Shopping Search Arrives as an Important Vertical

[Chris Sherman]

According to market research firm Hitwise, the market share of visits to the top comparison shopping sites increased by 22% this year, taking this market share directly from the major general purpose search engines. All of the major shopping search services offer paid inclusion and paid placement programs. If you're a merchant or affiliate, you're losing out on a significant source of traffic if you don't take advantage of these programs.

These programs aren't just for products. NexTag this year rolled out comparison shopping for mortgages, travel, real estate and online education programs. Expect this trend of shopping search engines moving into helping consumers search for services to continue.

Today's SearchDay article, Shopping Search Week 2004!, kicks off our annual look at what's new at the major shopping and product comparison services. Tomorrow we'll take a detailed look at BizRate/Shopzilla, Froogle, and MSN Shopping. Wednesday we'll cover NexTag, PriceGrabber, Shopping.com/Dealtime and Yahoo Shopping. And Thursday we'll broaden the focus to cover the relatively small but quickly growing shopping search services that are emerging outside of North America, catering to consumers around the world.

Comments welcome!

[rustybrick]

Shopping Search has definitely arrived as an important vertical. My father who teaches an MIS class in university gave his students a project to build a database of products based on results from the shopping search engines.

If universities is picking it up, then it must be catching on.

[Nacho]

Excellent article Chris!! (and off-topic, congratulations on your interview)

I want to share a bit about the Hispanic market to compliment your report. I think your best bet for now its best to stick just with the U.S. market for shopping search engines, because the rest of Latin America is still trying to play catch up with the search marketing concept in general. IMO, I believe Mexico and Brazil will be the first to play a significant role with ecommerce. Mexico already has 2.7 million consumers buying online (reported as 18% of the total 14.9 million Internet users from the Asociación Mexicana de Internet).

YES its true that Univision, Terra, MSN, Yahoo! and AOL do have important presence with the U.S. Hispanic and Latin American Hispanics as well. However most of these that does have some sort of “shopping” into their portals, they are not doing it in a fashion that makes them a “shopping search engine”, but rather a shopping destination since they have no search functionality to look for products located at stores all over the web in Spanish. Here are a few that are being early adopters in this market.

Preciomania.com (http://www.preciomania.com/)

This the Spanish version of Pricegrabber.com. The have done a good job translating the site slowly step-by-step, but they still have some way to go because when you are at the product level during navigation or at the purchase level you can see that the ‘product name’ field is still taken as it was imported by the site owner during the crawl or feed. Also, when the user wants se see the reviews, they are also the English review versions. You can see an example of sections that still need translation on this page where it displays “Is this review helpful? Yes/No (buttons)” instead of Spanish. Another very interesting thing that Preciomania has are its stong relationships with high volume portals and websites with high traffic such as http://monografias.preciomania.com/ for example, who belongs to Lucas Morea (one of our SES speakers for the Hispanic & Latin American session) or big brands like MSN for their Latin American audiences with http://latammsn.pricegrabber.com/.

Yahoo! Shopping en Español (http://espanol.shopping.yahoo.com/)

This was an effort by Yahoo! en Español to do its version of shopping.yahoo.com in Spanish. However, second and third clicks where leading to their English versions and management most likely found it was better to just make that transition direct. Therefore now you will see “Shopping (en inglés),” under Compras of their Spanish version of Yahoo!.homepage for their primary U.S. audience. Their shopping versions of other countries are only available for Mexico and for Spain.

There are other big players like MercadoLibre and DeRemate.com but they are auction based models, rather than shopping search engines.

One of the things that I encounter every other day, are marketers that say myths like, “This culture is known for not trusting banks and other institutions due to their third world, or similar, experience; therefore, they are much less apt to carry credit and debit cards.” However this is not entirely true for the U.S. Hispanic population, U.S. Hispanics have increased in credit card penetration rate from 48% in 2000 to 57% in 2004. You can compare that with the general market penetration of 89% and with African-Americans of 61% for 2004 (source: Synovate 2004 U.S. Hispanic Market Report). Hmmm.... 57% vs. 61%. Wow, do we not consider African-Americans within our search engine marketing campaigns or is it any different because their first language may be English?

In my white paper titled “Search Engine Marketing to the U.S. Hispanic Market”, I mention that

COMscore MediaMetrix reported that Internet purchasing behavior among the U.S. Hispanics is reflected in the increase in online spending which grew from $4.3 billion in 2002 to $5.6 billion in 2003. Therefore it is clear that purchasing online is a reality here in the U.S. by these Spanish speakers. However, in today’s market, it is not good enough just to say: “we are going to target the Hispanic market.” A more analytical approach is usually needed. The Hispanic market is composed of immigrants and 3rd generation Americans; Spanish dominant Hispanics and those who only speak English; not to mention 67% are Mexicans, 9% Puerto Ricans, 4% Cubans – 22 different countries of origin with different values, customs, behaviors, attitudes, and maybe have pre-conceived notions of your brand.

I believe that there will be a time where companies don't know where to turn to for new consumers, but these powerful markets that have $575 billion in buying power (today). However, outside of our highly knowledgeable SEM community, with the entry barriers in search engine optimization and paid search know-how that is encounter today and in the future, early adopters will benefit and late entry businesses will pay the price.

[Corey Creed]

Excellent series. It amazes me how much attention Internet users are giving to these shopping search engines. It seems as if that is the direction they are going in. It is a great place to be for a merchant, in my opinion. I appreciate the quality information this week.

Does anyone have any experience submitting to MSN Shopping? (eShop?) I have heard that to sign up, you need to go through Microsoft bCentral. Is that true? Has anyone done so?

<edit> Forgot to mention-- excellent post! </edit>

Hitwise claims that comparison shopping sites are taking market share directly from major general purpose search engines but I doubt this is exactly a zero-sum game. Shopping.com, Nextag, Bizrate, and eBay all engage in advertising to increase their market share. (These are just my thoughts so I don't have numbers but) I'm sure they received significant volume from their Overture, Adwords, and other marketing campaigns.

Originally Posted by Chris Sherman

According to market research firm Hitwise, the market share of visits to the top comparison shopping sites increased by 22% this year, taking this market share directly from the major general purpose search engines. All of the major shopping search services offer paid inclusion and paid placement programs. If you're a merchant or affiliate, you're losing out on a significant source of traffic if you don't take advantage of these programs.

These programs aren't just for products. NexTag this year rolled out comparison shopping for mortgages, travel, real estate and online education programs. Expect this trend of shopping search engines moving into helping consumers search for services to continue.

Today's SearchDay article, Shopping Search Week 2004!, kicks off our annual look at what's new at the major shopping and product comparison services. Tomorrow we'll take a detailed look at BizRate/Shopzilla, Froogle, and MSN Shopping. Wednesday we'll cover NexTag, PriceGrabber, Shopping.com/Dealtime and Yahoo Shopping. And Thursday we'll broaden the focus to cover the relatively small but quickly growing shopping search services that are emerging outside of North America, catering to consumers around the world.

Comments welcome!

Great Shopping Search Overview! I will try to add my two cents by giving you some information about the LatAm market.

Disclaimer: I work at Livra.com one of the leading Shopping Search sites in the region.

Little History & Problems

During the Bubble years very few Shopping Search managed to get proper funds in LatAm in the early days.

Most of them appeared in the middle of the crash (early 2000) and others just didn't manage to survive. At that time there used to be 8-10 local players, even Kelkoo had established offices in all Latin America.

What's more, the development of ecommerce sites played a key part on that. In the US or Europe is more natural to "price compare" as you have a LOT of sites to buy anything. That was not the case in Latin America where even right now in Brasil you don't have more than 50-80 trusted sites where you can buy a Digital Camera, and in Mexico or Argentina that's much lower.

But there's also some technical problems to offer a Shopping Search that works. There's no standardization on Product ID or Product Taxonomy. Every ecommerce site has their own catalogue (with no Manufacturer Part Number or any other Standard Code) that could let "price compare" within the same product. The same product can be called "Palm V", others "Palm 5" and another one "New Palm Pilot", without any additional information to map them. What's more, most of the ecommerce sites are still on an early development stage which avoids the possibility of having a proper data feed from them to ease the technical problem.

All these conditions restricted the Shopping Search development in Latin America. If you check the current players you will easily notice that their functionality is "not there yet" in comparison with US players.

But we believe that 2005 will be a great year for Shopping Search companies in the region (we are making sure that will happen :-)

Sites

Livra.com: http://www.livra.com
Founded in Argentina (1999). Operations in Argentina, Brasil, Mexico, Spain and Portugal. Offers consumer reviews and price search.

Buscape: http://www.buscape.com.br
Founded in Brasil in 1999. Offers price search and merchant reviews in Brasil.

Bonfaro: http://www.bondfaro.com
Founded in Brasil (1999). Offers price search and merchant reviews in Brasil.

I hope it gave you a little overview of the region!

[Chris Sherman]

Originally Posted by rivergater

Hitwise claims that comparison shopping sites are taking market share directly from major general purpose search engines but I doubt this is exactly a zero-sum game. Shopping.com, Nextag, Bizrate, and eBay all engage in advertising to increase their market share. (These are just my thoughts so I don't have numbers but) I'm sure they received significant volume from their Overture, Adwords, and other marketing campaigns.

You're quite right. Part of the challenge in covering an entire vertical sector in a week is in deciding what to leave out.

Hitwise told me that on average, more than half of traffic to comparison shopping sites (50%) comes from search engines, demonstrating that paid search placement is successful in driving traffic to these sites. Only 19% of traffic now comes from organic listings in search engines & directories. Could have made that clearer... :-)

[St0n3y]

Does anybody know of SEO companies that optimize to target these engines?

[Nacho]

Here is an interesting news story just released on Dec. 4th that talks about "search-based comparison shopping engines". Here Piper Jaffray analyst Safa Rashtchy was quoted saying:

"We believe the heavy competition on the Web has created a new level of promotion, which is sure to suppress margins" for online retailers

[MrMackin]

Shopping.com Stock Skids on Investment Firm's 'sell' Recommendation

[Corey Creed]

Interesting news quote.

That is an interesting point that Shopping.com may be in trouble if Froogle and Yahoo Shopping (and MSN shopping for that matter) start getting more attention directly from Google and Yahoo. Does Shopping.com (and the many others) actually depend completely on the major search engines for traffic and attention?

I personally have a hard time believing that. Sure, they rely heavily on paid listings on Overture and AdWords, but I think the numbers show that people are going directly to these sites (Shopping.com, Nextag, Pricegrabber, etc) also. Besides, would Google/Yahoo ever actually ban paid listings from these sites just because they are competition? I doubt it.

[sean]

Corey,

A quote on search traffic from Shopping.com's latest filing with the SEC:

http://www.sec.gov/Archives/edgar/da...95373/d10q.htm

Page 19 (overview):

A significant number of our consumers have been referred through keyword purchases from a small number of sources, including Google.

Also, a couple quotes related to the types of competitors you mentioned:

Page 33 (competition):

Focused comparison shopping websites.
...We believe that many of these companies have specific competitive advantages over us. For example, BizRate specializes in merchant reviews and PriceGrabber specializes in computers and consumer electronics categories.

Search engines and portals.
...Yahoo! provides a service similar to ours, and Google has developed a search engine for finding products for sale online. If these search engines were to change their algorithms or otherwise restrict the flow of consumers visiting our websites, our financial results would suffer.

IMHO...
Currently, the other focused comparison sites offer more direct competition in terms of guiding shoppers through all aspects of the buying process, but the general search engines could nevertheless find ways to direct searchers away from competing resources in favor of their own offerings.

[Corey Creed]

Yes, you make a strong point there.

There's no doubt about it. Shopping.com (and NexTag, PriceGrabber, etc) could suffer very much if the major search engines decided to "find ways to direct searchers away from competing resources in favor of their own offerings" as you say.

However, I still believe that these sites are getting a bit of a "following" that does not completely depend on Google and Yahoo. I've been talking to quite a few people about this recently. When I bring up websites like NexTag, BizRate and Shopping.com, I frequently get a response such as: "Oh yea! I just used them recently. It works great. I go there a lot now." I think we will see more and more of that in the upcoming month.

I guess there is a balance between what we both are saying. People go to these sites not only from search engines, but also directly. It's just a matter of how much of each. Perhaps the balancing point will determine the stock value.

After all, isn't that true with most all quality websites?

[St0n3y]

Perhaps a little PR effort for these guys can go a long long way.