October 30, 2007, 12:00 AM

Lots of Choices

(Page 2 of 4)

Experts say the most wasteful money a merchant will ever spend on a shopping engine is to advertise products that are out of stock. Merchants must take an item off the comparison engine instantly when it runs out of stock because the chance of conversion is zero at that point. Ditto promotions that have ended. If a merchant’s feed is still advertising iPods at $149 but shoppers who click through see the price is $199 when they reach the site, it adds up to unhappy customers. The best advice is to check with the engine on exactly how many times a day it processes feeds from merchants so merchants can adjust their own feed update schedule accordingly.

4. Feed security seals

With concerns over the security of online transactions an issue with many consumers, e-retailers have long posted seals indicating compliance with security programs on their sites. Now, for an additional fee, they can put that assurance of security into their product feed to shopping engines. Engines PriceGrabber.com, Yahoo Shopping and Pronto.com, for example, have integrated ScanAlert Inc.’s Hacker Safe logo into their product listings. According to ScanAlert, the combination of a higher average click-through rate and a higher average conversion rate amounts to a 15.7% higher overall sales rate when the seal is displayed on both the shopping engine results pages and the merchant’s site on click-through.

The seal, says Michael Wilson, vice president of business development at PriceGrabber, further differentiates merchants’ listings to give consumers an additional data point in their purchase decisions. In fact, the first three months of adding the HackerSafe seal to product listings on PriceGrabber.com has produced a significant boost in sales for online retailers such as PlumberSurplus.com.

Since the seal began appearing next to its product listings on PriceGrabber, daily average sales through that engine have increased 112% and order volume has risen 36%, according to Ryan Douglas, the retailer’s online marketing team leader. Douglas says PlumberSurplus.com is looking to expand the use of the vendor’s seal to his feeds to other shopping engines. The cost to a small retailer of including the image in all of ScanAlert’s shopping partners’ sites starts at $840 per year and rises based on site traffic, according to ScanAlert.

5. Explore new pricing models

Typically, comparison shopping engines charge listing merchants a cost per click by category. That meant a merchant might pay the same fee whether a consumer clicked on a listing for an expensive digital camera or on one for a connector cable. And that made it unprofitable for merchants to list lower-priced products on comparison engines, in the knowledge that if they paid $2 per click, for example, they’d never reach an acceptable ROI on a $10 product.

Merchants thus have refused to list entire sub-categories of products on comparison shopping engines. However, that’s bad for the engines, whose value proposition to consumers is to have the broadest product selection possible. To address that, comparison shopping engines are introducing features that either let merchants secure lower costs per click on products whose prices justify them, or lets them do so more easily than in the past.

Shopzilla in October rolled out an overhaul of its bidding tool. It gives merchants the ability to bid on the cost per click they are willing to pay on any product. They can also group products across unrelated categories based on how well they are performing on the engine and the return they are generating and bid for a cost-per-click price on those products as a group.

Shopzilla since 2001 has allowed merchants to bid for cost-per-click price on individual products by segmenting them out at the level of the data feed. But Bobby Benfield, vice president of merchant sales and operations at Shopzilla, says merchant adoption of this option was limited due to the requirements of the data feed manipulation. “This makes it significantly easier,” he says. In the new tool, merchants can isolate products for different bids at the time they are actually placing the bid rather than when they are feeding data to the engine. The new tool also integrates the product listing with data on a product’s sales performance on the engine to inform merchants’ bids.

6. Pay less than rate card

Responding to the same marketplace demands on the part of merchants, comparison engine Shopping.com in October introduced a number of features including one called value-based pricing. Shopping.com powers the shopping function at a number of publisher sites, but not all of those publisher sites send high quality traffic to the merchants. Value-based pricing recognizes that reality with a dedicated algorithm that measures the conversion rate of each referring publisher to determine the cost the merchant pays on that click.

“If a publisher is sending low quality traffic the cost per click that we are charging the merchant is going to be lower than the minimum,” explains Tomer Shoval, head of merchant services at Shopping.com. “Merchants have cost-of-sale objectives to meet and this will help them reach their goals and sell more items with us than they do today.”

Shopping.com also in October introduced a beta test of SKU-level bidding, which will allow the largest of its listing merchants to bid for a per-click cost on a specific product rather than, as has been the case until now, a single cost per click for an entire category.

7. Get into the referral business

And in something entirely new-at least for retailers on Shopping.com-the engine is debuting a distributed commerce program. Basically, it turns merchants into referral sources able to collect a fee on traffic they send to other retailers.

When there are no relevant results returned from a search of a merchant site, the distributed commerce program will show relevant results from the other 6,000 merchants on Shopping.com. Under the program, Shopping.com shares the fee paid on click-through to any other merchant with the merchant where the consumer’s search originated. “On average, the vast majority of traffic coming to any merchant does not convert,” says Alisa Weiner, general manager of online comparison shopping. “Our goal in partnering with our merchants is to help improve their profitability and this is another way we can leverage our network.”

8. Don’t ignore new feed options

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