Comparison Shopping Engines: Popular but Flawed?

The Internet has made it simple for consumers to shop and in some cases to find the best deal when making a purchase. Comparison shopping engines collect information, such as product pricing, feature set and shipment costs, from various vendors, and then present that data to users.

While consumers think that they are receiving complete shopping surveys from unbiased sources, however, they are often being given snapshots of different products from suppliers with a vested interest in promoting their wares. “Comparison shopping can be helpful, but like with any other purchase, along with their use comes the warning label: ‘Buyer beware,'” said Brian Smith, an analyst with market research firm ComparisonEngines.com.

This warning has relevance for a fast-growing number of consumers. E-commerce purchases have been growing at a steady clip. Online sales grew by 24 percent in 2005, according to market research firm eMarketer. That growth has lead to more use of comparison shopping engines. “Once users are comfortable with online shopping, then they take the next step and start to work with comparison shopping engines,” said Jeffrey Grau, a senior analyst at eMarketer.

Widening the Customer Base

Vendors have been trying to make their products more enticing. As the engines have become more popular, more retailers are participating in these services. “Retailers had been leery of using these services because they felt that they competed with their own online stores,” noted Patti Freeman Evans, a senior analyst with market research firm JupiterResearch. “That thinking has been changing as large retailers realized that comparison sites can drive significant traffic to their own online stores while sparing consumers the task of jumping from site to site in search of the best deal.”

The comparison shopping vendors have been improving their data feeds, so it has become easier for online comparison-shopping services to collect up-to-date product data. Increasingly, the comparison-shopping sites provide users with a well stocked and organized department store. Some sites offer easy access to product research, shipping and “true costs” calculators. Others serve up coupons and highlight free shipping deals or generous return policies.

Wireless Bandwagon

As a result, comparison sites that once catered only to techies in search of low prices on gadgets, such as laptop computers and digital cameras, have gained broader appeal. “Comparison shopping vendors have been focusing more on marketing their services to women, who tend to be the primary group making purchases,” ComparisonEngines.com’s Smith told the E-Commerce Times. Consequently, the range of products available has been growing to include items like blenders and baby car seats as well as traditional electronics products.

Comparison shopping engine vendors have developed new services to support wireless devices, such as cell phones. Mobile searching also offers users new functions: they can have their camera phones scan bar codes with their phones for instant price checks. Scanbuy and NextCode have developed such features and comparison shopping engineers are reportedly ready to incorporate them into their services.

The improvements have attracted more customers, which in turn has lured the industry titans into the market: Microsoft, Google, and Yahoo have been trying to build up businesses in this space. Google’s comparison-shopping site, Froogle, added local search to its offerings. With Froogle’s local service, merchants with brick-and-mortar stores can upload data feeds of their inventory. Once users enter their zip codes, they can search for items near their home or office. “Yahoo has been pushing users from its search services to its comparison shopping engine,” eMarketer’s Grau told the E-Commerce Times.

An Order of Magnitude Improvement

To compete, smaller vendors have been adding more sites to their searches. “The newer shopping comparison search engines scan hundreds of thousands of merchant listings compared to the tens of thousands found with most services,” said ComparisonEngines.com’s Smith.

While the comparison search engines have many alluring features, they also have weaknesses, some of which may surprise customers. The most glaring is the fact that their searches are neither all inclusive nor unbiased. Most often, comparison shopping engines have arrangements with various vendors, so their partners’ merchandise is displayed first.

Many of these sites include user reviews as well — but the value of these can be questionable. Users should be aware that some vendors may doctor the reviews, often writing reviews of their own products to present them in a most favorable light, or skewering the competition with unfavorable entries about their offerings.

Guarding Against Vendor Fraud

In addition, the sites can be home to disreputable vendors. There have been cases where suppliers offer low prices for their items but then force consumers to buy additional add-on materials. Because of the problems, a few, but not all of the comparison engines, have begun to offer money back guarantees. Often these are capped, however, at US$500 to $1,000.

Disreputable vendors have also been known to attempt to drive up competitors’ costs. Many of the sites generate revenue on a pay-per-click basis where a merchant is charged each time someone clicks on links to their product. Click fraud is perpetrated by automated programs that continually click on rivals’ advertisements with the sole purpose of driving up costs. “The comparison shopping engine vendors say they have ‘black boxes’ that prevent fraudulent pay-per-click items, but how they work and how effective they are is unclear,” stated ComparisonEngines.com’s Smith.

Even in the face of these potential problems, however, use of these systems is expected to increase. As such, vendors will continue to remedy issues like these as they come.

“As users work with the comparison shopping services more extensively, they will understand their benefits as well as their limitations,” concluded JupiterResearch’s Freeman Evans. “While they have been making progress, vendors still have to take steps to improve the level of trust users have in their services.”