Comparison Shopping Engine Strategies

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

---

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-party options that Amazon is offering including of course Merchants@, but also fulfillment by Amazon (FBA) and ProductAds.  Sebastian is essentially the CEO of Amazon's third party business so this is going to be something not to be missed if Amazon is at all part of your strategy or something you want to learn more about.
• eBay - We have Stephanie Tilenius, GM of eBay NA, John Mracek from  Shopping.com and finally Mary Anne Gillespie, VP of Paypal coming to talk about all the changes and opportunities within the eBay marketplaces+payments family.
• Facebook - Ben Ling who runs Facebook's platform team will be here to talk about the opportunities there for merchants.
• Google - Vince Monical, Director of commerce and analytics will be talking about Google's long-tail strategy.
• Nike - One of the World's largest brands, Nike, will be covered by Chris Shimojima, VP of global ecommerce.  Chris will be talking about how the Nike brand is evolving and how they leverage it in the world of ecommerce.

This is only a sampling, and, of course, there are always great surprises -- you should definitely register here if you haven't already!

We expect to have twice the attendence of last year and have limited capacity so there's a good chance we'll have to cut off registrations early on, so get in while you can. 

Maybe we can finally meet in person, because I'll be there!

Written by Scott Hurff -- scott.hurff at channeladvisor

HealthPricer wants to own the health space

As more health-related information and access to products moves to online channels, the space will continue to consolidate around existing leaders.

But in one health-related space, there's no clear competition for HealthPricer, a CSE that specializes in offering everything from drugs to vitamins to beauty products and supplements.

The CSE just announced a partnership with Healthline, a health content site, to power an embedded marketplace for health products.  This should drive some welcome traffic -- Healthline's reach is about 2.5mm uniques / month, whereas HealthPricer drives about 50k  /month 150,000 uniques / month (based on HealthPricer company data), based on Compete data.

Versus mainstream CSEs, HealthPricer stacks up well in offering rich health data, relating ingredients across products, and figuring out volume pricing deals to tell you what the best deal is if you buy in bulk.

Overall, I'm impressed with HealthPricer's UI and logic in separating out relevant data to make informed purchasing decisions.  If you're a merchant who sells health products, check them out here.

Watch their DEMO 2008 presentation below:

Written by Scott Hurff -- scott.hurff at channeladvisor

Two Ciao updates

Two quick but important updates to Friday's Ciao post:

1. ChannelAdvisor is now live with our Ciao integration!  That means that merchants can now post to Ciao through our software.
2. The link for Ciao's merchant signup page is now updated with US information:  http://www.ciao-group.com/?id=media_merchant_signup

Questions? Write scott.hurff at channeladvisor dot com

Ciao US launches

I spoke yesterday with Markus Rottmaier, Head of Sales International for Ciao, which officially debuted in the United States yesterday.

The EU-based CSE is one of the biggest players in the market, with presence in Germany, France, Italy, Spain, Sweden, The Netherlands and the United Kingdom.

While Markus acknowledges that the US market is the most crowded and competitive one, he still thinks there's space to innovate and extend Ciao's already successful model.  So what makes Ciao different?

"Our main focus is on the user. We provide them with all the information they need before clicking through to a merchant's product page.  The target audience is someone who's in the middle of the buying process.  Typically, we've found that customer-written recommendations are the most useful in accelerating the decision process -- and deliver increased conversion rates for merchants." 

Ciao encourages user-to-user conversations and also pays the  most valuable contributors.

The strategy has worked in Europe, where Ciao's conversion rates tend to be higher than its competition. Plus, it's one strategy also recently employed by Become and Pronto, both of which have seen massive traffic increases (1000%+) since releasing social features in the same spirit.

"We see ourselves more as a shopping community than a pure price comparison site."

Ciao's staying away from more traditional ad buys and relying most heavily on the site's content to drive natural searches.

By the way -- merchants who sign up now can get three months worth of clicks and traffic free. After the trial it's a CPC model with no bidding -- the cheapest price comes first.

The CSE was bought by Greenfield, a CT-based company in 2005. Ciao generated $34mm in 2007.

Stay tuned for ChannelAdvisor announcements about Ciao support!

 

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

Amazon Product Ads begins rollout

Back in July, I mentioned a job posting over at Amazon about Product Ads, a previously-unknown program having something to do with "a new cost-per-click advertising channel."  Now it looks like this program has rolled out based upon email marketing performed by Amazon, as well as some early examples in Consumer Electronics, Home & Garden, Tools Toys and Kids & Babies categories.

Here's how the flow works:

• Merchant uploads product catalog
• Customers perform searches on Amazon.com, where the merchant's products appear in search results next to Amazon products (also known as "the product ad")
• Customers may click on the product ad, which takes the user to Amazon's product page presentation, which links directly to the merchant's OWN product page
• The merchant is charged on a CPC basis
• The merchant keeps all transaction revenue from the referral, minus CPC costs

Check out an example search here. Notice the "Available at external website" footer label on each "product ad."

So, what does this accomplish? It brings visibility to third-party merchants up one layer into the search results themselves.  Previously, as we all know, merchants could only be seen once a user clicked onto a product page. Now, third-party merchants can compete directly within Amazon's search results, depending on the product and category.

This will probably benefit merchants who sell more unique items, but the data will always tell the truth.

Anyone out there enrolled as a beta in the program?  Talk to me! scott.hurff at channeladvisor dot com

Thanks to Max & Brian for some information.

ChannelAdvisor ADC launched -- and we want you to come see it!

Our good friend Tank Stikman will be around to say hello if you come out to ChannelAdvisor's Agile Development Center, or ADC.

For around nine months we've shifted away from developing our products in the traditional "waterfall" method to an Agile / Scrum approach.  This means we're now releasing product updates every 30 days or so -- which also means that our products can better reflect what customers really want.

The ADC is in the building next door to 2701 Aerial Pkwy, ChannelAdvisor HQ, and we've outfit the new space in a way that encourages and fosters the Scrum methodology.

You're invited
If you're in the RTP area, come to our open house next Tuesday (Feb 12) and we'll show you the sights!  Rumor has it there are awesome door prizes like an iPod Touch or a Wii...

ChannelAdvisor is really looking to ramp up the size of our engineering team, so definitely come if you're engineering-inclined -- and invite your friends, too!

RSVP here: http://www.channeladvisor.com/openhouse/

Send questions to Scott -- scott.hurff at channeladvisor dot com

More social shopping

This article from the La Crosse Tribune sums up the social shopping segment well.  I'd recommend a quick read.

Many users find it utterly addicting, logging on at least daily to see products that other people are looking for or have discovered. These members say the shopping lists their fellow users post are often funky, personal elements of self-expression, as much as that may sound like an overly exalted way of describing what is, after all, consumption.

"We want to create a million mini Oprah Winfreys," said ThisNext CEO Gordon Gould. "Why is she powerful? Because people think she's genuine, she's authentic. She's giving recommendations from the heart. We're (doing that and) scaling that across every product category across the Web."

Scott Hurff

Mo Money, Mo...social shopping deals

Stylefeeder and ThisNext just announced two big venture rounds.

Stylefeeder
And the $2mm Series A prize goes to Stylefeeder, the Cambridge-based startup that has its roots at MIT.  The site is technology-heavy in that there's some complex algorithms going on behind the scenes to match you up, recommend and direct you to people and products you'll probably like.  Onto the statistics:

• ~500,000 installs of their Facebook app with 3 percent of the install base active daily (~14,000) -- this active number is slightly lower than the cross-platform average of 5 percent. This is part of a different distribution strategy than ThisNext, which has focused on partnering with tight-knit niche communities and extending their functionality to those properties.  While Stylefeeder's app has a strong install base, I wonder how strong the traffic bleed is from Facebook to their site.
• ~150,000 uniques per month and a 400% increase in traffic since 12/06
• Second round after a seed investment of $1mm in October from Highland Capital Partners
• Makes money from affiliate links and branded profiles, like the Olson twins
• Raised cash from Schooner Capital and Highland Capital Partners
• Previous coverage here

ThisNext
LA-based ThisNext pulled down $5mm in a Series B round led by Anthem and Clearstone Venture Partners.  See my interview with CEO Gordon Gould here, who was previously with Blogsmith (WeblogsInc's blogging platform) and the Silicon Valley Reporter, which means that the company has close ties with Jason Calacanis. He also started Upoc, one of the largest mobile social networks.

• Previously raised $3.5mm
• ~400,000 uniques per month
• Facebook obviously hasn't been a focus -- 125 users on their app
• All about co-branding with strong niche communities and representing the influencers within those communities (example: Coolhunting)

So the space continues to heat up.  I'd recommend that merchants get involved on these sites and learn how they work. At the same time, I'd start becoming known on these sites as thought leaders in your particular space -- since you know the best products in your niche, start making that known. Build your own mini-communities. It's a natural extension of your brand and it'd be in a place where people are looking for that.

Written by Scott Hurff -- scott.hurff at channeladvisor

A Merchant's CSE

There have been lots of comments left on this blog about what CSEs do poorly and some ideas for how they should be doing things better.

I want to open the floodgates. 

I want to hear from all of you merchants, CSE execs / employees, e-commerce junkies and anyone else who has ideas for their 'perfect-world' CSE. 

What I want to do is gather your ideas, ideals, feedback and more and structure it in a new post later this week.

Some ideas:

• How would you send, track and manage feeds? Would feeds even exist?
• How would you pay for search placement, if at all?
• How would your perfect-world CSE promote the best merchants? The best deals?
• Would social shopping be a factor?
• What about SEM? How would you like your products promoted on the search engines?
• Email marketing resources
• What would it look like? How would it make users find your products better?
• Which CSE do you think does the best job right now? How could it build on top of that experience?
• Would it be creative like Jellyfish Smack?  What other "game-like" options would it offer?

So, here's the invitation.  Your forum is just a click away.

Comments open!

Written by Scott Hurff -- scott.hurff at channeladvisor

Shopzilla: 2007 a "rough year," loses top tech guy

There's new news afoot from Shopzilla in 2008 --

• Christophe Louvion leaves the company after 10 years for LA-based Gorilla Nation. He was, I hear, their top technical person, having basically built the site. He held a number of positions -- Software Architect, VP Ops, VP Product / Engineering, Agile Evangelist / Coach and "Uber Scrum Master."  Louvion blogged that "after spending the most part of the internet life time building Shopzilla, the biggest shopping search engine, I am moving on to running the technology at Gorilla Nation, the largest online ad sales rep firm." and that he's looking for talent. Gorilla Nation is a "one-stop shop for online advertisers & agencies looking to build brand awareness through high impact ad units and rich media across targeted content categories."
• Shopzilla had a "rough year," said CEO Ken Lowe, but must have benefited from the $29 billion in sales at the tail end of 2007.   Lowe also said that "bridges" would be built between Shopzilla and other Scripps Interactive properties.  I hope this means deeper integration and not just linkjuice for SEO, or even some lame product offerings embedded within stories.  There's a huge opportunity there to expose the product inventory outside of the main property.

Got anything else about this? Drop me a line at scott.hurff at channeladvisor

Retrevo is a great example of the niche CSE

When I spoke with Jon Glick of Become.com about the site's latest redesign, he reiterated that the site's mission was to "give people all the information they need to make ideal buying decisions."   In other words, the more product information people have, the more qualified they'll be as merchant referrals.

Retrevo is a niche consumer electronics CSE launched in much the same spirit.  The site aggregates user manuals, user ratings, "expert ratings," forums, blogs, and, of course, shopping referrals. Retrevo has been live for about a year now.

What's unique about Retrevo is that it doesn't stop with simply aggregating relevant material -- it assembles the breadth of information into a usable, standardized, simple product rating called a "Product Snapshot."

Retrevo's Product Snapshot maps your TV, camera, or other search onto a price / feature matrix and places the item in question within a tier like "better than average feature set in mid-range" or something akin to this -- also including whether the community's reviews stack up to a positive, neutral or negative endorsement.

Retrevo is also a sign of bigger things to come in the CSE industry -- vertical search engines specifically tailored for products used by clearly-defined audiences.  It's almost like using Game Genie on your old NES...Retrevo lets you shortcut it to the relevant stuff in the quickest way possible.

The site is powered by Yahoo! Shopping on the product search side.

Written by Scott Hurff -- scott.hurff at channeladvisor

Social shopping segment growing; Kaboodle leads the pack

Social shopping sites only receive less than one percent of Internet traffic in the United States, but the segment grew 447 percent from a year ago last week, Hitwise reported yesterday.

This is good news for the social shopping segment and some good visibility, too.

Hitwise ranked the following sites in terms of traffic volume and social shopping market share:

1. Kaboodle: 68 percent; up 200 percent from last year
2. Buzzillions: 8.23 percent
3. ThisNext: 7.23 percent
4. ShopWiki: 6.89 percent
5. Stylehive: 5.18 percent

To put this in perspective, Photobucket, the photo sharing site recently bought by MySpace, accounted for two percent of US Internet traffic with 14 million users.

Both Quantcast and Compete report Kaboodle's traffic to be about 3.2 million uniques per month.

These sites differ from traditional CSEs in that they encourage their users to create lists of items they want or already have that define their personal style.  Often, these sites will show which users are most compatible to your own tastes.

Business models mostly include affiliate fees, co-branding deals and advertising -- and possibly selling the market data they collect to outside recipients.

Written by Scott Hurff -- scott.hurff at channeladvisor

Friday finale: Google Shopping, Scripps spin-off update, PayPal Labs offerings

1. Google "Products" link now "Shopping"
2. Scripps reveals who's on deck for spin-off (and an MSN acquisition rumor)
3. PayPal Labs offerings

Google "Products" link changed to "Shopping"
In what might be another bid to counter the 80% decline in traffic that Google Product Search experienced from October 2006 to the same in 2007, Google changed the name of its promotional front-page link from "Products" to "Shopping."

This comes directly after Google replaced the "Video" link on its front page with "Products" during Thanksgiving week -- and could be a test to see if the link gets a higher CTR.

ComScore still considers GPS a top-25 CSE, but experienced the largest drop in traffic amongst all of them.  Comparatively, Pronto saw a 3,000% increase from 161,000 uniques to 5.2mm; Yahoo Shopping increased 46% to 23mm and Shopzilla, the #1 CSE, was up 7% to 24mm uniques.

[via Search Engine Roundtable]

Somewhat related news: Google Base renames "bulk upload" to "data feeds."

Who's on deck for the Scripps spin-off?
The Scripps Networks Interactive spin-off, which is, as of now, including Shopzilla, is set to include CEO Ken Lowe, CFO Joseph NeCastro (who's going to have an additional operating role for Shopzilla and uSwitch) and president John Lansing. No mention of ex-Yahoo Deanna Brown who joined as president of the interactive group. She reported to Lansing. The full list is here.

[via paidContent]

In related news, there's been a rumor circulating that MSN is interested in acquiring Shopzilla.  This is questionable as MS just acquired Jellyfish, but it could signal that the company might try and merge JF's technology with Shopzilla's larger user base.

PayPal Labs getting busy with widgets
PayPal Labs has been busy with a few projects:

• Storefront widget: a self-contained, Flash-based e-commerce platform that can be embedded on any site and pull from your inventory source. Emphasis by the team that it was developed for blogs and social networks.  A new way to get your products out there -- and a nicely built interface /experience.
• Facebook 'Request Money' application: exactly what it says it is.

Written by Scott Hurff -- scott.hurff at channeladvisor

TheFind moves into local shopping search

TheFind CEO Siva Kumar wrote us yesterday to tell us of a new development this morning over at the California-based CSE allowing shoppers to locate products at nearby stores.

The local shopping search is fully integrated with normal searches performed on the site.  It comes replete with a pretty little map highlighting merchant locations that carry items matching your search.

One critique I have is that this capability isn't immediately clear when I'm browsing search results.  I have to check a small box to the left of my results to hone them down to local items.  It'd be nice to see the number of local items and stores indicated at the top of the page, immediately after the "Our Web search found x# results from y# stores for [product]."

I had a few questions about how this affects local merchants and how TheFind is getting the data, so I asked Siva a few questions.  They're posted below.

What can a small, local merchant do to get included in these listings?
We will soon be augmenting “Add a Merchant” link at the bottom of the home page to include local address/contact information data entry fields so any merchant can add his/her locations. At present, you can email “talk at thefind.com” to provide this information and we will add it to your merchant record.

How are you getting this info – did you partner with someone?
We crawl of all of the store Web sites and using this crawled data we comprehensively compile the contact and location information. Geocoding of the addresses and maps are done through available external Web services (mashups).

Does this put local merchants in competition with those that are only based online?
In some ways it does make it competitive and in some ways it doesn’t. 86% of the consumers say they do search online and buy offline, but this behavior is not in any way affecting the rapid growth of online shopping by the very same set of consumers.

In our consumer testing, there were cases where some shopping categories (clothes, shoes, household products, etc.) prompted a need to see an item physically and in other cases it was the ease of returning or exchanging the item that made local stores more attractive. In yet another case it was the immediacy of need – “want it today” that made local a preference. But, equally there were a lot of people willing to buy online for a better price or the lowest total cost (no tax, free shipping), better availability of sizes and colors and convenience (don’t have to drive and waste time at the mall).

We are just making these tradeoffs a lot more easy for consumers in using a single search site for any and all shopping search situations.

Is this a move into a new category -- competing against startups doing only local shopping search?
We are just building a next generation search engine to address the two major trends in online shopping – (a) rapid growth of lifestyle categories like apparel, and (b) rapid growth in consumer usage of the Internet for searching offline purchases. Its not possible to separate these two trends out as lifestyle goods categories often are intertwined with local stores and hence when we started we focused on building this complete solution – it just took a while to do both parts. The artifice of having separate and distinct local shopping search sites and online shopping search sites will quickly disappear as I believe folks like Shopping.com are working to add the local capability (at least this is what their recent press release with CI claims).

Companies like NearbyNow and others have their business models and I don’t think we are competing with these models. For example, NearbyNow works with mall management companies in a B2B type model to power shopping search for malls and it also operates a mobile marketing platform inside these malls. These are not what we aim to do at all…

===

Great stuff.

As of now, I think this is the most comprehensive / beautiful / simple local product search effort I've seen to date (competitors being NearbyNow, ShopLocal, Krillion).  Any thoughts on experiences of TheFind vs. these competitors?

Written by Scott Hurff -- scott.hurff at channeladvisor

Another look at Become.com's redesign with Jon Glick, VP Product Search & Comparison Shopping

When Become.com announced their redesign, I should have given it more of an in-depth look and sought to fully understand the goals and impact of the release.

Thanks to Jon Glick, VP Product Search & Comparison Shopping at Become.com, we have more details behind the change and where the site is going.

This release could be characterized as "intermediary" -- a step in the direction of bringing more social-enabled features for shopping, but certainly not the end game.

Also, Jon states below that first-time users who used non-shopping features like Web research or reviews were more likely to become repeat visitors and were 170% more likely to click out to a merchant.

Oh, and on that new logo -- Jon says that it's part of making the site more consumer-friendly, and that using thinner serif fonts is reflective of higher-end department stores.

What's the goal the Become team has set for itself with this new release?
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.

You mentioned that one theory driving the inclusion of reviews and research is that conversions will be greater if the person is as educated about the product as they need to be to make a purchase. Can you elaborate on this and also describe any other theories behind including this content?
Become.com’s mission is to give people all the information they need to make ideal buying decisions.  The more we help educate our users by providing them with reviews, research, etc.; the more they will use the site and the more highly qualified they become as merchant referrals.  What we have seen is that first time users who used our non-shopping features (such as web research) were more likely to become repeat users, and that their clickout rate to merchants increased 170%.  On the merchant side, we just launched an ROI tracker for our merchants.  It’s too early to see how their conversions are impacted (and they don’t share their conversions from other CSEs with us), but anecdotally, the most frequent “complaint” that we get from our merchants is that they’d like us to send them more traffic (which we take as an indicator that our users convert very well for them).

Tell me about the balance between creating a destination site while still increasing clickthroughs to your merchants. What kind of discord or harmony do you find there? What do you think the formula for success is?

We see these two objectives as being very much in harmony.  Become.com is increasingly becoming a destination site for users, but the final destination for them is our merchants (since we don’t compete with them on transactions).  The more that people interact with the features on Become.com, the more informed they are as shoppers and the more highly qualified they are when they do visit our merchant partners, so everyone wins.  One of our key measures of success is RPS (revenue per session).  Having a feature-rich site generates more pageviews per user (so RPM goes down), but this means users are more engaged, and ultimately we’ve seen this translate into more clicks-per-user to the merchants.

How is Become marketing itself to users?

Most of our marketing is through press/PR, introducing users to our service via keyword ads on the search engines, and on our site itself.  With the addition of social shopping, we want to make it easier and easier for people who like the site to share it with others.  Currently users can e-mail the deals they find on Become.com to their friends, and as we expand the social shopping they will be able to invite friends to join them on Become.com.  Additionally we have our blog, Pocket Change; it’s tailored to the shopping consumer, rather than being about what’s happening at Become.com. You won’t see us doing lots of old-school media buys: radio spots, billboards, TV ads, etc.  A lot of the CSEs have tried these in the past, and found that these have highly negative ROIs. 

Now that Become has reached profitability, will it be making any acquisitions in the near future?

We have looked at some strategic acquisitions in the shopping space recently, and have noticed that more and more companies are approaching us.  If we find a company that is a good fit and highly synergistic, acquisition is something that we actively consider.

Written by Scott Hurff -- scott.hurff at channeladvisor

Happy Holidays from ChannelAdvisor - The Adventures of Tank Stikman...

We just published our holiday Flash animation, introducing Tank and his adventures the last year.  You can see it in original flash here.

Or hit play below on the embedded youtube version:

$700mm Cyber Monday?

ComScore published some data points which are relevant for merchants and CSEs alike:

• $9.3 billion spent online from November 1 through 23, a record and 17 percent higher than the $8.1 billion spent online last year
• Online sales on Thanksgiving Day were up 29 percent, while Black Friday sales were up 22 percent from last year
• Online spending is forecast to exceed $29.5 billion, a record amount but slower growth than previous years at 20 percent -- which brought in $23.6 billion -- and slowing to 5 percent growth
• From January through October 2007, buyers spent $93.6 billion in online retail stores
• People shop online mainly for the convenience factor (81 percent said they wanted to be able to shop at any time) and 77 percent said they did it to save time
• Almost 3/4 of online retailers planned Cyber Monday promotions, almost 30 percent more than the 42 percent that did so last year
• Shoppers were expected to spend $700mm yesterday, up from $608mm last year!
• The biggest shopping day is still yet to come in mid-December!
• Yahoo! Stores, Sears, Circuit City and Lowe's sites were overloaded yesterday...so make sure you've got your servers hotrodded out
• Shipping incentives and deep discounts were common incentives, with Macy's offering the lowest threshold ever for free shipping at $75

And some extra goodness from Shop.org:

• 72mm consumers were estimated to have shopped online yesterday, up from 61mm and 59mm in 2006 and 2005, respectively
• 55 percent of office workers with Internet access did their shopping at work

Written by Scott Hurff -- scott.hurff at channeladvisor