Window-Shopping
May 22 2000
When comparison shopping first hit the Net a couple of years ago, portals were expected to help turn it into the next big thing. Excite, Yahoo and Lycos , among others, were planning to unleash their newly purchased shopping bots that would let users compare prices and other features on given items across a range of online retailing sites. But the portals' comparison-shopping services soon gave way to a wave of affinity-marketing agreements in which retailers paid premiums for placement. The portals buried their bots.
But a handful of independent sites have given new life to comparison shopping. Four in particular - BizRate.com, ShopNow.com , MySimon.com and DealTime.com - have seen their traffic rise steadily since the holiday season. Two-year-old MySimon, purchased earlier this year by CNET , attracted more than 1 million visitors in March, up from 340,000 in October, according to Media Metrix . ShopNow Networks, a public company in which 24/7 Media holds a 19 percent stake, drew nearly 3 million unique visitors in March, up from 1.2 million in October. DealTime, backed by America Online and Time Warner , also hosted some 2.5 million visitors in March, up from 522,000 in October. Leading the group is BizRate, which attracted over 4 million unique visitors in March, doubling its October numbers. BizRate is now more popular than any portal's shopping channel, except for AOL's - a significant fact, given that portals generate about 20 percent of retail e-commerce revenue, according to Jupiter Communications . That means BizRate has emerged as a force in e-commerce.
BizRate, oddly enough, was virtually unknown to online shoppers eight months ago. It started in 1996 as an e-commerce research firm and transformed itself into a comparison-shopping site just before the 1999 holiday season. But thanks to a strong holiday marketing campaign, and a buyer-incentive program, it has grown into the 13th most-popular e-commerce site, according to Media Metrix. Consumers who fill out BizRate's shopping-behavior and satisfaction surveys at 4,000 online retailers receive discounts. Farhad Mohit, BizRate's chairman and founder, says his site not only drives visitors, but it also spurs consumer spending. He adds that 8.5 percent of visitors buy goods at the sites they reach through BizRate - far higher than the average 3.2 percent conversion rate for all e-commerce sites.
BizRate averages a 7 percent commission on each sale originating from its site. Half of its revenue - the company is private and won't release figures - comes from its comparison-shopping service and half comes from sales of research reports based on consumer surveys.
This summer BizRate plans to offer a downloadable browser companion that will automatically comparison shop for you - popping up during browsing sessions at e-commerce sites with the price of an item on other sites. Also included will be an e-wallet that consumers can use at all the sites they visit, similar to one available through Yahoo shopping.
Even without the help of a service like BizRate, four out of 10 shoppers say they sometimes comparison shop, jumping around to as many as five sites before completing a transaction, according to a Jupiter study. College-age shoppers are particularly enthusiastic about comparison-shopping tools: About 60 percent in this age group has used comparison-shopping sites, according to Forrester
Two kinds of consumers are drawn to comparison-shopping sites, according to Forrester analyst Carrie Johnson. Surprisingly, bargain hunters willing to spend time tracking down the lowest price turn out to be a small minority. Price is not always, or even usually, the deciding factor. Johnson notes that 80 percent of buyers using MySimon don't choose the lowest-priced item.
Johnson says the majority are shoppers who track down comparison information - not only about price but also about merchandise features and site services - simply because it's readily available.