Price Check, Please
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.
Especially in today's economic climate, netpreneurs are always looking for creative ways to find new customers. Many have found success by joining price-comparison sites such as BizRate.com, DealTime.com, Epinions.com, mySimon.com and PriceGrabber.com.
Most of these sites use e-commerce robots, or bots, to scour a myriad of Web sites in order to list price comparisons on everything from books to digital cameras. They also allow merchants to sign up and pay for their listings. In general, paid listings usually get better placement.
Some sites offer even more than just price comparisons. Many also help shoppers determine the best merchant for a product or service based on reputation, product availability and service. Some also aggregate customer feedback to generate merchant ratings based on quality, delivery and other customer service metrics.
Comparison sites are free and easy for shoppers to use, and they operate much like search services. The sites don't sell anything; instead, they simply link shoppers to the places that do. The best part is, consumers are visiting these sites in droves. According to a 2001 Jupiter Media Metrix holiday consumer survey, 30 percent of respondents said they expected to visit a comparison-shopping site during the holiday season.
The more than 10,000 Americans conned by Net scams lost a collective
SOURCE: Gartner Inc.
"These sites are widely used, and traffic to these sites has been growing fairly dramatically over the past two years," says Ken Cassar, a senior analyst at Jupiter Media Metrix. "They're easy to use, [they] put a lot of information in one place, and [they] make it easy for people to comparison-shop." In fact, the most popular comparison-shopping sites say millions of consumers visit them regularly every month. As a result, analysts say these sites are perfect customer-acquisition tools for netpreneurs.
"Comparison sites are ideal for small companies that can ship products nationally and that are trying to acquire market share," says Cassar. "[These sites] regularly expose them to millions of pre-qualified, ready-to-buy shoppers. There is really nothing but an upside."
Sites to Behold
One company that uses comparison sites is Zappos.com, an online shoe store with more than 120 well-known footwear brands. Co-founded in 1999 by Nick Swinmurn, the San Francisco company raked in $10 million in 2001 and expects sales to reach $30 million this year.
According to Swinmurn, 29, Zappos.com gained a competitive advantage by joining Bizrate.com and MySimon.com in 2000 and DealTime.com in 2001. "The sites make Zappos.com visible to the shoppers using them and ensure we are visible to comparison-shoppers," he says.
While the sites themselves-and how they work with their merchant partners-are very similar, there are subtle differences between them. BizRate.com's unique draw, for example, is its proprietary merchant rating system based on real consumer feedback. DealTime.com lets consumers sort their searches by store name, store rating and price. PriceGrabber.com's home page design speeds comparison shopping by showing the best price for the most popular items, while MySimon.com allows one-click comparison shopping for popular items.
In 2001, inquiries to online Yellow Pages directories increased to
up from just
SOURCE: Gartner Inc.
Although Swinmurn says these sites work especially well for price-driven businesses, they can also work for retailers like Zappos.com that aren't discounters. "It helps us get our name in front of people and show off the fact we have a better selection than our competitors, who are primarily discounters," he explains.
Cassar says the only sites potentially threatened by comparison sites are established, dominant companies like Amazon.com. "Comparison sites can alert customers to other companies with less expensive products," he says.
Moreover, Cassar says these sites work well for growing businesses, even if those companies aren't able to offer the lowest possible price. "The fact is, consumers tend not to buy from the lowest-priced merchant," Cassar explains. "They'll shop with [the merchant with] the lowest-price reputation. [When] consumers see that your prices are competitive with-or maybe a bit higher than-a national retailer, they may still be inclined to purchase your product."
Dare to Compare
Especially for growing businesses, comparison sites also offer virtually risk-free exposure-after all, retailers only pay to participate when an impression is generated. "Most sites have a cost-per-click pricing model, so merchants do not have to pay unless someone comes to their site," says Cassar. "The only risk is that a shopper will come to your site and not purchase something." Some merchants set price caps as well to ensure they don't spend, say, more than $1,000 on the service per month. When customers have logged enough clicks to equal that amount, they get pulled from the site. In general, it breaks down to companies paying about 10 cents to $1 per click; there is usually a nominal set-up fee as well.
Still, Swinmurn says comparison sites aren't Zappos.com's primary means of finding potential new customers. "We do a lot of advertising online, and we believe it's best to use a mix of marketing and advertising techniques [in addition to] customer-acquisition tools," Swinmurn says. "Comparison sites aren't our best-performing tools, but they're not our worst-performing, either."
Moreover, comparison sites alone shouldn't be looked upon as a customer-acquisition panacea, according to Swinmurn. "To stand out on comparison sites, you must differentiate yourself from the competition, whether it's through pricing or by having the largest selection," he says.
Whether you decide to use them or not, comparison sites can offer growing businesses a major advantage: the ability to compete with larger, more established competitors on a basis other than name recognition.
Melissa Campanelli is a marketing and technology writer in Brooklyn, New York.