March 28, 2002, 12:00 AM

When searching is no longer enough

Site search technology has undergone radical changes in the past year—and attracted a new corps of competitors

By Kurt Peters

A year ago, two competitors in the site search arena were battling it out for e-retailing market share. Mercado Software Inc., which had been marketing a product since 1999, and EasyAsk Inc., which had just placed its first site search products on retail web sites, were the major contenders in a market that has been searching for a more accurate way to present products to shoppers.

But the landscape is different today-and a lot less lonely for Mercado and EasyAsk. Two start-ups-Endeca Technologies Inc. and Netrics Inc.-both landed significant customers in the last few months. And Endeca is part of a trend that now includes Mercado and EasyAsk toward broadening the definition of search results.

Given that the importance of search has risen dramatically on e-retailer’s to-do lists, it’s not surprising that more competitors are coming into the market. At the end of last year, 76% of 50 web site managers that Forrester Research Inc. interviewed said search is extremely important to their sites. Eighteen months earlier, 68% had rated search extremely important. At the end of last year, no site manager said search was not very important, while 6% of managers had given that answer 18 months earlier.

But at the same time, while 90% of respondents said they were taking steps to improve search, 40% said their efforts had yielded few results. “So much is going on in search,” says Harley Manning, research director, site design and development for Cambridge, Mass.-based Forrester Research, who was one of the authors of Forrester’s report, “Specialize Your Site’s Search,” that came out in December. “While we’ve got web categories that are contracting, such as web content management, there’s been an explosion of search vendors.”

Moving up the hit list

In fact, vendors’ own experience shows the importance that retailers are placing on search today. “Prospective clients are coming to us with search RFPs,” says Stefanos Damianakis, president of Netrics. “That shows they clearly understand the importance of search.”

And the growing importance of web shopping-whether to buy online or to research online and buy offline-is prompting many retailers to focus on search. “Many, many more retailers than we’ve seen in the recent past are anticipating a rebound in retail spending and so they are allocating capital dollars to fix search,” says Bob Alperin, CEO of EasyAsk, which counts LandsEnd.com and ColdwaterCreek.com among its customers. “It’s always one, two or three on their lists.”

Forrester identified nearly 80 vendors of various web search products, Manning says. Forrester includes 21 leading search vendors in its report and identifies five that excel in product search, which is most applicable to retailing. Those five were EasyAsk, Endeca, which powers the search at TowerRecords.com, Mercado, which powers the search on 70 sites, including Macys.com and Petco.com, Oracle Corp. and Requisite Technology Inc. Netrics, which powers the search at high-profile customer BMGDirect.com, was not included in the report but Manning says the company has good product-search software. Forrester gave high marks to some well-known names in web search, such as AltaVista, Google and Inktomi, which focus on content, but lesser grades in product search.

Not only has the market grown in the past year, but the definition of search itself has changed. Today, to most vendors of site-search technology, simple search results are not enough. Endeca, EasyAsk, Mercado and Netrics all offer some sort of search-and-browse results. With the search-and-browse technology, a customer searching for a product will get a list of search results as well as get the results sorted by various attributes. “It’s search coupled with appropriate navigation,” says Matthew Berk, analyst with Jupiter Media Metrix Inc. “It’s a great hedge against losing people.”

A consumer searching a site for a sweater, say, would get not only a list of sweaters, but also a list of sweaters sorted by attributes that she might like to browse through-cotton sweaters, for instance, or cardigans or pullovers, or perhaps by size. Each time she clicks on one of the attributes, the information is re-sorted so she can browse through her new selections by other attributes. For instance, she may choose to browse by size, then choose small. All the sweaters then displayed will be small, and they will still be sorted by other attributes. “It’s like being in a store that sells only the size you want,” says Yaron Dycian, Mercado’s director of product marketing.

Or someone searching for music can start the search with a genre then narrow down to such attributes as artist, compilations, price, oldies, etc. “We are giving customers the option to shop our web site however they want and use whatever path they want to take,” says Mark Bressler, direct-to-consumer division manager of TowerRecords.com. “It creates a portal-like experience.”

Up, up, up

TowerRecords.com represented a major win for Endeca when Tower agreed to install what Endeca calls its “Guided Navigation” product last summer for DVD searches. In January, Tower announced that it would use Endeca technology for all music and video search, replacing Mercado on the site. Since then, Tower has gone public with the results of the technology, giving the heretofore unknown Endeca much credibility.

TowerRecords cites an impressive number of statistics that back up search-and-browse advocates’ claims that the technology increases sales because it puts more potential products at customers’ fingertips, sorted in ways that make it easier for customers to find more products. Among the stats: Conversion rates are up 8.5%, average sales have increased 6%, video sales are up 29% while video orders are up 19%. Customers are spending 14% more time at the site. And gross margins have improved because higher-margin, back-catalog items are more visible to customers. All of this came at a time when TowerRecords.com was doing nothing new in marketing, Bressler says. “It’s a great cross-merchandising tool,” he says.

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