October 30, 2007, 12:00 AM

Lots of Choices

With the explosion of comparison shopping sites, merchants get more options. The challenge: find the winners.

Not so long ago, any e-retailer forward-looking enough to include then-new MP3 players in the listings it submitted to comparison shopping engines fed them into a category representing the closest match-say, audio systems. Today, however, that same forward thinker would be missing a lot of traffic from qualified would-be buyers if it never updated its data feed to reflect the fact that at comparison shopping engines, MP3 players are now a healthy category of their own.

The expansion of product categories is just one illustration of a larger evolution in comparison shopping sites. Much has changed since comparison shopping engines emerged as a way to let shoppers find and compare prices for the same product across multiple online merchants.

One of the biggest changes is that retailers are now finding themselves on the wooing end as shopping engines vie for their attention in an increasingly crowded field. Online channel management services vendor ChannelAdvisor Corp., for example, supported merchants’ feeds to 24 comparison shopping engines in 2005-today, that number has grown to 60 and includes both domestic and ex-U.S. engines.

The growth imperative

Comparison shopping engines, whether dedicated destinations or attached to portals, are search tools specific to retail. They populate their shopping-only indices largely by way of direct feeds from merchants’ product databases, though they also send out web crawlers. The engines charge retailers a fee whenever a visitor clicks on the retailer’s listing in search results; a few have models that charge per sale rather than per click. One indication of the new competition among comparison shopping engines is that some are incorporating information other than price as a way to provide more decision points to consumers and attract more comparison shoppers. For instance, several engines incorporate quality scores that affect rankings and some offer other indications that highlight a retailer’s listings.

The first generation of comparison shopping sites retain the largest share of shopper traffic. But if they are to keep growing at a healthy rate-particularly critical for comparison engine Shopzilla if it is to justify its $525 million acquisition by E. W. Scripps Co. in 2005 and for Shopping.com in light of its $620 million acquisition the same year by eBay Inc.-they must address retailers’ concerns about rising costs and ROI.

Retailers talk of the rising cost of clicks on comparison engines in much the same way they began to complain about rising cost of clicks in paid search two years ago, a function of more competing merchants using the channel and jockeying for position on the engines. In response, comparison engines have added choices for merchants; for instance, advanced bidding strategies that more closely match a merchant’s cost per click with the desired ROI.

And merchants looking for ROI on click costs aren’t limited to looking at the same established engines. There are new engines to consider, with new features designed to lure shoppers and targeted audiences that can deliver highly qualified traffic.

More opportunities

The new alternatives add up to more opportunities for merchants using comparison shopping as a marketing channel-and potentially, more opportunities for their program to go south if they make the wrong decisions. For merchants, getting the most out of comparison shopping engines now means understanding that when it comes to managing their program, one size does not fit all.

For example, retailer eBags.com, a ChannelAdvisor client, now structures its data feeds to suit the parameters of each engine and it’s getting better performance out of its program as a result. “By breaking out feeds for individual engines as opposed to sending out a master feed, we were able to measure the lift that occurred in particular engines within a month of making the changes,” says Jon Mellen, senior marketing manager.

As eBags’ experience suggests, one theme behind new developments at comparison shopping engines is that the engines offer more ways to individualize programs and more levers for merchants to pull so as to affect results.

Whatever the new approaches, though, one thing remains unchanged: Consumers who use comparison shopping sites are still looking primarily for the best price.

While the default order in which each site presents results to shoppers is generally a combination of relevancy and bid price that varies from engine to engine, shoppers can search and sort results by their own criteria. And price is still the most popular way to sort. “Over 80% of consumers hit the price sort button, so price and brand outweigh the initial default sort,” says Scot Wingo, CEO of ChannelAdvisor.

With today’s wide array of options, making sense of the comparison shopping sites is harder than ever. Here, retailers, consultants and comparison shopping engines offer a roundup of what merchants need to know about what’s new-or remember about what works-to leverage the opportunity.

1. Measure, measure

Before sampling any of the virtual smorgasbord of new merchandising options on established engines and the new venue of emerging engines, experts say retailers should have a mechanism to calculate traffic and return on every expenditure at those engines. “The most important piece of advice I can give any merchant is to use an analytics program to track results,” says Brian Smith, founder and CEO of SingleFeed, an online, self-service data feed management and optimization provider.

2.Scale expectations to category

As a marketing channel, comparison shopping engines have driven better performance in some product categories than others because of how the automated process of matching products works, according to Wingo of ChannelAdvisor. He points out that attributes describing some types of products, such as consumer electronics, are readily comparable, point to point. Attributes of other types of products are described in terms that are less standardized, making the effective use of comparison engines more challenging for categories such as jewelry and apparel.

3. Stay ahead of out of stocks

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