Shopping Comparison Engines vs Marketplaces, Part 2

The CSE model is a little different than the marketplace model and typically refers to a cost per click site or engine which lists products side by side so a consumer can easily pick out which product offering they prefer. I suppose the thinking went something like this…

At some point in the not so distant past, someone looked at a new thing called Yahoo or perhaps Google, and noticed how convenient the horizontal listing format displayed lines of page links with a quick summary of each page, so a navigating web surfer could easily scan through the results of a search, and with out having to slowly load each page (remember, most people are on dial up at this point).

Then the genius in question, says hey, what if I could develop a search engine that will only list products so people can easily scan through and see which one they want to purchase? Instead of a simple page summary, all relevant information could be displayed like product name, manufacturer, and of course…price. So the merging engines began to find ways to fill their results pages with hundreds, then thousands, then millions of products. Each engine strived to have the easiest to use, most product and consumer friendly format available. In this emerging process, a retailer can many times find their products listed for free on the CSE as the engine tries to fill its pages. Many times these products can be spidered from a merchant’s website, or even taking from another engine such as Froogle/GoogleBase/Google Product Search (GPS). If you really want to understand how effective this can be, know that a couple CSE’s actually list products on GPS, channel the free click through the engine to the retailer, and then charge the merchant with a click that actually originated on Google Product Submit. Ah, the hidden secrets of online advertising.

Currently there are many processes that are shaping the CSE industry. Many retailers are asking for a marketplace or commission based model. However, this may or may not be good thinking. Sure a commission based model is less risky, but a cost per click model if managed correctly, can be many times less expensive than commission. Also, integration is much less complicated with traditional pay per click models as including information like product options, inventory, and exact shipping is necessary for marketplaces. Also, customer feedback becomes more important as the CSE brand is much more involved and responsible or the sale. Many hybrids are developing from this system as PriceGrabber, Shopping.com, JellyFish, UnderBid, and many others are offering commission or marketplace variations.

Looking to the future, the industry looks bright for both models as merchants continue to reach out toward new and innovative ways to recreate online marketing and the internet driven sales. Looming challenges lie ahead like creating a correct taxonomy and categorization method for millions of products, as well as a heavier reliance on manufacturer information and sku numbers to help place products. However, this is topic unto itself and seems best suited for a later article…

May 22nd, 2007