Do It Yourself E-Commerce, Part 4: Comparison Shopping Engines
Oct 13, 2006 4:00 AM PT
It wasn't so long ago that technological or economic reasons -- or both -- stood in the way of many people who aspired to launch a retail business online. That's changed drastically in a short span of time. Professional quality e-commerce hosting services, along with a growing range of easy-to-use software tools, have come within the reach of even those with modest budgets.
Part 1 of this five-part series on do it yourself e-commerce takes a look at some of the factors driving the growth of the small business e-tail marketplace, as well as some of the major players involved. Part 2 focuses on key issues and system attributes that aspiring e-tailers should consider when developing their business plans and choosing hosting solutions. Part 3 examines how, and why, a growing number of entrepreneurs -- as well as established brick-and-mortar retailers -- are following in the footsteps of the door-to-door seller by launching their own e-tail businesses.
This fourth installment provides some insight into how e-commerce do it yourselfers can take advantage of an important online shopping tool: comparison shopping engines (CSEs).
Low-Tech Means Low Profits
It seems that the pace of innovation isn't about to let up; nor is the level of competition in the SMB (small and medium-sized business) e-commerce space likely to slacken. The business of providing SMB e-tailers with more-sophisticated business management tools looks like it will continue to grow rapidly, in tandem with the underlying market itself.
Successful comparison shopping engines such as Bizrate.com, Google's Froogle, PriceGrabber.com, Shopzilla and Yahoo Shopping enable customers to quickly and easily search through participating e-tailers' catalogs to find the best prices for desired products -- and they are being joined by a host of others.
"Almost three quarters of U.S. households are connected to the Internet, and the majority use it for researching products online. Retailers can't afford to ignore their multichannel consumers anymore," Tamara Mendelsohn, a principal analyst at Forrester Research, told the E-Commerce Times.
For e-tailers, making effective use of comparison engines has become key to building a successful business. Consequently, they have had to become more knowledgeable and tech-savvy.
Leveling the Playing Field
"Comparison shopping engines function as an alternative to traditional search engines," Aaron Rosenthal, director of channels research at Marketing Experiments, told the E-Commerce Times. "Traditional search engines are information-centric, meaning they attempt to rank sites or pages based on criteria designed to identify information or content. Shopping engines are product-centric, meaning they focus on users purchasing a product."
The use of CSEs has grown rapidly in recent years, which has led to a stream of new market entrants. "In the last few years, Google launched Froogle, MSN launched Shopping.MSN.com, eBay purchased Shopping.com and Yahoo Shopping opened its doors to everyone -- not just Yahoo Stores. The inventory of advertisers on the major CSEs has [likewise] ballooned in recent years, which has also added to the industry's growth," Rosenthal noted.
"Today, the leading shopping engines include Shopzilla, Yahoo Shopping, Shopping.com, NexTag, PriceGrabber and Froogle. There are also several additional companies fighting for market share, including Shopping.msn.com, Shoplocal.com, Shopper.cnet.com, Pricescan.com, Pricewatch.com, etc.," he pointed out.
One of the big incentives for smaller e-tailers to become adept at using comparison engines is their potential to level the playing field and help them compete with their larger cousins.
"CSEs create something of a central marketplace," Rosenthal said. "They eliminate the ad-based advertising model of the traditional engines in favor of a catalog-style product/price-based advertising model."
Marketing Experiments specializes in testing and evaluating online marketing strategies and campaigns.
"Comparison engines are a good source of qualified traffic, because shoppers can compare products based on detailed descriptions, prices and consumer reviews before clicking on your listing. These engines typically convert at a higher rate than standard PPC (pay-per-click) engines such as Google AdWords or Overture," the firm states in a research report on comparison engines and data feed management.
To illustrate how the effective use of data feeds can increase the likelihood that e-tailers' sales and marketing campaigns will lead to profits, Marketing Experiments' researchers conducted an online field test. By demonstrating how to apply and evaluate a few key data feed management concepts, they effectively showed that e-tailers could boost their ROI (return on investment) from 28 percent to more than 200 percent, the firm claims.
Data feeds are helpful in at least three ways:
First, they "allow a merchant to quickly and easily control inventory on any given CSE," Rosenthal noted. "The ability to add or remove large numbers of products in a very brief amount of time is critical to success. Without the use of a data feed, editing product listings can take significant resources, leading to lost profit due to increased time investment and incorrect product listings."
Second, data feeds also allow for quicker syndication throughout the various networks, making for quicker implementation," he added.
Third, careful data feed creation and management can help assure the success of CSE marketing campaigns by providing customers with complete and up-to-date product information that is more informative and richer in keywords than "snipped" CSE descriptions.