to Lindsay @ AccessPR for setting up the meeting. Here’s what Iggy had to say…

On eBay & Shopping.com (SDC)…
“eBay’s beginnings were about bringing together community and efficiencies where there weren’t efficiencies – buyers couldn’t find sellers and vice versa. The marketplace flourished, but eBay realized that with PPC services from MSN, Google, and Yahoo!, that the world was not necessarily a closed space. eBay dominates ecommerce – they have a very strong hold on used goods, collectibles, and refurbished products. Anytime there’s scarcity, they do well. However, they weren’t dominating the new and seasoned market. Shopping.com adds a piece of ecommerce that wasn’t their sweet spot. [With Shopping.com], they can make a quick, bold entry and take it to a new level.”

As a merchant [Home Security & Microscopes] on Shopping.com, one thing that concerns me is that I might suddenly find 4 additional merchants selling my products at ridiculously low prices on Shopping.com with big ‘Buy it Now’ graphic next to the listings…
“At the end of the day, the consumer has to be treated as the North Star. The only way to serve the merchants is to thrill the customers. How we implement is to be determined. Consumers want to see it all. They want it in an orderly digestible fashion. They want everything in one place, but they want it differentiated. Give users choice, the most choice. Buy it new for $100 or buy it used in condition Z for $60. On the site, this may take the form of different tabs. We won’t do anything that confuses the user. We’ll try to give people choice. There’s a way of doing it intelligible so you serve merchants and sellers and consumers.”
Read the rest of this entry »

Heard at the ChannelAdvisor Summit…
General
-Trent hinted that there will be features introduced through the Merchant Account Center (MAC) that will “change the game.”
-SDC has the highest conversion and rate on return: Merchants earn nearly $18 on every dollar spent with SDC vs. $4 with Google (Netplus)
-90% of the top 300 merchants in the US are on SDC
-Generated 300m paid leads to over 6,000 merchants in 2004
-Delivering the industry’s best conversion to sale; buyers, not browsers
-We process feeds 2-3 times today, that frequency will go up [as merchants demand it]
-SmartBuy gets 3x the traffic and 3x the conversion to sale

Data Feed Problems
-No post-processing platform
-Minimum filtering capabilities
-Not “Smart” (there’s no connection btw sales data and data feed)
-No taxonomic enhancements (you’re not improving the categories – there’s no standard)
-No data improvements (engines need clean product descriptions and product names)

Data Feed Tactics
-”Invest” today. Don’t wait.

Start Simple
-Feed delivery time (know when the sites process feeds)
-Essentials (stock, pricing, tax, shipping)
-Filtering by price

Then Graduate
-Right product, right place, right time
-Marketing message by product
-Taxonomic improvements
-Data integrity
-The data feed platform is one of the single most important investments in a performance based marketing environment.

Test, Analyze
-Merchants that are constantly testing and analyzing are the retailers that are the most successful
-Repeat
-The merchants that work closely with SDC have better success (stay in touch with SDC)

Questions…
SKU Level Bidding – “It’s on the list”
Data Feeds – “We frequently find that merchants can get some of the products up, but not all. We then crawl those sites to help them out.”
Pricing pressure b/c of Shopping Comparison Engines – “Some of these merchants just can’t survive with their tactic to lower their prices below costs.”
Why the #1 player in the space? – “Consumer experience. Organic traffic is #1 driver”