COMPARISON SHOPPING VERTICAL IN THE INDIAN ECOMMERCE SPACEby admin August 9, 2012 0 comments
– Authored by Rohit Chugh, Founder and Group CEO, Logicserve Group
As mentioned in one of the industry articles, a comparison service (also known as comparison shopping, shopping comparison, or price engine) allows individuals to see different lists of prices, and other valuable information, for specific products / services being sold online by retailers and service websites. Most of the comparison engines do not sell products themselves, but source prices and related information from retailers from whom users can buy.
The global eCommerce eco-system not only includes the main online retailers but also various services associated with the industry, including the comparison shopping engines vertical, to help the individual buyer differentiate between service and product offerings (including price / service / terms / other factors) from different online suppliers. Hence, as consumers increasingly go online to find the best deal, comparison shopping engines have been growing in popularity worldwide.
According to a recent industry report, and as published in The Economic Times, the domestic (Indian) eCommerce market has the potential to grow between $125 billion and $250 billion by 2024-25. The report also says that urban Indian consumers are now confident enough to make online purchases of up to Rs.25000, from Rs.2000-5000 in the recent past. So clearly the eCommerce industry and consumer mind-set in India has started evolving. However, the overall eco-system, especially the value add service space in the form of Comparison Engines, is yet to develop in the fragmented eCommerce market of India as the industry is currently wrestling with an array of challenges covered in rest of this article.
So how do these comparison engines actually work? Comparison engines back in the late 90s were little more than an online version of the Yellow Pages. Various firms developed technology that searched retailers’ websites for prices and stored them in a central database. The technology has evolved since then. Comparison engines now collect data directly from merchants. Retailers who want to list their products on the comparison engine’s website supply their own lists of products and prices and these are matched against the original database. Comparison engines can also collect data through live data (XML) feeds where merchants, or affiliate networks, provide information electronically in a set format. Comparison engines typically do not charge users anything to use the site; they are monetized through payment from retailers, in the form of fixed fees or commission, who are listed on the site.
From an online retailer / merchant perspective, this vertical enables a significant portion of retailers and agencies generate valuable leads and conversions either for themselves or for their clients. According to an industry survey in UK in the year 2008, 43% of retailers and 58% of agencies interviewed as part of the exercise, reported increased sales through Comparison Engines in that year alone. In UK, almost every month, it seems, a new comparison engine is unveiled, promising to scour the market for customers to find the cheapest quote for financial or insurance service or product at different retailers’. However, even in the UK region, where eCommerce has evolved into one of the mainstream sectors, a fifth of merchants are not using any Comparison Engine for their marketing / lead generation activities. Barriers to effective use of this channel include resourcing issues, difficulties keeping feeds updated and concerns about quality and volume of traffic.
While the Comparison Engine space has a huge potential in a developing eCommerce market such as ours, both tracking and comparison technology need to evolve further for online customers to get the best value addition. Moreover, there is a need for eCommerce players in India to understand and develop a multi-channel distribution of their portfolio from Search (paid advertising and organic) to include Social Media (paid advertising and community engagement), Display advertising, Email and Affiliate Marketing. Comparison Engines, more often than not, fall into the Affiliate space working as merchant’s extended window and partner for the right customer acquisition. Right tracking technology between the main players (merchants, networks and partners / affiliates) and the ability to rightly attribute conversions, post de-dupe against channels at merchant’s end, is something that can be built up taking cues from developed markets such as UK and US. These overseas markets have standardised the data to an extent where even the name of the products and description do not vary from one website to another, enabling right deep-link listings and an amazing user experience + engagement.
The above mentioned factors suggest that there is a great scope for Comparison Engines and marketplaces to grow their businesses as the take-up is still fairly low compared to the use of other support systems within the eco-system. While there is no data to back this up, it can be conjured that the failure to develop and exploit Comparison Engines can largely be attributed to lack of time or know-how in the industry space here. Having said that, there exists a huge gap in the eCommerce eco-system of India for the online Comparison Engines to fill and develop. It can be rightly inferred that first entrants, with right technology / value addition services, would greatly benefit by winning the trust of brands / merchants and consumers to play a major role in the Indian eCommerce space.
Let’s all now hope for a ‘Comparison Revolution’ in the eCommerce eco-system of India for the benefit of both online consumers and merchants!