February 21, 2008, 12:00 AM

Retailers search for ways to improve results in comparison shopping engines

Although traffic volumes have been rising on comparison shopping sites, retailers like Abt Electronics and auto parts e-retailer J.C. Whitney are taking several steps to get better results from e-marketplaces crowded with merchants and shoppers.

Paul Demery

Managing Editor, B2B E-commerce

Although traffic volumes have been rising on comparison shopping sites, retailers like Abt Electronics and auto parts e-retailer J.C. Whitney are taking several steps to get better results from e-marketplaces crowded with merchants and shoppers.

“We are seeing a downturn in performance, measured as cost per customer acquisition and return on investment, from most shopping engines compared to prior years,” says Jon Abt, co-president of Abt Electronics Inc., which sells online at Abt.com as well as through a single store located at its Glenview, IL, headquarters. “In the past, comparison shopping sites have been great for Abt in driving customers to our site for purchases, but their costs have gone up as the traffic to their sites increased.”

Consumers have been showing an increasing interest in comparison shopping sites, particularly during peak shopping periods. Hitwise, a unit of Experian that measures Internet traffic, reports that traffic to comparison shopping sites surged in the final week leading up to last Christmas. It notes that market share of consumer traffic to Shopping.com, a unit of eBay Inc., rose 34% year-to-year that week, as traffic share rose 17% to Smarter.com, 4% to Yahoo Shopping and 3% to Shopzilla.com.

But all that traffic is making it more difficult for retailers to convert visitors to some comparison shopping sites into buyers at the participating retailers, Abt says. “My guess is the problem is the less-qualified traffic comparison shopping engines are sending over to us,” he says, adding: “We are no longer working with certain shopping comparison sites that didn’t perform well for us.”

Abt is also taking several steps to improve performance at sites like Shopping.com, where poor performance recently led Abt to suspend participation, Abt says. The consumer electronics retailer is testing how to present specific product categories, while dropping under-performing ones, and tweaking things like product logs and bid prices. Comparison shopping engines like Shopping.com, Shopzilla, PriceGrabber.com and others typically let merchants bid on pay-per-click fees.

J.C. Whitney is also taking steps to improve the quality of the way it feeds product data to comparison shopping engines, says Geoffrey Robertson, vice president of e-commerce and technology. “We have added several new critical fields (i.e., sale pricing), cleaned up redundancy in product name fields, and made tens of thousands of new items available through the data feed to comparison shopping engines,” he says.

Retailers participating in comparison shopping sites should take a dual approach to maximizing performance, says Scot Wingo, president of ChannelAdvisor Corp., a provider of technology and services that connect online retailers to e-marketplaces.

Wingo divides the comparison shopping engine market into two camps-the first generation of sites based largely on paid-search traffic, and the second generation based on content that attracts natural search traffic-each of which requires a distinct strategy by retailers for maximizing performance.

To succeed with the first generation of comparison shopping engines-including Shopping.com, Shopzilla.com, NexTag, PriceGrabber and Yahoo Shopping, MSN Shopping and Google Product Search-retailers should take the kind of steps Abt and J.C. Whitney are doing in optimizing how they feed product data to the e-marketplaces, Wingo says. “If you’re selling mufflers specifically meant for a 1968 Camaro, make sure the data is mapped correctly and not to other years of Camaros,” he says.

It’s also important to integrate product listings on comparison shopping engines with a retailer’s inventory management system, so that listings are automatically deleted once the featured products are no longer in stock, he adds.

While first-generation comparison shopping engines still produce larger volumes of consumer traffic, second-generation engines-including Pronto.com, Smarter.com, TheFind.com, JellyFish.com and Ciao.com-have been known to produce higher conversion rates, Wingo says. Unlike first-generation engines, most of which pay for search traffic to their sites and then charge a mark-up in pay-per-click fees to merchants, second-generation engines rely on content like consumer-generated product reviews to generate free, natural search traffic, then charge merchants fees tied to each retailer’s sales resulting from that traffic. “Because this is based more on cost of customer acquisition, there’s less risk for merchants,” Wingo says.

Retailers should be willing to experiment with second-generation sites, many of which offer smaller but more highly targeted groups of consumers, Wingo adds.

Nathan Decker, head of e-commerce for outdoor sports gear retailer Evogear.com, says he has had particular success with Sortprice.com, which offers smaller traffic levels than more established first-generation comparison sites but an attractive pricing policy. “They allow you to list your entire product catalog for a fixed monthly amount, and if you purchase a long-term contract, they offer very attractive discounts,” he says. “By paying up front for a longer duration, this channel is one of our most effective comparison engines when looking at ad spend.”

Robertson of J.C. Whitney says he expects to have ongoing success with comparison shopping engines, but through a constantly evolving strategy. “We’ll continue to add new engines to the mix,” he says.

Wingo adds that competition among comparison shopping engines may lead to more services and value offered to retailers. Alisa Weiner, general manager of online comparison shopping for Shopping.com, says the comparison shopping engine is working to improve how it delivers both volume and quality of consumer traffic "by giving shoppers the ability to compare and buy products from the widest range of online merchants and offer helpful product and merchant reviews to make smart buying decisions."

ChannelAdvisor currently works with about 98 comparison shopping engines, but within a year or so the market will offer a core group of about 30 or 40 that will be most effective in tying retailers to consumers, Wingo says.

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