Groupon says its focus is on the bottom line, rather than top-line growth.
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One of the web’s allures for consumers is the ability to find discount prices. Thus an online retailer who stakes out the low-price territory faces the challenge of making sure everything it does reflects the fact that it has great deals-whether it is making sure its prices come up near the top on search engine results, making it easy for customers to redeem product rebates or finding unusual reasons to declare a sale.
Executing on that approach is what sets Buy.com apart from other Internet retailers. “Buy.com is driven by the value/price mentality and it is focused on making sure consumers save money,” says Lauren Freedman, president of consultants The E-Tailing Group Inc. “Deals are what Buy.com is all about.”
But having the best price is not enough if you can’t get the word out. That’s why Buy.com works closely with shopping search engines to make sure that at sites like Google, Price-Grabber.com or Shopping.com, Buy.com products get good play in the results. “We make sure we optimize our listings for consumers who are ready to buy,” says Larissa Hall, vice president of marketing. And it’s not shy about buying its way to the top of major search engines. “We do what we have to to make sure we stay on top,” Hall says.
That also means giving careful review to product descriptions to make sure they match what consumers are asking for. “Consumers often use different words or phrases to describe PDAs, for example,” Hall says. “We have to make sure we match all the different descriptions, even consider common misspellings or incorrect terms.”
In addition to paying to get premier listings at shopping sites, Buy.com advertises heavily on informational web sites. “If a consumer is reading about photography, we want links on each page of that web site so the consumer can click to find out about our camera deals,” Hall explains.
Buy.com also isn’t afraid to invest in other services related to saving consumers money. “Buy.com is one of the few that lets customers apply for rebates online on their site,” says Freedman. “Most other sites require consumers to mail in the rebate coupon. That can be a hassle and often, consumers never get the rebates they’re entitled to.”
A final element of Buy.com is tied to unusual sales. “We try to be entertaining and come up with creative reasons to have a sale,” Hall says. While a lot of retailers throw a sale in honor of President’s Day, for instance, Buy.com took a different approach and threw a sale in honor of the California recall vote. “We like to stay up with the times,” Hall says. m
Unique Visitors (monthly)
Chase Merchant Services/Retail Decisions
Search Engine Management
Continuing to push the horizon
Like a superstar athlete who keeps coming in first in different sports, eBay Inc.’s eBay.com routinely tops rankings of web sites by number of unique monthly visitors. Whether the product category is home-and-garden, computers-and-electronics, or apparel-and-beauty, eBay came far out in front of other retailers who are leaders in their field in recent months, according to visitation figures compiled by Nielsen/NetRatings.
In the mass market category, eBay topped all others in terms of unique visitation during a study Nielsen did in September. The numbers put eBay in a field of its own: It recorded 14.4 million unique visitors in one week-more than double the 6.2 million unique visitors to Amazon.com, and more than six times the number of unique visitors to Yahoo Shopping.
One of the biggest challenges for publicly held eBay, a marketplace that channels sales for more than 40,000 sellers, is to keep looking for ways to grow and satisfy investors. So far, that hasn’t been a problem, as eBay has moved into new product categories, showing substantial gains. It reports more than $1 billion in annual gross merchandise sales in eight categories: motor vehicles, computers, consumer electronics, sports, books, clothing, toys and collectibles. It recently introduced a store by Universal Music Group, the world’s largest music company, to sell recordings and assorted other items ranging from lyric sheets to back-stage concert passes. It has also shown strong growth in wholesale markets, increasing its number of business-to-business categories over the past year to 250 from 25.
One of eBay’s strongest characteristics is its scale. With an active user base of some 37.4 million buyers and sellers, it has a unique ability to test new categories. “They can facilitate a marketplace if they see any demand developing on the buying or selling side, even if they don’t do much research,” says Heather Brilliant, an analyst who follows eBay for investment research firm Morningstar Inc. “They have the ability to test new markets without taking on new risks.”
But as big and dominant as eBay has become, it hasn’t forgotten its roots as a marketplace for small buyers and sellers of collectibles and assorted other products. It recently launched a separate, instructional home page to show unregistered users how eBay operates.
Meantime, it continues to grow both in the U.S. and internationally and to develop new revenue streams. It recently agreed to offer its PayPal payment services through CyberSource Corp.’s payments processing services, for example, opening up a new revenue base. “EBay is a very well-managed company, and they will continue to grow,” Brilliant says.
Unique Visitors (monthly)
$23 billion gross merchandise sales (’03 est.)
Search Engine Management
Content Delivery Network