E-commerce robots, also known as “bots,” made waves a couple of years ago by promising to find bargain-basement prices for online shoppers. So far, though, bots have not proved to be a panacea.
Price comparison sites like BizRate.com, DealTime.com andPrice.com can indeedsave shoppers time and money, especially in certainproduct categories. But as long as price is theprimary metric for bots’ comparisons, their value willbe limited, analysts agreed.
“For consumers who buy on the Internet, the biggestpoverty is of time, not of money,” Gartner research director David Schehr told the E-Commerce Times.
Shopping bot providers like New York City-basedDealTime.com use Internet spiders to comb onlinemerchant inventories, so shoppers can benchmark pricesfrom a single location.
“Our mission is to help shoppers zero in on theproduct they want to buy and determine which merchantthey want to buy it from, based on price, reputation,product availability and service,” DealTime.comspokesperson Deborah Sack told the E-Commerce Times.
But shopping bots have yet to hook shoppers en masse,despite their veteran status in the e-commerce arena.
“There is indeed a place for shopping bots,” JupiterMedia Metrix analyst Ken Cassar said in an interview with the E-Commerce Times. “The question is whether it is a market for horizontal players or vertical players.”
In December 2001, just 10 percent of the onlinepopulation used a shopping bot, according to JupiterMedia Metrix. In the same vein, Gartner analystsrecently reported that buyers use bots to find shopping sites just 3 percent of the time.
While most bots cut horizontally across multipleproduct categories, analysts said bots are most usefulin certain high-end product categories wherepotential savings are highest.
“Most of what people buy online is low priced — $US5to $50 — so they do not spend much time to save 50cents,” Schehr said. “Consumers are more focused onconvenience than on price.”
Because a multitude of factors drive most purchases,Schehr suggested that bots should offer morecomparison criteria.
A consumer shopping for a shirt, for example, couldsearch and sort according to color, size, materialand style, in addition to price.
While parametric searches like this would be ideal,Cassar said, they would present unique challenges ofscope and scalability.
“The bots would need to inherently understand productcategories,” Cassar noted. “The approach andattributes to help consumers find the right productcan differ by each customer and each product.”
For the Record
That said, many bot providers are beefing up contentto complement their price data.
For instance, Los Angeles-based BizRate.com — whichdrew more than 6.5 million unique visitors in January,according to Jupiter Media Metrix — aggregatescustomer feedback to generate merchant ratings basedon quality, delivery and other customer service metrics.
Electronics shopping bot site Price.com offers asimilar merchant rating system.
Still, most of this content is merchant-based rather thanproduct-based, limiting the types of parametricsearches common on retailers’ own sites.
Both merchant and product data will be critical forshopping bots’ long-term viability, Cassar suggested.
For higher-priced items like computers, digitalcameras or stereo equipment, comparison shopping canpay off, according to analysts.
“On the most popular electronics products, the savingscan be as much as 50 percent and run into the hundredsof dollars,” DealTime’s Sack said.
Bot providers prefer consumers to realize such savings online, since they derive referral revenue from the merchants listed on their sites.
“Consumers who come to BizRate.com are purposefulshoppers,” BizRate.com spokesperson Leslie Barry toldthe E-Commerce Times. “Once they research with us,they link to the retailer they want to buy from.”
Ironically, in high-end product categories,consumers often research online and purchase throughoffline channels, Cassar noted.
“For every dollar spent online, another $5.50 is spentoffline as a result of online research,” he added.”Bots are in the bull’s-eye of this phenomenon.”
Red Carpet Retail
Regardless of whether content-rich product searcheswill drive more bot users to purchase online, theseshoppers represent a new, lucrative customer base forretailers, analysts said.
“The appeal of bots to merchants is that they offerlow-cost transactions,” said Cassar. “Bots bring totheir doorsteps customers that they might nototherwise have sold to.”
For its part, DealTime scours more than 1,000merchants, including Kodak (NYSE: EK), Wal-Mart (NYSE:WMT), REI, Crutchfield,Amazon (Nasdaq: AMZN) and Sam Goody.
“Customer acquisition cost is a large proportion ofthe online merchant’s cost structure, and shoppingsearch engines provide a [low-cost] customeracquisition tool,” Sack said.
The only risk to retailers, Cassar noted, is that theycould commoditize their brands or products byagreeing to appear in comparison site listings.
But this risk ismitigated by tangible opportunity for incrementalnew business, he said.