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New research published by E-consultancy this week reveals that the comparison engines sector continues to flourish despite challenges presented by the economic downturn and the increased cost of buying search engine traffic.

The Comparison Engines Buyer’s Guide 2008 contains a detailed analysis of an increasingly competitive sector and profiles of 16 leading engines.

According to ChannelAdvisor, this channel now drives approximately 15% of total online sales and was therefore responsible for £7 billion in UK online sales during 2007.

As the industry approaches maturity, further growth will be driven through innovation in both technology and customer service, as comparison shopping engines (CSEs) compete for market share in an increasingly crowded marketplace.

The announcement that Yahoo! is considering selling Kelkoo, as well as Experian’s plans to review the future of PriceGrabber, has raised questions over profitability in the sector.

However, the leading CSEs such as Kelkoo, PriceRunner and Shopping.com are still optimistic about the prospects for the industry.

Bruce Fair, UK managing director at Kelkoo, said:

“We believe that there may be some economic slowdown in 2008, which will impact consumer spending, but this will be mainly felt offline. There remains a steady channel shift of purchasers moving online, which should see strong growth in 2008."

Mattias Berg, UK MD at PriceRunner, added:

“Retailers are continuing to invest in comparison engines because we provide a significant number of buyers who already have an interest in buying. Over the last few years, retailers have become much more sophisticated in measuring the partners that are most valuable to them, and who are also generating the best ROI, both of which are encouraging developments.”

In an attempt to reduce their over-reliance on search engine traffic, some comparison engines have sought to establish themselves as destination sites rather than hop-on, hop-off sites.

As merchants have become more concerned about an increasingly commoditised shopping culture, the leading comparison engines have shifted their focus away from just price to product comparison.

Established industry players such as Shopping.com and Shopzilla are also branching into new sectors and repositioning themselves as shopping portals to create long-term customer loyalty and build sustainable competitive advantage. 

Differentiation is paramount, and a lucrative opportunity presents itself through integration of Web 2.0 technologies, including user-generated content, incorporating third party content and widgets, and social shopping.

Financial services price comparison sites in particular have continued to thrive, but the growing dominance of market leader Moneysupermarket.com has resulted in calls for greater regulation of the industry from financial service providers, and demands for transparency from consumers. 

New entrants that are changing the traditional price comparison model include Twenga, Microsoft-owned Jellyfish, and local price comparison site Askthelocal.com. The growth of social shopping sites, including Crowdstorm, mydeco, and OSOYOU will also be significant.

Despite concerns over the lack of transparency and further scrutiny over the question of profitability, shopping comparison sites continue to prove popular with consumers and retailers alike.

The key challenge for CSEs will be building consumer confidence by increasing transparency and trust. Comparison engines need to place emphasis on creating long-term loyalty by optimising the customer experience and differentiating their sites from the increasing number of players in the market.

A breakfast briefing held by online channel management specialist ChannelAdvisor last month re-enforced our belief that the failure of many retailers to optimise effectively was also a barrier to the growth of this channel. Many retailers struggle to create feeds which can help them get maximum value from these sites.

There is plenty more information and tips from experts in our new comparison engines buyer's guide.

Aliya Zaidi

Published 17 April, 2008 by Aliya Zaidi

Aliya Zaidi is Research Manager at Econsultancy. Follow her on Twitter or connect via LinkedIn or Google+.

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