Comparison Shopping Engine Strategies

CSE Wishlist - Part 3

This is one that I think CSEs should want to embrace because it is all about communication between the merchants and the consumer.

More/better ways to demonstrate value proposition.

There are already elements in existence that help merchants communicate their value proposition, such as promo text, ratings, logos, and obviously the price of the offer itself. However, many possibilities for improvement remain. These are the ones at the top of my mind:

• Real time promotion messaging: The timing around the display of promotional text is painful. Short promos such as one-day sales are pretty much impossible to get right through the feed. Entering such information through the merchant UI with controls over timing, or timing controls in the feed, would allow merchants to be more confident in presenting short term promotions on CSEs.
• Real time price changes: Same as above for pricing. Some merchants have one hour or two hour price drops that can drive a lot of sales but it's impossible to promote such offers on most CSEs right now. (PriceGrabber already allows this one in the merchant interface under "Click-Thrus by Product")
• Warranty and service options: Merchants could put this sort of information in promo text, but it's not as attractive and would be replaced if they had any real promotions going on. There is value to these options, though, especially on certain product types, so some default indication should be made visible as opposed to just burying the information in the description.
• Configuration/Customization messaging: Obviously this can be included in titles, descriptions, and promo text but it's still hard to get the message to consumers, especially when it applies to all of one's products. For this point and the previous one, a possible method to convey this information would be something akin to the gift icon on eBay (but free).

If anyone else has specific ideas, I'd love to hear about them.

CSE Wishlist - Part 2

As I mentioned in my last post, a major theme in this series is that of control for the merchants. Here is another CSE wishlist item in that vein:

More insight and control over affiliate partner sites.

For those who don't know, some CSEs get a LOT of the traffic for which they charge merchants from affiliate partner sites. For example, PriceGrabber's comparison shopping data is used on CNET and AOL Shopping. Shopping.com has hundreds of partners, and offers both a full API or widgets for the less savvy. There are many more examples, enough to make one's head spin, but that is not the focus here.

As a merchant, it is difficult to know what percent of traffic is coming from these partner sites and whether that traffic is converting. The traffic spikes I mentioned in my last post sometimes blindside not only the merchant but the CSEs themselves because they are the product of promotions run by these partner sites.

Shopping.com has taken a step in the right direction by introducing their Value Based Pricing program, which is intended to offset the lower return delivered by some of these partner sites. The system basically lowers the CPC charged for clicks originating from sites that yield lower conversion rates. Kudos to the SDC team for this innovation, but to the merchant, it is still a black box. Merchants would prefer to be at the helm rather than be reassured that something is being done about it.

I think it is fair to include new merchants in the entire network, but allow them to opt out on the partner level. This is not just a way for merchants to control conversion, but also cut back on spend in lieu of the additional budget controls discussed last time.

I am trying to be realistic about these requests, so it may be more likely that CSEs publish a list of partner sites or maybe report how much traffic comes from the network. Regardless of the details I think any step toward transparency would be welcome, but the ultimate goal should be to allow merchants some level of control.

CSE Wishlist - Part 1

Since it's a new year (almost), I thought it might be a good time to discuss some new features from which merchants would greatly benefit. So to all you CSE product managers out there, tune in over the next week or two. Here is the first request:

More budgeting options.

Most CSEs only offer monthly budget caps, but there is no way to control the rate at which that is spent. Much like AdWords, one or both of the following is needed:

• A function that attempts to balance the spend across the month.
• A daily cap that ensures a set amount is not exceeded for any day.

This would be especially valuable for small/medium-sized merchants who want to test the waters but may have trouble keeping their account active because they can't afford to let it run free. There is no reliable way to forecast what traffic levels will be, even for merchants already live on a particular engine (many CSE's own documentation indicates such). Remove the risk so they feel comfortable.

For larger merchants, this would allow feeds to remain larger and lower the risk of having to go dark at the end of the month/quarter. Since spend velocity is currently dictated exclusively by user behavior and engine/affiliate promotions/merchandising, the only lever the merchant can pull is to remove products from their feed. This is a necessary evil but isn't ideal for merchants, engines or consumers.

Most importantly, this will shield merchants from the dreaded traffic spike. Some engines are more prone to this than others, but at times, merchants will see huge traffic increases for a single day, either on a single product or across a few products. Sales may increase, but often the quality of that additional traffic is poor, so the return on that spend is usually very poor. Such spikes typically result in requests for click cost credits at least and complete feed removal at worst, so no one really wins. Ideally the engines would coordinate the promotions that results in such spikes with merchants before-hand as well, allowing merchants to authorize an override of their daily cap.

I think I know what the CSE folks are muttering right now: "Our system architecture can't support this!" and/or, "This will lower our revenue!" I believe you, but I think if you could work toward this, you would get and retain more merchants, meaning more products/listings/revenue in the long term.

One of the overall themes you will see in this series is that of more control for the merchant. Comparison Shopping is a complicated and sometimes overwhelming channel, one that is often misunderstood. I think the more control merchants have, the more likely they are to try the channel, see some success and therefore continue with it.

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Written by Scott Hurff (scott.hurff at channeladvisor dot com)

Google Product Search's New "Free Shipping" Filter

Google has implemented complete pricing and a "free shipping" filter that instantly makes shipping a critical data point in your Google feed. It appears that both shipping and tax information must be configured either in the Google Base interface or in the feed for this to work correctly.

It's pretty clear that many merchants do not currently have these data points set up. I searched on iPod and saw the first result had 52 sellers. When I clicked the free shipping filter, that number dropped to one. A quick glance at the product page indicates that though there were a few merchants with tax and non-free shipping configured, most of the merchants just have blanks in those areas. So if they are offering free shipping but don't have it or the tax configured correctly, they are probably going to lose a lot of traffic this weekend.

If you offer free shipping, you should jump on this. If not, it may not be too critical because the presence of this data does not appear to have much weight in the display algorithm that dictates how offers are ranked. Since Google remains (for the time being anyway) free, getting clicks from users searching for shipping and tax information isn't necessarily bad. It may make your conversion rate appear lower, but free traffic is free traffic and there will likely be some retention.

Kelkoo sold to private equity firm Jamplant

After being acquired by Yahoo in 2004 for €475 million, Jamplant took the French CSE off of the purple giant's hands for less than €100 million earlier today.  

Kelkoo will continue to power Y! Shopping, Cars and Travel.

Sellers on Kelkoo today received the following email outlining the Yahoo's sale and Jamplant's acquisition of Kelkoo:

Dear merchant,

Today, I am extremely excited to inform you that Kelkoo has been acquired by a newly formed private equity company called "Jamplant". Kelkoo will no longer be a subsidiary of Yahoo! and will continue to trade as an independent entity. 

Going forward - your trading relationship with Kelkoo will be unaffected. Kelkoo will continue to power Y! Shopping, Y! Cars and Y! Travel. Administration of your account will also be unaffected, and all current contracts remain valid. 

Through greater levels of investment in our product, systems and back office, we are firmly committed to bring you the highest level of service, ROI and of course the largest price comparison audience available in Europe.

Thanks for your continued support as a valued client of Kelkoo!

Here's the internal communication from Kelkoo to staff on the sale:

Hello Everyone,
It has been since summer since I gave you update email. I have waited because there are so many things nearing launch that I thought it best to wait till they had happened to give the update. Firstly, I would like to end the speculation from the last few months about the future of Kelkoo. Both Toby and I have announced that we were exploring strategic options for the business. One of the options that Laila and I were exploring, in fact pushing for, was to find it a new home for Kelkoo. I am pleased to announce, today, that we have done just that!
The new owners of Kelkoo are a UK based private equity company called Jamplant Ltd funded by several angel investors, and in their own words: “Jamplant Limited is very excited about the price comparison space, and being able to help Kelkoo continue its rapid growth. Philip Smyth, Chairman of Jamplant, believes that with our backing, Kelkoo should be able to accelerate its growth much faster as a standalone company . We are looking forward to working with the highly experienced and established management team at Kelkoo” Laila and I are also very excited about this new phase in the history of Kelkoo, accelerating the growth strategies we have put in place over the last year, and exploring new opportunities for all of us.
So, what does it mean to our daily lives as Kelkoo employees? We will carry on with the great work already in process. This is due to the fact that many people have been working hard behind the scenes to ensure a very smooth transition out of Yahoo! Today at 3pm GMT (4pm CET), we will schedule a video all hands for Kelkoo staff. Please ask any questions that are on your minds to Sasha ( —— ) before the meeting, we will do our best to answer during the broadcast.
I also want to update you on the things we are delivering on our top 3 priorities. Out of the new organization of Kelkoo last October, the Country Managers and the Exec Team have spent time thinking about and stretching our expectations of Kelkoo. That resulted in the following mission statement (slightly altered with the help of our new marketing director, Bernard):

Ø Kelkoo will be integral to the online retail experience by completely satisfying the needs of our users, helping them to find and discover what and where to buy. In doing this, we will ultimately deliver more buyers to retailers than any other site.

To achieve this, we have all been pushing on delivering on the following priorities:

* Fix the Search

o (Convergence) which has seen the launch of Search 5 in France and Netherlands and is currently showing nearly - - - % uplift on revenue per visit

o (Comprehensiveness) we have finalized the agreement with - - -, are working with them to

* Give more noticeable value to users thru creating Kelkoo Club

o - - - launched in all countries in July

o - - - launched in some countries in September

o Cash-Back launched in beta in the UK yesterday, and will launch in FR next week

* Build the Brand

o We have kicked off our own version of project Goldmine , to study and understand our customers and their needs. We have appointed three agencies to help us with the project, which should complete by the end of February. An exciting part of this project will be to interview some employees on “what is Kelkoo”, and feed that back to the business priorities we will establish over the next 6 months.

So you can see, that we are delivering more and faster than ever in our history. Laila and I are proud of the work that has been done so far, and believe that the future of Kelkoo is really bright.

In closing, I feel that it is important to thank Yahoo! for all the investment and work that has gone into Kelkoo and our employees over the past 4 years. To list all of the people we will miss would take an age, but in particular, I would like to thank Toby and Jonathan Wolf for making the new chapter possible.

Regards,

Glen & Laila

Written by Scott Hurff

Follow up - Holiday Season Approaching: Watch Out for Falling CPCs??

Well, it appears that November 1st has come and gone and Shopping.com is the only Comparison Shopping Engine daring to drop their rates for the Holiday Season.  Other major players still plan to increase their rates (per usual) for the holiday season.  However, Shopzilla is offering a small concession by postponing the rate increase from Nov 1st to Nov 20th - a few extra days is always appreciated.

Regardless I am still interested in how Shopping.com's rate decrease will work for them over the coming 2 months.  Specifically as retailers have come to realize Shopping Engines are a "must have" advertising avenue will they find the extra ads for the same spend on Shopping.com is worth additional attention, or not?  And while budgets may be decreasing with the tight economy we see percent spend on Comparison Shopping Engines remaining steady, regardless of CPC increases or decreases... my guess is none of the major engines will starve, but will Shopping.com thrive?

Holiday Season Approaching: Watch Out for Falling CPCs??

As the holidays approach there are many things we all look forward to –  holiday decorations, parties, and gifts (which hopefully means traffic to our retail websites) – but with it comes many things that we usually do not look forward to – long lines, traffic, air travel, and higher marketing CPC rates… or do we?

This year, in a departure from the norm, Shopping.com released their holiday rate card with lower rates for some traditional gift categories… lower rates?, that’s new! Don’t worry the sky is not falling and Shopping.com is not completely losing it, instead they are only lowering rates for a handful of categories (25 to be exact), keeping rates the same for over 160 categories, and raising rates (per usual) for the rest. Still this is not typical behavior for a Comparison Shopping Engine and thus begs the question – is something else at play? While I cannot speak for any engine, Shopping.com included, I do know that Shopping.com has a new CEO who is obviously looking to shake things up in the industry. He is a believer that lower CPC rates will help retailers increase their ROI on the site and, I presume, in turn may convince retailers to sell other products through Shopping.com… the breadcrumb trail always comes back. But is that it?

Sure, this adaptation could also signal that Shopping.com expects the current economy to impact their traditionally profitable Q4 and they are trying to add and keep retailers by using incentives. Or they could be reacting to a decline of retailers that sell in these 25 categories, either now or during past Q4s. Or some completely different reason beyond the understanding of anyone not within Shopping.com. Still, whatever the reason, Comparison Shopping Engines are an important holiday marketing tool and if the site serves a demographic you are interested in reaching and they are offering a discount to your rates, I would suggest you consider it strongly.

Shopping.com has played their [rate] card – will others follow suit?

Thoughts from Shop.org keynote - Borders CEO George Jones

(This post is from Jennifer who is the Product Manager for ShoppingAdvisor and attending Shop.org's annual summit today)

Blogging live from the Shop.org Annual Summit 08 in Las Vegas.  Today the Shop.org conference opened with a keynote from Borders President & CEO George Jones speaking to the strategies his company has taken on relaunching and expanding their presence online.  While Borders new site strategy is interesting and appropriate in our current “social media marketing” online society, I was more intrigued by how Shop.org kicked off the conference. 

Prior to Mr. Jones taking the stage, the conference organizers showed a short video montage highlighting the “voice of the customer” speaking to their shopping trends in this challenging economy. There were some key themes repeated by the many of the consumer’s comments; specifically I heard phrases such as “compare prices”, “coupons”, “cash back”, and “high gas prices” over and over again.  You may not immediately equate these sentiments with comparison shopping engines, but I do.  What I think the consumers are saying is that their pocketbooks are being squeezed and with an increase in the cost of living, especially gas, they must be more conscious of every dollar.  They are looking for retailers who can give them low prices and are interested in shopping without driving (or at least with sites that offer shipping that is less than it would cost to drive and pick it up).  This leads me to believe the importance of internet retailers in the average consumer’s life is increasing and with it the marketing channels that help consumers find good deals, cheap prices, low shipping, or anything else that can save a penny here or there – Comparison Shopping Engines. 

Now is the time, more than ever before, to promote your products on CSEs.  Make sure you are ready for the holiday season, especially if the economy continues to tighten and consumers take these sentiments and trends into Q4 2008.

Redmond, WA: CSE Capital of the World

Microsoft announced recently that the $486 million acquisition of Greenfield Online, owner of the Ciao family comparison shopping sites. Ciao just launched in the US this year, but has been at the top of the heap in the German CSE market for some time. MSN will sell off the online survey piece of the business and retain only the Ciao properties, and apparently plans to wrap the consumer incentive function of Microsoft Live CashBack function (based on technology from their acquisition of Jellyfish.com) into the Ciao sites.

This seems like a reasonable plan to acquire users and revenue in Europe, but What does this means for the US market? MSN, who already owns MSN Shopping, MSN Live Product Search, and the aforementioned MSN Live CashBack, now has a fourth CSE property in the US. One can only think (and hope) that there is some consolidation/integration going on behind the scenes since they currently each require a separate feed. Throwing Ciao into that integration process makes for a lot of work. This work may pay off in EU where Ciao is already known, but it seems like in the US, keeping Ciao.com afloat may be more trouble than it is worth. It's another brand to build at a time when MSN should be focusing on their own brand's competition with Google. CSE's that have little brand recognition, such as Ciao in the US, are predominantly driven by marketing efforts. The efforts on Ciao's part have, so far, not had much impact in the US market, even with the "social" aspect helping them out. Those marketing dollars would be better spent in the US on something other than Ciao.com. MSN's ability to focus may be tested here.

Comparison Shopping Overview

Comparison Shopping Engines (CSEs) are product marketing websites that display aggregated product offerings across multiple retailers. Examples include Shopping.com, Nextag.com, Shopzilla.com and PriceGrabber.com. Consumers often visit CSEs to find the most attractive offer on a product they have already determined they want to purchase. However, some consumers will also use CSEs as part of their product discovery and research process. Once on the CSE, the consumer is able to evaluate various offers from multiple retailers in one place, saving time while finding the best value.

CSE traffic is important to retailers because it represents a sizable set of internet users at some point in the buying cycle, and therefore in the retailer’s target audience. Most CSEs (including all the examples above) charge retailers on a per click basis. Every time a consumer clicks on the offer of a certain retailer, that retailer pays the CSE. The actual amount charged for each click varies by category and by CSE. On many of those CSEs that have this cost-per-click (CPC) pricing model, the retailer has the ability to increase the rate they are willing to pay for each click in exchange for increased visibility on the CSE. There are a few CSEs that are free, two such sites are Google Product Search and TheFind.com. In addition, other CSEs, including Microsoft Live Cash Back, charge not on a cost per click basis but on a cost per acquisition basis, meaning it collects a percentage of the sale price when a consumer makes a purchase.

In order for products to appear on CSEs, retailers must send a product data feed to each CSE on which they choose to advertise. The exact layout of the data feed varies by CSE, but all CSEs require a product price, title, description, image URL and action URL that links to the product page on the retailer’s website. The CSE processes the data from the feed into their system and displays the product information for consumers to search or browse through. When the consumer finds what they are looking for, they click on that offer and are delivered through the action URL to the retailer’s website.

ChannelAdvisor announces RichFX acquisition!

Today we're excited to announce that ChannelAdvisor has acquired RichFX.   RichFX provides over 200 brand-name retailers (50 in the IR500!) with rich media solutions.  RichFX's solutions have shown they consistently increase a retailer's conversion rate 10%+.

Here are some great examples of what the RichFX solutions are capable of:

• Saks - jewelry example (zoom/pan/multi-image view)
• Saks - shoe example
• Men's Warehouse - Build your own Tux.
• Lillian Vernon - Rich  catalog
• Disney - Custom rich catalog
• Wal-mart - Rich circular

This is just a sampling of the solutions we now will be able to offer.

Why are conversion rates so important?
RichFX marks ChannelAdvisor's first foray into a segment of the market that I call 'conversion enhancers'.  Here's our thinking.  We have litterally hundreds of case studies of improving the GMV via ecommerce channels (search, cse, marketplaces) for retailers.  In every single channel the math is effectively the same for return on spend (ROS):

ROS = revenue/cost

if you want to express this as a 'take rate', it's the inverse:  cost/revenue

Expanding ROS out a bit for pay-per-click (CPC) models you get:

• ROS = rev / cost
• rev = (clicks*CR*AOV) {note: AOV is average order value, or on eBay, ASP as there is no cart.  CR is conversion rate}
• cost = (clicks*cpc)
• OR: ROS = (clicks*CR*AOV) / (clicks*CPC)

The clicks effectively cancel out and you are left with: (CR*AOV)/CPC.

Thus for your average CPC ecommerce channel in addition to the channel optimization that you do (CPC, etc.) the most strategic datapoints you can look at are your CR (conversion rate) and your AOV (average order value).

What happens when conversion rates increase?
In our experience, when a retailer enjoys an increase in conversion rates it dramatically improves not only their ecommerce channel ROI, but it also gives them a competitive advantage.  They have several ways to leverage that advantage.  They can use the improved CR to keep their channel spend the same and increase sales or they can drop the savings to the bottom line.  Most retails use CR improvements to double down on their ecommerce channel spend.

What's this mean for Comparison Shopping Engines?
One of the intriguing things to us about the RichFX acquisition is previously this technology was limited to only the websites of retailers.  Retailers spend tons of time and $ in their digital assets, and then when they put their products on CSEs, they are many time stuck with a flat stock-image that is usually teeny tiny.  Here's an example of a boot search on shopzilla.

Imagine you are a boot retailer and you have implemented some really nice rich media on your website. What if you could syndicate that to the CSE and have that same rich experience happen at the CSE? Your clicks would naturally convert better and you'll effectively leverage the merchandising experience throughout your channels vs. limiting it to just your website.

Of course its going to take a while for us to realize this vision, but thanks to RichFX, we are pretty close to having the pieces needed to make this happen.

Closing it out with a conversion rate example

Let's say there's a retailer - RetailerX that is doing some  CPC via CSE.  Their conversion rate is 3.5% and their AOV is $100. RetailerX is paying $.50/click and they get 5000 clicks/month for a particular product.

Their ROS is: revenue /cost

• Revenue = clicks*CR*aov = 5000*3.5%*$100 = $17,500
• cost = clicks*CPC = $2,500
• ROS = rev/cost = 17500/2500 = 7
• Or take rate is = cost/rev = 14.29%

Now the retailer works on improving their CR via some rich media (Note: Rich Media  can also improve your AOV - see the tux builder, but for this example let's just focus on CR).  The retailers is able to improve their CR 10% (from 3.5% to 3.85%)

• Revenue = 5000*3.85%*$100 = $19,250
• cost = $2,500
• ROS = 7.7
• or take rate is = 12.98%

With this example you can see that the retailer is now able to effectively get 10% more out of that $2500 spend.  If the retailer is managing their ecommerce channel via an effective take rate and their margins support 15%, then the 13% take rate for this product now gives the retailer the ability to either pocket that 2% as extra margin, or to increase their CPC, which would give them more clicks and thus more volume of sales for the same effective take rate.

Want to learn more?
If you have any questions about how Rich Media can improve your sales, we're hosting a webinar next week, July 23 at 3pm ET, you can register here.  Alternatively feel free to leave a comment or contact your rep at ChannelAdvisor for more details.

Shopwiki is in ur sitez, raising ur cash

Shopwiki has plans for world CSE domination, and they've apparently raised the cash for it.

ADOTAS reports that Shopwiki has raised a fairly significant round that puts them on "quite solid footing," as Rory Cummings, Shopwiki's CEO, commented.

Shopwiki has plans to:

• Expand beyond UK, France and AU into Germany and the Netherlands
• Launch a "new luxury vertical shopping portal"
• Crawl an index in every European country
• Offer more deals and stores than the competition

The site claims to offer 200,000 stores in the U.S. and 240,000 internationally.

Shopwiki's model shuns feeds in favor of indexing via crawler, and monetizes those results with CPC ads or CPA actions.  Think of Shopwiki more like a product search engine than a typical CSE.  Keyword-driven searches yield easy opportunities for brand keyword targeting.  Most of the relationships are through the major affiliate networks.

Shopwiki is similar to TheFind, a competing product search engine, in that they both crawl and build store indexes.  TheFind, however, prefers a more "pure" approach and doesn't accept CPC or CPA ads within search results.

{thanks to Siva Kumar, CEO of TheFind for the heads-up}

written by Scott Hurff -- scott.hurff at channeladvisor

Is there a method to Microsoft's cashback madness?

Microsoft acquired the Jellyfish CSE and has used it as the core of their rebate program.  Pundits have dismissed this as futile, but over at eBay Strategies, we have some new information and thoughts that could change your opinion.

More m-commerce ramblings

Our friends over at ReadWriteWeb attending Internet Retailer today caught a relevant talk by Nic Covey, Director of Insights for Nielsen Mobile detailing trends in "m-commerce" and outlining some good data points.

To me, there are two distinct version of mobile commerce:

1. SMS purchasing
2. Purchasing through the mobile browser

SMS purchasing is meant to capture the impulse buy in all of us, and surely we've all seen those late-night low-budget commercials to buy ringtones via SMS.  But this innovation has made its way to places like Papa John's, Tim McGraw concerts, CosmoGirl and Stuff (which printed shortcodes next to products), and even Amazon and American Eagle.

But there's also another use case, and that's to cement brand recognition and tie-in.

In Amazon's particular case, TextBuyIt allows one to send keywords to Amazon's shortcode (262966), reply with "1" or "2" to buy an item from returned results, and answer a call confirming details.  Amazon then associates your phone number with your 1-Click settings or your email address and shipping information.

One thing that Amazon's particular case serves is comparison shopping on the road without massive graphical overhead.  It's simple and direct and cements Amazon as the "go-to" for price checks.

American Eagle is doing this to drive in-store traffic, which lets you text yourself items from their e-commerce storefront to find the physical item in your local store.

As for mobile browsing, Nielsen says that 9 million people have used their phone to browse the Web and purchase things (RWW indicates that this is only 3.6 percent of mobile phone subscribers) -- which is paltry in comparison to the ~150mm+ online shoppers.

But it's a growing segment, which increased by 73 percent alone since last April. 

So I'm curious, if you're reading this far, have you ever bought something using your phone?  If so, tell everyone what it is you bought and why you used mobile in the comments.

written by Scott Hurff -- scott.hurff at channeladvisor

Live blogging from Internet Retailer Conference

Here at IRCE, I'm in a workshop around affiliates and along with 80% of the attendees, I'm sitting here with my jaw open because instead of offering ways to maximize your affiliate business, this workshop has essentially been a 90 minute rant about what scum-bags affiliates are and tons of data that are essentially telling retailers to scale back or do extreme policing of their affiliate programs.

Why the anti-affiliate sentiment?
I decided to cover this topic on CSE strategies, because with ChannelAdvisor's ShoppingAdvisor product, we've seen more and more retailers going direct with their top affiliates, and keeping the bottom-tier affiliates in affiliate networks for closer management.  Retailers seem to be separating the wheat from the chaff.

Barbara Hurd from Harry and David talked about how they are fighting affiliates that are doing bad things like saying they have a H+D coupon code, but then send people to competitor's sites.

Vickie Updike from Miles Kimball - pointed to some research they did that showed affiliate drove only 17% NEW orders for them.  In other words, 83% of the affiliate orders were essentially coming to MK were intercepted and MK had to effectively pay for orders they would have gotten anyway.

George Michie went on a rampage and talked about the bad guys and their tricks such as:

• PPC fiends - these guys violate your affiliate rules and do things like buy your keywords at night (night pirates), or use geo targeting to avoid your corp HQ and buy in other regions.  You can catch these, but it's tough.
• Coupon sites - these guys are trained by the consumer press (today show mentioned twice - evidently Matt Lauer is big on coupons)
• Domain squaters - they buy things like plasmatvs.com and do lots of SEO and then charge for traffic to a bunch of affiliates.
• Loyalty programs - eBates kind of programs essentially want to take an affiliate % from traffic you should be getting - avoid them.

What's a retailer to do?
At the end of the day, the panel seemed to be saying that it's time to drop the hammer on affiliate programs, cull out the bad guys and focus more on Web 2 kinds of activities like blogs, user-generated-content, etc.

On the culling side, one of the panelists likened finding your 'good affiliates' like trying to find the good guys in prison.

Ouch - nuff said.

Shopzilla revenue up 34% YOY

Scripps reported today that Shopzilla's Q1 revenue increased to $63mm from $49mm in the same period last year.  It seems, at least temporarily, that Scripps' efforts to turn around the CSE are paying off.

From the 10-Q: "The growth for the quarter was driven by improvements at Shopzilla that allowed the business to more efficiently increase and monetize user traffic...The increase was primarily attributed to paid session growth derived from an increase in bidding on keywords. Shopzilla's net revenue, when considering search marketing costs incurred, increased 34% for the first quarter of 2008 compared with the first quarter of 2007."

Shopzilla is about to be splintered off of the main company into Scripps Interactive, which will be joined by uSwitch, a CSE for home utilities.

"We continue to focus on making improvements to the consumer experience at Shopzilla and driving traffic to the site, and we plan to continue to operate uSwitch with a pared down cost structure to better manage through the changes in energy switching activity we have experienced in recent periods."

written by Scott Hurff -- scott.hurff at channeladvisor

Stylefeeder: one million Facebook installs

Has Stylefeeder just proven that e-commerce can live inside Facebook?

Stylefeeder, a Boston-based social shopping site centered around a recommendation and rating algorithm dubbed the Maximum Margin Matrix Factorization, just passed the million-member mark with its Facebook app.

The gist of the app is this: it connects to your Stylefeeder account and syncs your "shopping finds" between the two properties.  Your picks then display on your profile box while incoming product recommendations stream to you from within the app.

In effect, it replicates the experience you'd find on the main property within Facebook. 

It appears that the application has had a positive effect on Stylefeeder's main property, as well, shooting up past ThisNext and 200,000 monthly uniques in February to ~1 million uniques in April, according to Compete.

Stylefeeder's also ahead of Mark Cuban's RadicalBuy (3,000 installs), Amazon's Giver (1,300 installs) and Grapevine (1,000 installs).

written by Scott Hurff -- scott.hurff at channeladvisor

Yahoo! Shopping launching a bidded marketplace

Yahoo! Product Submit advertisers received the following email today:

Important Notification: Upcoming Changes to Product Submit

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Dear Product Submit advertiser,

We are pleased to announce the upcoming launch of a bidded marketplace. With this change, there will be modifications to your Master Terms & Conditions and Program Terms, which will be detailed in a future email notice that you'll receive in the next 30 days.

We expect the bidded marketplace to have an impact on your day-to-day business. Therefore, we advise you and your team to begin planning for the transition to a bidded model.

As part of this launch, we are expanding the number of product categories and improving reporting within your Product Submit account.

These changes are designed to help you to:

• Better influence the level of traffic you receive from Yahoo! Shopping
• Gain more control over optimizing your product listings
• Gain better visibility into your category performance

Stay tuned!

The Yahoo Product Submit team

Rollout is apparently in July, where feed bidding would be available as well as by category.  Rumor also is that logos will be able to be added by merchants for additional CPC soon. 

written by Scott Hurff -- scott.hurff at channeladvisor

Boba Fett + CSE = Bountii

I'm always a sucker for attention-getting Star Wars references.

But Bountii's co-founder John Puskarich also caught my attention and this CSE is worthy of yours.  The site has some key differentiators:

• For certain products, Bountii will pay people to find lower prices. There is a set bounty for specific products, and users can make as much cash as the number of deals they find.
• They display "Click to See" and "Add to Cart" prices that are often left out of the feeds sellers send to shopping engines.
• Products that have coupons and rebates have these deals reflected in the price, instead of being handpicked and possibly subjected to bias.
• Pricing information is always displayed, no matter what the seller pays Bountii. Further, the number of stores is intentionally limited to reputable sellers delivering a quality experience.  (One example is Costco -- Bountii is the only CSE on which their results are displayed).

I'm impressed with the site's design approach -- clean, simple and direct.  There isn't much to distract a visitor from their core purpose -- finding the lowest price.  John tells me that they've gotten a lot of feedback saying exactly this.

One challenge I see, though, is visibility and driving enough traffic to make this material.  John told me that they've experienced healthy traffic growth from their widgets, which allows people on eBay and Craigslist to emphasize the quality of their price.  This particular widget shows real-time price updates, pulling from Bountii's product listings.  Repeat visitor traffic is also growing steadily, he said.

Bountii is based upon an affiliate model.  John was quick to point out that no stores get preferential product placement in search results. Pricing information is obtained from merchants' sites and complemented with data from product feeds.

 

The company is a Y Combinator (an early-stage startup fund founded by Viaweb / Yahoo! Stores creator Paul Graham) startup based in Boston and led John and co-founder Samir Meghani.

written by Scott Hurff -- scott.hurff at channeladvisor

Interesting new CSE - mydeco.com (UK-based)

Today at ChannelAdvisor's Catalyst UK event, a new CSE was mentioned in the Q+A that I thought was particularly innovative.  The site is called mydeco.com (it's a UK site so don't be surprised to see all prices in pounds).

What's neat about mydeco, is that similar to like.com in the US, it's a very visually-driven CSE, but with the added twist of focusing on the furniture vertical.

By focusing on furniture, mydeco allows a consumer to build a room using the CSE.  So you can create a quick 3D model of your room and then 'place' products from the search results into the room.  Here's an example created by a mydeco user.  Note how the products used to build this room are clearly listed, so not only is it a way for you to have a custom experience, but there's a social element where you can share designs and then as a buyer you can browse different designs and pick out elements that you particularly enjoy/like.

Comparison Shopping Engines @ ChannelAdvisor Catalyst UK

Scot Wingo here.  I'm over in the UK (London) for our ChannelAdvisor Catalyst UK event and we held an interesting panel on CSEs.

In my keynote, I pointed out that based on Comscore data, about 35% of buyers in the EU go through a CSE on a monthly basis.  In the UK, this is quite a bit higher at over 50%.

The panel was hosted by our UK CSE expert, Dan Burnham and featured:

• Adam Patterson, Shopzilla
• Laurent Gibb, Shopping.com
• Thomas Sevege, Twenga

Shopzilla

Shopzilla is active in UK, FR, DE.  They reviewed a timeline of the company that most are familiar with.  In EU, they have 6m visitors/m and in the UK approx 3m uniques/m.

The Shopzilla differences are:

• Speed - 10-50x faster than competitors
  • No ads
• Relevance
  • ShopRank determines most relevant results, not just based on price.
• Ratings (consumer ratings)

They highlighted non-compacted products and how shopzilla does on these items.  Specifically they pull out a variety of attributes.  Used the example of women's jeans.

Shopzilla has a bid-driven interface (merchants love this - we can attest to this).  He also highlighted their account management function.

Shopping.com
Highlighted their distribution network.  Their Catalogue is part of their key differentiator.  They have over 100 people in Isreal actively building the catalog.  He also talked about ratings.

Twenga
Twenga is a new CSE in the UK market.  They have gotten some pretty good traction.  They are only 18 months old.

They are in 11 countries with 30k active members.  Tehy have 60m offers and 90,000 product catalogs.  They claim 12m visits.

They have a mixed crawler/feed model (all inclusive vs. pay only).  It's indexed with TwengaBOC (smart cataloguing).  These products are displayed with Twenga's Clustering algorithm.

Thus their value proposition is:

• For buyers:
  • All merchants - largest selection
  • Finds the right product, at the right price.
• For merchants:
  • CPA model - pay only when something sells
  • Traffic

Here's an example of a search on Twenga.

Comparison Shopping Engines in the UK and Europe

In the EU and specifically the UK, CSEs are even more prevalent, fragmented and strategic than the US.  Here is some data I reviewed in my keynote:

First, here is some Comscore trends and data on CSEs in all of Europe:

Note that 34.7% of internet users visit a CSE in Europe.  Also note that Twenga (CSE 2.0) came on the market with 4m uniques placing them into the top 10 very quickly.  Also, one thing to note as they are coming to the US is that Ciao enjoys the number one spot ahead of many of the CSE 1.0 players like shopping.com and shopzilla.

Second, here is the same Comscore data, but from a UK perspective:

In the UK, note that Shopping.com holds the top spot, but Ciao is right on its heels.  Also of particular interest is that 51.4% of the internet audience (online shoppers) in the UK  visit a CSE on a monthly basis.  So UK buyers are much stronger users of CSEs than both the rest of EU and the US.

E-consultancy's CSE Buyer's Guide 2008

The fine team at E-consultancy just published one heck of a comprehensive guide to CSEs for sellers who want to know more about the market, who the players are (profiles of 16 leading engines included) and investigates how new players are trying to differentiate themselves just as the old guard seeks to prevent stagnant growth.

E-Consultancy also predicts that the growth of new social shopping sites will be "significant."

And, despite the specter of a complex and difficult global economic situation, a poll of players in the CSE space reveals that there is little worry of an online purchasing slowdown.

Weighted towards the UK market but relevant for everyone selling or playing in the CSE space, I'd recommend you download and read it.

Bonus: James Scott from ChannelAdvisor's UK office is quoted (pp. 14-17, 29-32).

Go get yourself a read.

by Scott Hurff -- scott.hurff at channeladvisor

TheFind powers commerce in Elle's content community

It's been said that content, community and commerce is the holy grail to Internet success, and that's just what TheFind is now doing.

The partnership effectively creates a destination shopping site on Elle.com, leveraging TheFind's competency in lifestyle goods, piping in products from merchants that match ELLE's audience.

The product results appear under the "Shopping" tab on ELLE's site and can be dropped into stories as products are referenced by writers.

This partnership is similar to the one announced earlier this year by Become.com, which teamed up with the Washington Post to offer local shopping results and a shopping portal on washingtonpost.com.

The terms of the deal weren't disclosed, but I assume that they split referral fees from commissions that take place at the end of the purchase line.

written by Scott Hurff -- scott.hurff at channeladvisor

Talking $17.5mm with Become.com's Jon Glick

Become.com just announced that it raised $17.5mm in a Series C round from Texas Pacific Group Growth  (TPG), a large private equity / VC firm that's previously done deals with Petco and Travelocity.

The last time I wrote about Become was back when they launched a complete site overhaul, integrating social aspects like shopping lists, putting more focus on users, product information / education, and reviews. Here's an excerpt from Jon Glick, VP of Product Search when this was released:

From the outset Become.com blended product-focused web search with comparison shopping.  What we started to see was a third information source, UGC (user generated content), becoming increasingly important. The new site design seeks to tightly integrate all three information sources into a single experience.  Now users can compare products and prices, research products using our 5.6B webpage index, and view/create UGC all on the same page.  The goal is to make the site increasingly comprehensive and engaging for shoppers and a more frequent destination for them.  Also, we see a bright future for social shopping on the web.  I don’t think any site has nailed the right online user experience that taps the innately social nature of offline shopping. This launch lets us offer features to users, get their feedback, and move toward being the site that is truly able to bring social to shopping.

I spoke with Jon last night to follow up on the success of these changes and, of course, how they plan on using all that cash!

What new or continuing initiatives are going to be made possible with the investment – improving search technology, expanding into other verticals, more partnerships like the one with the Washington Post, more aggressive SEM...?
This investment allows us to continue to grow the site aggressively and invest in core areas like user experience, search relevance and SEM.  We also now have the financial backing to expand into new verticals (sorry that I can’t pre-announce which ones) this year, whereas without additional funding we would have had to hold off for a while on some of our expansion plans.  For Become.com this is “step on the gas” money that will help us grow even faster.

Did recent changes to the site make Become a stronger candidate for such a large Series C (noticing how both Become has benefited strongly from increased traffic after UGC additions)?
I think it was a combination of factors.  Both organic and SEM growth have been strong; organic was the fastest growing segment of our traffic in 2007, and the site improvements were a big part of that.  The site “stickiness” more than doubled and we’re continuing to add features (ex. price drop notifications are coming out this week) to keep users engaged.  SEM has also really gotten rolling; we have five PhDs working on it and that’s really starting to pay dividends.  It’s amazing how advanced web marketing has gotten in just the last few years!  Having these diverse traffic and revenue streams really helped attract investment, along with a great team, and being in our 2nd quarter of profitability also made us attractive to investors outside the VC community.

Who are your key competitive targets? The obvious competitors (Shopping, Shop, NexTag), search engines (Google…well, and Google) or CSE 2.0 entrants (Pronto, TheFind, etc.)?
We don’t really focus on specific competitors.  There are a lot of players in this space and the cream will rise to the top, so we focus on how to make our site creamier.  When the team here discusses tactics we don’t say “how can we beat so and so?”, we say “how can we grow our traffic 30%+ next month and continue improve merchant ROI?”.  More and more users are discovering and using comparison shopping sites, and with $300MM of growth in the CSE space projected in 2008, there are enough new users to go after without targeting anyone’s existing base.

Michael Yang, CEO, also posted this on his blog:

We have been profitable for 2 consecutive quarters since Q4, 2007 and our business is still going through a very fast growth. We now have over 10 million unique visits to our site per month which is over 300% growth from the same period last year. Everyone at the company and all the investors are very happy with this investment. With the additional funding we are going to invest in key areas of the business to accelerate the growth with an eye toward IPO by the end of 2010. Our goal is to become a top comparison shopping engine company in the world.

written by Scott Hurff -- scott.hurff at channeladvisor dot com

Managing the long tail

My team and I deal with inventory sets in the hundreds of thousands.  Such large product catalogs cause logistical pains, but in many cases, the larger issue is getting to profitability when the aggregate cost of that "long tail" of low click, non-revene generating products outweighs the revenue generated by the head of the distribution. Sometimes, this is the case whith feeds that are smaller in size.

Below is an example that shows the order distribution by sku of one of our merchants over a 30 day period. This data is for a single CSE, but the total distribution looks very similar.  The x axis is the number of products in the feed, and the y axis is the number of orders each of those products generated. The most important thing to note here is that though the x axis ends at 4000, the total number of offers is actually around 20,000, which means the long tail goes well off your monitor.

Take a close look at the percentages in each of those areas (click to enlarge).  Over half the cost lives in that long tail of products, the majority of which have incurred just a few clicks.  This means the individual product cost is almost invisible, but in aggregate, this poses a serious threat to profitability.  The gut reaction for many is pretty simple. Chop off the long tail and leave in the feed only the products that have generated revenuve (ROAS will double!).  This is where that middle yellow range comes in to the conversation.  That range represents products that generated exactly one order over this time frame.  If no action is taken, the next 30 day distribution will likely look similar to this, but the products that appear in that middle area will not be the same products next time around. So if you blindly chop off the entire long tail, you're likely cutting off a big portion of your future revenue. You then wind up with a similar distribution that does have a shorter tail, but also a much smaller head.

The ideal solution is to remove only the correct products from that tail.  The question is how do you define correct?

There is no way to get it right every time. As soon as you remove a product, you risk losing revenue that could have come on the next click. But most retailers will find there are products that just aren't worth including. Here are a few ideas on how to identify those. Please note that all of these can be loosened or tightened based on your business's tolerance for risk.

• Reverse-engineer your target conversion rate: Look back at the equation in my last post. Drop in the product cost, the CPC you are paying and your target ROAS, then solve for conversion rate. Divide 1 by the result and you have your click bogey. If the product gets that many clicks and no sales, it is officially in a hole. Unfortunately, the above distribution is the result AFTER applying this rule regularly. It also is only addressing the head of the cost tail, not the really long part of the tail. This approach can help cut an unusually large portion of your cost that comes from a relatively small number of products. You could also occasionally widen the time frame on the data set used in this analysis to catch the second tier of products that are not meeting that target conversion rate, but taking longer to reach the click tolerance level.
• Reverse-engineer a price filter:  Try the same exercise as above but solve for AOV. Use your current conversion rate on the CSE in question. The result is the theoretical inflection point of product level profitability.  Products under that price are less likely to work in the long, assuming they convert at or below the standard rate used in the equation.  If you have a lot of products at a low price point, you may wind up with a much smaller feed, but hopefully a higher ROAS.
• Use data from outside your CSE campaign:  If you have 100,000 products, odds are some subset of those products (possibly larger than you'd care to admit) have never sold on your website.  Well, if that long sought after first sale does come some day, it is as likely to come via a CSE as it is to come from any other marketing initiative.  But if you are fighting this problem, it may not make sense to include that initial marketing cost here. Since CSE CPCs are pretty much flat, advertising these self ascribed long tail products is a risk. These products are probably either incredibly niche, or there is a problem with the offer itself (probably the price).  If they do generate traffic, it will probably only be a few clicks, but that is exactly what we're targeting here.

written by Mark Vandegrift -- markv at channeladvisor

The Importance of Conversion Rate

"How can I improve the return I get from Comparison Shopping Engines?"

This is by far the question I hear most from merchants using CSEs. The answer is pretty simple: Improve your conversion rate. Making that happen, however, isn't quite as easy.

First, let's look at why conversion rate is so critical.

Unless you can drastically increase your average order value or miraculously pay less than the minimum CPC, increasing conversion rate is the only way to impact performance since it is the only remaining piece of the equation. The main reason for this is that CSEs basically charge you the same price for every click. Whether that user searched on your brand or your exact product title, or if that user stumbled across your product through a browse mechanism, the cost to you is the same. Qualified traffic and non-qualified traffic look identical from the merchant's perspective.

So now on to the hard part...how do you increase it? While there is no silver bullet, there are some best practices you can follow to maximize this metric.

• Categorize products appropriately
• Ensure titles and descriptions are accurate
• Populate as many feed fields as possible
• Submit clear and accurate images
• Ensure your action URLs work, take the user to a page where the product in question can be easily located and that the price matches the price on the CSE
• Complete the Merchant Information section in the account login area of all CSEs
• Actively remove products that do not convert
• Unless you have already done so, analyze and improve the landing pages on your site

Reviews/ratings on CSEs can impact conversion as well, but only if those reviews are positive, so be sure to provide great service to keep those ratings high.

Ideally, comparison shopping engines will one day expose some level of information as to how a user found the product listing, suggesting some indication of how likely that user is to purchase after clicking, and charge the merchant appropriately. In the mean time, doing everything possible to maximize your conversion rate without the benefit of that insight is your best bet.

"What if my conversion rate is nowhere close to my goal?"

If you use the equation above and enter in your actual average CPC and order value, plus your ROAS goal, you can solve for your target conversion rate. If your current conversion rate from your CSE initiative is significantly different, you may need to adjust your ROAS goal. You can also work to increase your average order value by removing low priced products from your feed or via promotions such as $10 off orders of $100 or more. However, if your target conversion rate is 2% and you are sitting at 0.5% (difference of 4X), it's unlikely that attempts to quadruple average order value will be successful.

written by Mark Vandegrift -- markv at channeladvisor

iStorez -- the CSE of deals

One of the biggest problems I've faced when reaching the checkout page of a merchant is knowing if I'm overlooking any potential deals -- a promo code, or if I'm missing the threshold for free shipping, or if I could have purchased one small item to get it free.  Yes, these are the woes of online shopping.

Newly-launched iStorez, now in beta, seeks to change that and more.  It aggregates thousands of current online retail deals with the intent of driving you to make a purchase decision.

This naturally seeks to capture users who are driven mostly by what deals are being offered (and, subsequently, often by price)  as opposed to finding a product you like and happening to have it be on sale, subject to free shipping, etc. etc.

In other words, iStorez flips the funnel.

The source of these promotions is the stores themselves -- iStorez harvests thousands of retailer promo emails and presents them on the site, which is sortable by merchant and category.  And it's all customizable depending on your preferences (i.e. I want jewelry deals but not American Eagle...).

So, merchants, this is another reason to ensure that those emails are accurate and relevant!

Thanks to Anand Jagannathan, CEO of iStorez' parent company Kriyari, for the heads-up on this.

written by Scott Hurff -- scott.hurff at channeladvisor

TheFind: now with better local search data

I covered TheFind's move into local product search back in mid-December, a move that enabled shoppers to find products at local stores and to go pick them up.  These results were included at the top of search results in tabs -- also enabling shoppers to "virtually" shop on Madison Ave, Rodeo Drive, or take a peek at boutique offerings. I mentioned Krillion as one of TheFind's competitors.

Today TheFind announced a partnership with Krillion, a provider of local product availability data.  This effectively expands TheFind's capability to pinpoint exactly where one can pick up, say, that 52" Sharp Aquos without paying shipping charges while finding the best price.

TheFind was previously crawling this data and says that 86% of shoppers search online and buy offline.

written by Scott Hurff -- scott.hurff at channeladvisor.com

Are you in?

If you're not registered for ChannelAdvisor Catalyst yet, then you definitely should be.

Catalyst takes place in beautiful Pinehurst, NC after the holiday selling season has passed and retailers can actually come up for air.  It's a great time to assess selling strategies -- new and old for retailers large and small. 

Catalyst is perhaps one of the best places to get educated about multichannel selling from the people who are making the decisions at the Internet's most influential properties.

And guess what? You get to attend with hundreds of other sellers, and, of course, your humble ChannelAdvisor friends.

Here's the speaker lineup we announced today, in alphabetical order:

• Amazon - Sebastian Gunningham, SVP Merchant Services will be talking about the various third-p