With millions of ready-to-buy consumers turning to shopping comparison sites, experts advise retailers to consider participating in one of the Internet’s newest sales channels.
Shopping sites allow merchants to “feed” them lists of products and prices, and then those products are displayed alongside the same products from other merchants when a shopper keys-in a search. For instance, if a consumer visits Yahoo! Shopping and types in “Coleman Sleeping Bag,” he’ll see various styles of Coleman sleeping bags from a variety of vendors—from major retail players to smaller shops. A consumer can easily compare products, prices and shipping costs to look for the best deal. Consumers don’t complete the transaction at the comparison site: They are linked back to the merchant’s site to complete the transaction.
Follow the money
“Online retailers need to be in this marketplace because a good portion of sales across the Internet are coming from the shopping-comparison sites and marketplaces,” said Michael Lambert, CEO of MerchantAdvantage, a company that helps merchants provide feeds to comparison search engines and public marketplaces. “The consumers who come from these sites are buying approximately 25 percent more per sitting. So, when they come to the shopping cart from the shopping-comparison site, they typically spend 25 percent more money than they would have if they just came directly to the site.”
Lambert says there have been significant changes in the comparison-engine marketplace as more companies have entered the arena. Most sites deploy a pay-per-click (PPC) fee structure. These sites charge a merchant for every customer that clicks on their product at the comparison engine. There are also newer models in the marketplace, like Jellyfish.com, that use a cost-per-sale, commission model. Jellyfish.com will only make money if the customer it sends your way actually buys the product.
Lambert encouraged merchants to carefully review the fee structures for shopping sites before beginning. For PPC shopping sites, minimum click bids range from 5 cents to $1 per click at the major shopping sites. Like with other PPC advertising, sites usually allow for merchants to bid on keywords in excess of the minimum requirements.
Mark Bradley, vice president of NexTag, said in a recent edition of Ecommerce Guide that there is a misconception that merchants at shopping engines compete only on price, and that these search environments only drive down margins.
Two types of shopping-engine customers
He said there are two types of shoppers using the shopping engines. The first type consists of consumers considering a well-known merchant, and they will tolerate a somewhat higher price from that merchant, as long as the gap isn’t too large. The second type of consumer is the one that is only looking for the lowest price.
Since a small merchant’s offerings could be placed next to the same product offered by a major retailer, it’s important that a merchant give considerable thought to the products it will post, the price for the products and the categories where these products will be displayed.
For those merchants considering a shopping-comparison site as a new sales channel, Lambert’s firm explained in its April newsletter the two basic product categorization strategies when feeding products to search comparison engines:
- The road less traveled: Search each comparison engine and determine what category has the least saturation of products within your target category. See how you can fit your product into the least saturated category, keeping in mind that a less saturated category might mean less traffic. This method might allow a merchant to get a larger piece of a smaller pie.
- Using the busy road: Get your products seen where shoppers are already going. If your products are competitive in price or are distinctive otherwise, list in a category that is saturated. Use keywords and information that help your product to stand out. This method might allow a merchant to get a piece of a larger pie.