nicolas leroy

Bad press for CSEs

February 25, 2008

In the last week, I have read a couple of articles related to CSEs that were not really positive. Among those:

TechCrunch UK – Price comparison sites are going, going, gone…

[…] For now though, PriceGrabber is not the only one ‘on the block’. Yahoo has been looking to sell Kelkoo, which operates in 10 European countries, since October last year (here are some good reasons why). Elsewhere, Pricerunner, launched in Sweden in 1999 and bought by ValueClick for £16m, seems to be losing momentum as bigger players have won the traffic and marketing game […]

Interactive Investor – Is it the end for price comparison sites?

[…] Since then the cost of attracting traffic to such websites by bidding for Google key words has risen dramatically, thereby eroding profit margins. And with the US economy on the brink of recession and the UK economy suffering a slowdown, consumers have less disposable cash to spend online or offline. […]” (for those who don’t like suspense, the end of the article seems to conclude that: “no, this is not the end” ;) )

The Independent – Price site shake-out

[…] One of the key issues for price comparison sites is that the market has become overcrowded which means that only the most successful are likely to survive. […] And the market for companies which focus on retail products is even more saturated. One analyst said the barriers for entry for those comparing retail products, such as flat screen televisions and DVDs, were lower than those comparing financial products, such as mortgages and insurance, which meant there were many small players in the field.[…]

Those articles are following the recent news that PriceGrabber is for sale; and also the less recent news that Yahoo! was seeking to give more autonomy to Kelkoo, and previous rumors that Shopzilla may be for sale (which seems to be false in the end, by the way).

I’m really not good at business, so I’m not here for great business analysis, just a few thoughts:

2 commentaires

Philip Wilkinson
on Feb 25, 2008 / 8pm
With your last point Nicolas "price comparison sites are transitioning to become shopping discovery destinations" - this is very hard for them to do as it completely flips around their business model.

Price comparison sites buy traffic at say 11p from a PPC campaign, try and convert it with the highest % possible and then sell it for a net price of 12p or more.. This means they really want to get the customer into the site and out again to a merchant as quickly as possible. It's not in their best interest to give the customer what they really want and keep me in the site for any length of time.

If one of them makes £12m revenue a year - how likely would they be to risk all of this on a new concept?

on Feb 27, 2008 / 7am
Hi Philip,
Indeed that's a tough challenge for them to change their business models; that's why I'm talking about a transition, not a revolution.

Some are already moving in that direction: Become or Pronto on the US market are experimenting with social shopping features that are directly integrated into their search results.

I think social shopping features (as basic as "manage your list of products") are a good way for shopping engines to make users more engaged on their sites.

Also with a bigger inventory of offers (à-la TheFind for instance) and a slightly adapted product, I'm pretty sure shopping engines can become a more attractive destination for shopping discovery. That surely means accepting to have free offers at the tail, getting through crawl... Again a change in the business model.