There are big changes afoot at online comparison shopping engines, and one e-retailer reported today at the Internet Retailer Conference & Exhibition how his company boosted sales dramatically last holiday season by careful work with those shopping sites and suppliers.
Sales through comparison shopping engines went up 38% during the 2009 holiday season, reported Peter Cobb, co-founder and senior vice president of the web-only retailer of luggage, handbags, laptop cases and backpacks, which is No. 117 in the Internet Retailer Top 500 Guide.
Cobb said his team recognized last summer that the holiday season would be a tough one and negotiated discounts with suppliers, persuading them to offer discounts in the range of 20% starting around Thanksgiving, instead of waiting until after Christmas to launch sales.
After securing those deals, Cobb said, eBags worked with comparison shopping engines and online affiliates to make sure its products were prominently featured. Not only did sales for the season from comparison shopping sites grow 38%, but the Monday after Thanksgiving—or Cyber Monday as it's often called—produced sales 57% higher than any day in the history of eBags, which has been selling online since 1999.
Cobb said the comparison shopping engines are experimenting with new ideas and he tries to impress upon them that eBags is a nimble company that is ready and willing to try new things. "Internally when they're throwing around these new ideas, we want to be the one they come to first," Cobb said.
By being among the first to participate in new programs, Cobb said eBags can compete more effectively with much larger merchants that have more money to spend on paid search ads and other online marketing programs.
Cobb spoke at a session entitled "Putting the changes at comparison shopping sites to work for you," along with Scot Wingo, CEO of ChannelAdvisor Corp., which helps retailers sell through comparison shopping engines and online marketplaces.
Wingo predicted there would be more changes this year in comparison shopping engines than there has been in the past five years.
Established shopping sites—Shopzilla, Shopping.com, PriceGrabber.com and NexTag—are trying to regain momentum, Wingo said. Those sites lost ground as Google changed its ad-ranking rules in the past two years to make it harder for them to attract traffic through paid search. Meanwhile, Google beefed up its own shopping area, now called Google Product Search, which accounts for the largest share of revenue among ChannelAdvisor clients, at 26%.
The established shopping sites have languished in recent years, Wingo said, because they were bought by companies that sought to milk them for cash, and that did not reinvest enough money in them to keep up with the rapid changes in e-commerce. Also, their model of charging per click has led many retailers to withhold products from those sites as retailers feared they would pay for a lot of clicks that do not lead to sales.
Meanwhile, Wingo said a new breed of comparison shopping sites has emerged with new models, in some cases listing products for free or only charging a retailer when a consumer makes a purchase. He pointed to newcomers such as TheFind and Pronto as examples. This competition is leading the established players to change their tactics, for instance by letting retailers bid below a shopping site's rate card for product placement—say, offering to pay 10 cents per click in a category where the standard rate is 30 cents.
Wingo also took note of the recent announcement by Bing, the Microsoft-owned search engine, that it is ending its cashback program that had proven successful in driving sales for many retailers. Wingo predicted Bing would replace cashback with a new approach aimed at attracting retailers, either displaying products for free as Google does, or charging a fee when the retailer makes a sale as a result of a click from Bing's shopping site. "Keep an eye on what's going on at Bing," Wingo said, noting that Bing will soon be the No. 2 search engine after Google once Microsoft and Yahoo complete their deal for Bing to become the search provider on Yahoo sites.