Price Check, Please

Incomparable Value

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
10%
up from just
2%
in 2000
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.

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Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at mcampanelli@earthlink.net.

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This article was originally published in the August 2002 print edition of Entrepreneur with the headline: Price Check, Please.

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