By Mark W. Vigoroso E-Commerce Times
02/28/02 10:14 AM PT
Bot providers derive referral revenue from merchants listed on their sites - but many
shoppers research online and purchase through offline channels.
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E-commerce robots, also known as "bots," made waves a couple of years ago by promising
to find bargain-basement prices for online shoppers. So far, though, bots have not proved
to be a panacea.
Price comparison sites like BizRate.com, DealTime.com and
Price.com can indeed
save shoppers time and money, especially in certain
product categories. But as long as price is the
primary metric for bots' comparisons, their value will
be limited, analysts agreed.
"For consumers who buy on the Internet, the biggest
poverty is of time, not of money," Gartner research director
David Schehr told the E-Commerce Times.
Dealer's Choice
Shopping bot providers like New York City-based
DealTime.com use Internet spiders to comb online
merchant inventories, so shoppers can benchmark prices
from a single location.
"Our mission is to help shoppers zero in on the
product they want to buy and determine which merchant
they want to buy it from, based on price, reputation,
product availability and service," DealTime.com
spokesperson Deborah Sack told the E-Commerce Times.
But shopping bots have yet to hook shoppers en masse,
despite their veteran status in the e-commerce arena.
"There is indeed a place for shopping bots," Jupiter
Media Metrix analyst Ken Cassar said in an interview
with the E-Commerce Times. "The question is whether
it is a market for horizontal players or vertical players."
Adoption Apathy
In December 2001, just 10 percent of the online
population used a shopping bot, according to Jupiter
Media Metrix. In the same vein, Gartner analysts
recently reported that buyers use bots to find
shopping sites just 3 percent of the time.
While most bots cut horizontally across multiple
product categories, analysts said bots are most useful
in certain high-end product categories where
potential savings are highest.
"Most of what people buy online is low priced -- $US5
to $50 -- so they do not spend much time to save 50
cents," Schehr said. "Consumers are more focused on
convenience than on price."
Price Rut
Because a multitude of factors drive most purchases,
Schehr suggested that bots should offer more
comparison criteria.
A consumer shopping for a shirt, for example, could
search and sort according to color, size, material
and style, in addition to price.
While parametric searches like this would be ideal,
Cassar said, they would present unique challenges of
scope and scalability.
"The bots would need to inherently understand product
categories," Cassar noted. "The approach and
attributes to help consumers find the right product
can differ by each customer and each product."
For the Record
That said, many bot providers are beefing up content
to complement their price data.
For instance, Los Angeles-based BizRate.com -- which
drew more than 6.5 million unique visitors in January,
according to Jupiter Media Metrix -- aggregates
customer feedback to generate merchant ratings based
on quality, delivery and other customer service metrics.
Electronics shopping bot site Price.com offers a
similar merchant rating system.
Still, most of this content is merchant-based rather than
product-based, limiting the types of parametric
searches common on retailers' own sites.
Both merchant and product data will be critical for
shopping bots' long-term viability, Cassar suggested.
Niche Knock-Offs
For higher-priced items like computers, digital
cameras or stereo equipment, comparison shopping can
pay off, according to analysts.
"On the most popular electronics products, the savings
can be as much as 50 percent and run into the hundreds
of dollars," DealTime's Sack said.
Bot providers prefer consumers to realize such savings online,
since they derive referral revenue from the merchants listed
on their sites.
Brick-and-Dollars
"Consumers who come to BizRate.com are purposeful
shoppers," BizRate.com spokesperson Leslie Barry told
the E-Commerce Times. "Once they research with us,
they link to the retailer they want to buy from."
Ironically, in high-end product categories,
consumers often research online and purchase through
offline channels, Cassar noted.
"For every dollar spent online, another $5.50 is spent
offline as a result of online research," he added.
"Bots are in the bull's-eye of this phenomenon."
Red Carpet Retail
Regardless of whether content-rich product searches
will drive more bot users to purchase online, these
shoppers represent a new, lucrative customer base for
retailers, analysts said.
"The appeal of bots to merchants is that they offer
low-cost transactions," said Cassar. "Bots bring to
their doorsteps customers that they might not
otherwise have sold to."
For its part, DealTime scours more than 1,000
merchants, including Kodak (NYSE: EK), Wal-Mart (NYSE:
WMT), REI, Crutchfield,
Amazon (Nasdaq: AMZN) and Sam Goody.
"Customer acquisition cost is a large proportion of
the online merchant's cost structure, and shopping
search engines provide a [low-cost] customer
acquisition tool," Sack said.
The only risk to retailers, Cassar noted, is that they
could commoditize their brands or products by
agreeing to appear in comparison site listings.
But this risk is
mitigated by tangible opportunity for incremental
new business, he said.