How many Web sites does it take to buy one DVD player?
It depends how much looking around you want to do. To simplify things, about 60 percent of U.S. consumers used comparison-shopping Web sites last year, according to Jupiter Research data. That’s up from 40 percent the year before.
In the comparison-shopping world, Brisbane-based Shopping.com Inc. and Shopzilla Inc., located in West L.A., are among the leaders.
Shopping.com had 22 million unique visitors in July, according to the most recent data from JupiterResearch, while Shopzilla logged 16 million. Yahoo Inc.’s Yahoo Shopping had 11.5 million, Microsoft Corp.’s MSN Shopping had 6 million, Culver City-based Price-Grabber.com LLC had 5.2 million and Google Inc.’s Froogle site had 5 million visitors.
More people, it seems, are window-shopping online to find the best deal before making a purchase.
“The number of online retail sites with measurable traffic is growing at twice the rate of the rest of the Internet,” according to Patti Freeman Evans, retail analyst at JupiterResearch.
This means there are more products to view, find and search online. “It gets so overwhelming,” she said. “If these shopping-comparison engines can offer a consumer a way to access products and make sense of them, God bless them.”
Consumers aren’t the only folks trolling shopping sites. EBay Inc. purchased Shopping.com in June for $620 million, and E.W. Scripps & Co. bought Shopzilla for $525 million.
Research shows that consumers’ attitudes are changing: asked last year whether they found shopping comparison sites the “best place to buy,” 61 percent of consumers surveyed said they agreed with that statement, according to Jupiter’s survey, compared with 45 percent who agreed the year before. And people are using comparison sites for their real-world purchases, too: 83 percent said they researched their offline purchases online.
“We have anecdotal stories of people walking into stores with a PriceRunner printout saying, ‘Can you match this price?'” said John Ardis, vice president of corporate strategy for Westlake Village-based ValueClick Inc., owner of comparison site PriceRunner.
ValuClick, an Internet advertising agency, entered the market last year when it bought PriceRunner AB, the top-ranked comparison-shopping site in the U.K. and Sweden. PriceRunner’s headquarters are now in ValueClick’s Westlake Village office; it launched its U.S. site this year and has expanded its European reach into France and Germany.
Shopzilla (once called BizRate.com) is also expanding now that it has the backing of Scripps. Shopzilla co-founder and Chief Products Officer Farhad Mohit is looking to add 75 more people to his staff of 200 during the next year, mostly tech-types to work on the sites’ proprietary algorithms and search capabilities. “We’re looking to be the brain-drain in Los Angeles,” Mohit said of his hiring strategy.
Comparison shopping sites work like search engines, aggregating many choices into one place. Users on comparison-shopping sites are more valuable to retailers because they’re more likely to make a purchase.
“They’re on a shopping engine for a reason,” Ardis said. “The conversion rates are much higher.”
Retailers pay comparison-shopping sites a fee to deliver clicks, and many shopping sites also offer sponsored listings, where the retailer pays an extra fee to be listed prominently in search results. (A smaller revenue stream comes from banner advertising.)
Shopzilla reported $29.5 million in second-quarter revenues, up 113 percent from the year-ago period. (The company declined to state profits, but said that earnings before interest, taxes, depreciation and amortization totaled $7.6 million in the latest second quarter, compared with $2 million a year earlier.)
As in other Internet categories, the ranks of comparison-shopping sites are expected to thin over time, said David Evans, an analyst with American Technology Research. “This is still fairly early in the timeline for development of these shopping engines,” he said.
Ardis admits that most of the sites deliver similar price results in the most popular categories. To distinguish itself, PriceRunner lists both offline and online prices, he said, and always lists items by lowest price regardless of whether it has an advertising relationship with the retailer.
Shopping.com offers store ratings and reviews. Shopzilla offers multiple pictures of products, while PriceGrabber and Yahoo Shopping tout features that allow shoppers to narrow a search by price, color, style and brand.
So far, no site is dominant. “There’s room for a lot of players, but I don’t know how many,” she said.
