One of every five beauty purchases online is made via the Amazon marketplace, according to a new report.
While the free referrals may be slowing slightly, TheFind’s strong traffic still lures online retailers.
Jason Oliver only learned about TheFind about three years ago when it started sending traffic to his site Oompa.com, which sells children’s toys and furniture. Oompa.com hadn’t registered with TheFind and wasn’t sending it a data feed. More importantly, Oompa.com wasn’t paying TheFind anything for the traffic. Oliver, chief operating officer of Oompa.com, wanted more.
“We were getting traffic from them initially and then went looking for them,” Oliver says. “We needed to learn how we could get more traffic.”
Traffic is something TheFind has in spades. Though only five years old, TheFind ranked fifth among comparison shopping sites in unique visitors in October at 11.8 million, comScore Inc. says.
But sending traffic to retail sites for free isn’t much of a business model, and TheFind is now seeking to capitalize on its traffic. Its challenge will be to convince e-retailers that the perks of entering into a paid relationship justify the added costs.
There are signs TheFind is having success in making that case. Early in 2010, TheFind said it was being paid for 35% of the traffic it sent to retailer web sites; by the fall that was up to 40%.
TheFind’s strategy is similar to that of another successful Internet company, says Scot Wingo, CEO of ChannelAdvisor Corp., which manages retailers’ product feeds to comparison shopping engines, including TheFind. “They’re taking a Google approach to this,” Wingo says. “They’ve built up massive traffic because of their large selection, and their paid parts supplement the free parts.”
The whole web world
The way TheFind amassed its broad selection was by creating technology that crawls the web, collecting information from every retail site it can find. As a result, the company says, it now can offer web shoppers a selection of 400 million products from 500,000 e-retail sites. To compare, comparison shopping engine PriceGrabber works with 11,000 merchants. Pronto.com claims more than 25,000 merchants and 75 million products.
Those older comparison shopping engines only display the items retailers send them. And since they charge retailers a fee for every click, retailers often omit items from their feeds that generate lots of clicks but few conversions. That reduces the selection on those shopping sites.
When TheFind was simply scraping data from retailer sites and not charging, it didn’t face that problem. But even as it’s gradually introduced referral fees it’s avoided cutting into selection by charging a retailer only when a click leads to a sale, a pay-for-performance approach that means a retailer will never find itself facing a big bill for clicks that didn’t convert. As a result, retailers have no reason to limit the products they send to TheFind.
TheFind declined to reveal what it charges as a commission on sales, but says its fees are in line with those charged by online marketplaces like Amazon.com, Buy.com and Sears.com. Those marketplace fees generally range from 5-20% depending on product category.
Why would a retailer pay TheFind for referrals when it could get them for free? Because the data TheFind acquires about sales on the site of a participating retailer elevates the reliability and popularity ranking of the product and the e-retailer, which could move the retailer’s products higher in search results on TheFind.
Children’s apparel e-retailer InFashionKids.com pays TheFind for referrals that convert into sales. InFashionKids.com finds products from its main selling categories, such as boys’ tuxedos and Easter dresses, show up among the top 10 results for those search queries, right next to listings from bigger e-retailers like Overstock, BabiesRUs and Amazon. Since joining the paid program “our traffic from TheFind has increased about 40%,” says Jacquie Rizk, vice president of InFashionKids.com. “I attribute this to better positioning on TheFind as well as perhaps to an increase in traffic to TheFind itself.”
While InFashionKids.com established its own relationship with TheFind, most retailers participating in the pay-for-performance program are coming through the agreements TheFind reached over the last year with companies that provide retailer product data feeds to comparison shopping sites: ChannelAdvisor, Channel Intelligence, Mercent and CPC Strategy.
In addition to the pay-for-performance program, TheFind is testing a limited cost-per-click structure that can get participating e-retailers better placement in search results. Siva Kumar, TheFind’s CEO, insists the engine is carefully monitoring how this program affects the customer experience and says paying retailers won’t necessarily appear at the top of search results if TheFind’s algorithm suggests there are products that consumers would rather see.
He compares the program to paying to get a better view at a game in a stadium. Paying something may get a retailer a better view, Kumar says, but it can’t jump from the back row to the front. “No amount of payment is going to get you the front row spot if the data doesn’t support it,” he says.
TheFind also offers retailers free options for improving their rank, basically by providing the shopping site better data. TheFind executives say they have no intention of charging for these. And retailers still can do nothing at all and get the products and store details the crawler picks up listed in search results at TheFind.com; whatever traffic or sales come from those listings are free.
Among the free options for moving up in TheFind search results is the Merchant Program that allows retailers to send a product feed—and, more recently, their Facebook page information—to TheFind. Providing this information gives TheFind’s algorithm more reference points to use when it calculates search rank. TheFind had 25,000 e-retailers participating in the program in November.
Merchant Program participants also can register for the UpFront Merchant program and provide more granular data, such as shipping information and return policies. The company says participating in UpFront helps boost rank on TheFind by an average of 10%. About 10,000 merchants are in the program, TheFind says.