Not All Sites Created
Equal"> One justification for the higher price is that not all price-comparison sites are the same. Harry Tsao is the co-founder of E-commerce site Smarter.com and, as a student of E-Commerce, argues that finding the lowest price is actually a pretty poor indicator of the quality of a price-comparison site.Froogle and Yahoo Shopping delivered the lowest prices of the group, with Shopping.com coming in third. But Tsao argues the absolute lowest prices are heavily polluted with fraudulent sites that advertise prices for products they dont have, with the schemes goal to upsell consumers once they try and buy. "I think finding the lowest price is a very poor metric" for determining the quality of a price-comparison site, Tsao said. "Sites like PriceRunner and Froogle include anybody that would sell the product online. Froogle especially tries and list everything under the sun from every single merchant online" including "a bunch of illegitimate retailers." Tsao argues that PriceGrabber does much more to weed out frauds, so while their prices may not be the lowest, they are a more accurate reflection of the prices available. Experians Smith said the vendor screening process was one of the attractive features of PriceGrabber. "They are very selective in vetting who their merchants are" based on customer reviews and other methods, Smith said, adding that price comparison sites see a lot of customers choosing on non-price attributes, such as the proximity for a brick-and-mortar location or the comfort-food-aspects of a branded manufacturer and branded retailer. Another differentiation that Tsao argues is SKU-matching to make it more likely that consumers are seeing apples-to-apples product comparisons. "If they dont do SKU association, it might be a completely different product," he said. Experians Smith agreed. "It might be a compatible print cartridge as opposed to the manufacturers own print cartridge," she said. "PriceGrabber will not allow that to happen. They will fire merchants if they are misleading consumers." Another key argument for Experians acquisition is what company officials said is PriceGrabbers site visitor loyalty, resulting in a lot of repeat customers. Forresters Mulpuru agrees that there is a lot of interest in the price-comparison segment today, but she questions the wisdom of that focus. "Im skeptical of the future of price comparison sites. On a Forrester survey, e-commerce marketing budgets grew 20 percent, but the price comparison budget was flat to nominal – maybe five percent," she said. "More money is going to the paid searches like on Yahoo and Google. Its misguided to think the growth in price comparison sites will continue over time." As a business model, Mulpuru also questions the comparison sites longtime viability. About "70 percent of people online in the U.S. dont use shopping comparison sites. This is 2005 data Im referring to. From a retail perspective, Im becoming more skeptical of these price comparison services. Outside of the holiday season, it doesnt work for most retailers," Mulpuru said. "At the same time, youre paying for it, its on a cost-per-click basis. Retailers arent foolish. If theyre paying for clicks and theyre not getting the conversions, its not going to work." Retail Center Editor Evan Schuman can be reached at Evan_Schuman@ziffdavis.com. Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.
A recent Consumer Reports story, for example, did a shootout between Froogle, NexTag, PriceGrabber, Shopping.com, Become.com, Shopzilla and Yahoo Shopping.