On the internet
, a price comparison service
(also known as shopping comparison
or price engine
) allows individuals to see lists of prices for specific products. Most price comparison services do not sell products themselves, but source prices from retailers from whom users can buy. In the UK, these services made between £120m and £140m in revenue in 2005 , and is growing at an annual rate of 30% to 50%.
History of price comparison services
The internet boom of the late 1990s
made price comparison profitable.
Price comparison services were initially implemented as client-side add-ins to the Netscape and Internet explorer browsers, and required that additional software be downloaded and installed. After these initial efforts, comparison shopping migrated to the server so that the service would be accessible to anyone with a browser.
Services are now offered by websites dedicated to price comparison and by major portals such as Yahoo!.
In the late 1990s, as more people gained access to the internet, a range of shopping portals
were built that listed retailers for specific product genres. Retailers listed paid the website a fixed fee for appearing. These were little more than an online version of the Yellow Pages
. As technology has improved, a newer "breed" of shopping Web portals is being created that are changing both the business model and the features and functionality offered. These sites do not "aggregate" data-feeds provided from the retailers, they search and retrieve the data directly from each retailer site. This allows for a much more comprehensive list of retailers and the ability to update the data in real-time.
Generic portals and search engines launched similar services and companies that stood to benefit from increased internet shopping (especially credit card and delivery firms) launched similar sites. Many of these services have since closed.
Early price comparison services
Through 1998 and 1999, various firms developed technology that searched retailers websites for prices and stored them in a central database. Users could then search for a product, and see a list of retailers and prices for that product. Advertisers did not pay to be listed, but paid for every click on a price. Globally, similar websites were launched, and the period continued to see various websites launched, merged, acquired and closed.
Consolidations and acquisitions
- Kelkoo merged with Dondecomprar and ShopGenie. Later that year Kelkoo and Zoomit finalized their £100 million merger with ZoomIt. Kelkoo's investors owned about two thirds of the merged company
- CNet acquired mySimon for common stock worth approximately $700M
- ShopSmart relaunched under Barclays ownership2002
- Barclays announced that they were to close ShopSmart, with all traffic redirected to Kelkoo.2003
- Dealtime acquired Epinions2004
- Kelkoo acquired by Yahoo for €475m
- PriceRunner acquired by ValueClick for $29m plus shares2005
- eBay acquired Shopping.com for $620m
- E.W. Scripps acquired Shopzilla $525m
- Experian acquires PriceGrabber for $485m2006
- In July, Idealo was taken over by the majority from the media company Axel Springer which purchased 74.9% of Idealo Internet GmbH for an undisclosed sum. 2007
- MeziMedia (owner of Smarter.com) acquired by ValueClick for up to $352m
- In June, private equity firm Providence Equity Partners bought two-thirds of NexTag.
- In August, the Hearst Corporation bought Kaboodle for about $30 million.
- In October, Microsoft bought Jellyfish.com for $50m.
- In October, News Digital Media, part of News Limited, the Australian business of News Corporation bought 27.5% of Australian comparison shopping site Getprice.com.au for an undisclosed sum.2008
- Greenfield Online (owner of Ciao) acquired by Microsoft for up to $486m
One way price comparison sites can collect data is directly from merchants. Retailers who want to list their products on the website then supply their own lists of products and prices, and these are matched against the original database. This is done by a mixture of information extraction
, fuzzy logic
and human labour.
Another way comparison sites can collect data is through a data feed file. Merchants provide information electronically in a set format. This data is then imported by the comparison website. Some third party businesses are providing consolidation of data feeds so that comparison sites do not have to import from many different merchants. Affiliate networks such as LinkShare and Commission Junction aggregate data feeds from many merchants and provide them to the price comparison sites. This enables price comparison sites to monetize the products contained in the feeds by earning commissions on click thru traffic.
An alternative approach is to crawl the web for prices. This means the comparison service scans retail web pages to retrieve the prices, instead of relying on the retailers to supply them. Some combination of these two approaches is generally used. Some search engines are starting to blend information from standard feeds with information from sites where product Stock-keeping units (SKUs) are unavailable.
Similar to search engine technology, price comparison sites are now spawning "comparison site optimisation" specialists, who attempt to increase prominence on the comparison sites by optimising titles, prices and content. However, this does not always have the same effect, due to the differing business models in price comparison.
Price comparison sites typically do not charge users anything to use the site. Instead, they are monetized through payments from retailers who are listed on the site. Depending on the particular business model of the comparison shopping site, retailers will either pay a flat fee to be included on the site or pay a fee each time a user clicks through to the retailer web site or pay every time a user completes a specified action - for example, when they buy something or register with their e-mail address. Comparison shopping sites obtain large product data feeds covering many different retailers from affiliate networks such as LinkShare and Commission Junction. There are also companies that specialize in data feed consolidation for the purpose of price comparison and charge users for accessing this data. When products from these feeds are displayed on their sites they earn money each time a visitor clicks through to the Merchant's site and buys something. Search results may be sorted by the amount of payment received from the merchants listed on the web site.
- Haag, Cummings, McCubbrey, Pinsonneult, and Donovan. (2006). Information Management Systems, For The Information Age. “Buyer Agents”. McGraw-Hill Ryerson.