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Analysis of Buy.com’s foray into Comparison Shopping
Brian Smith at Comparison Engines was the first I found to blog about Buy.com’s inclusion of competing Merchant’s offerings on the Buy.com product page. My comments (1 – 5) to Brian’s post are below.
Buy.com’s implementation is smart from what I can tell only providing the comparison grid if Buy.com does not carry the product. This has to be a calculated move where the logic is that Buy.com wants to monetize as much of their traffic as possible. Here are some further thoughts about Buy.com’s move:
1) Found in the “What’s this” link: “…allow you to compare Buy.com’s
pricing to other merchants” – This unequivocably shows the customer
confidence Buy.com’s pricing. This move takes Buy.com from a shopping
destination to a shopping portal. A potentially very significant shift.
2)
A wise man once clued me in a few years ago about the true nature of
the internet being about distribution. Buy.com’s move is both an
offensive move (as mentioned above) and a defensive move (start all
shopping here) and gets Buy.com into the distribution game. This will
prove to build customer loyalty over time and look for other
traditional shopping destinations to do the same – look to the pure
plays first Overstock.com would be a good candidate. One could argue
that Buy.com is copying Amazon’s Merchants @ efforts albeit delivered
in a more transparent UI.
3) Buy.com’s marketing costs will be
lowered by not having to be reliant on the comparison engines of the
world. Let’s assume Buy.com is spending 5 – 15% of revenue on marketing
depending on the category (Conversion, average order size and click
thru rates are also critical factors) they can pocket some of this
money and the balance to buy other targeted traffic – see 4 below to
see why this is interesting.
4) Creates an additional stream of
revenue – golden click-based revenue – which converts at orders of
magnitudes higher than order-based revenue. It would be nice if in
future earnings reports if Buy.com will break out “site revenue”
(revenue generated from orders on their site) from “syndication
revenue” (orders generated from sending traffic elsewhere). What I love
about this is this puts a “traditional” merchant in the same game as
his marketing “partners” – the comparison engines – that game being
click arbitrage off the search engines.
5) It will be
interesting to watch for any ‘blow back’ from Buy.com’s affiliate
marketing channel. Buy.com is a voracious affiliate marketer that
demanded their own small army of support from CJ after switching from
Linkshare (supposedly due to non-payment) to CJ. As a Buy.com Affiliate
the problem is that the affiliate could be sending order dependant
traffic to Buy.com which doesn’t convert, but ends up converting on a
syndication merchant from the comparison grid. The impact would be a
decrease to the Affiliate’s Earnings per Click and ultimately cost the
Affiliate money. A great way around this would be for Buy.com to share
the click revenue (if any generated) with the affiliate who drove the
traffic during the same session – I would remove any latency from the
equation.
Categorised in: Online
This post was written by DEP Ecommerce Consultants
