Comparison Shopping Engine Strategies

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

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

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

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

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

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