Comparison shopping engines, otherwise known as shopping aggregators, are considered by some as the darlings of the internet era, and for good reason. With the profits of some aggregators, such as hotels.com and booking.com, exceeding $6 billion annually, it’s fair to say that this industry is one to watch.
But how exactly did these sites come about? And more importantly, will their success continue unbridled?
We decided to investigate the history of shopping aggregators to find out exactly what has made these sites so successful, and to inform our predictions on what would happen next.
Here’s what we discovered:
WHERE HAVE THEY COME FROM?
Although shopping aggregators are typically associated with sites that have cropped up in the last decade or so, it’s a little-known fact that the first shopping aggregator existed a long time before that.
The first comparison shopping engine was created in 1995 by Bruce Krulwich, a researcher from now-defunct firm Arthur Anderson. Krulwich and his team created BargainFinder, a site that compared prices for CDs, largely as an experiment to see if it would work. Krulwich’s experiment was a breakthrough success – it was used over 100,000 times in two months (a formidable amount, given the amount of web traffic at the time!).
Following Krulwich’s breakthrough, the first commercial site, Jango, was launched by Seattle startup Netbot in 1996. Seeing the potential in such sites, Jango was soon acquired by the Excite portal in 1997 for $USD 35 million. Around the same time, another US startup, Junglee, pioneered comparison shopping technology, which was quickly snapped up by Amazon. It was clear that the era of shopping comparisons engines was off to a not-so-humble start.
The model explodes in popularity
Through the late 90s and into the 2000s, shopping aggregators exploded in popularity and volume. With the introduction of not only price and product comparisons, but ratings comparisons (pioneered by Bizrating.com), consumers began to consider comparison sites as the go-to for online shopping, as they provided the best value, most trustworthy results.
It was around the same time that shopping aggregators began to solidify their revenue models. Most used an affiliate marketing approach, where they collected revenue for either every click-through to, or eventual purchase on, the end retailer’s site. Others utilised the pay-per-list model, where retailers had to pay to list their products/services on their site.
Whichever model they were using, it was working. Evidence shows that sites such as shopping.com were racking up as many as 13 million page views, making them almost the most popular sites on the web.
Consumer and retail benefits are clear
Just why have the aggregators been so popular? It’s because the benefits to both consumers and retailers are clear.
According to Forbes, customers have everything to gain and nothing to lose from using a shopping aggregator, because:
‘Not only do aggregators take the gold for saving consumers time and money, but they also serve an important role as market curators. They don’t have to work with just any affiliate, but rather, can select certain ones based on specific criteria to determine whether the affiliate is up to par on behalf of the consumer.’
Likewise, retailers also benefit immensely from shopping aggregators. If you’re going to get more click-throughs, and more sales with less marketing effort, wouldn’t you want to list your business too?
Trouble in paradise?
But has it all been smooth sailing for shopping aggregators? Evidence would suggest not. As they have grown in popularity, so too have the issues that have plagued them. Here’s a snapshot of the main ones:
A shopping aggregator is only as good as the data it contains. Otherwise, when consumers click through to a site, they risk either seeing the product they want at an outdated price or worse, the special/product they’re interested in is no longer available. Basically, data is everything to shopping aggregators.
Yet despite advances in technology to call up and store information via APIs and XML files, research shows that many aggregators still display outdated information.
Shopping aggregators are also woefully ill-equipped to deal with the rise of mobile online shopping (which overtook desktop shopping for the first time in 2016). As they’re unable to share user data with third party merchants, consumers have to visit retailer’s sites and then painfully type all their data onto their mobile, a process which we know drastically reduces the chances of conversion.
Most – if not all – aggregators also have their own shopping apps, where the majority of mobile-related purchasing takes place. Given that aggregator apps are forecast to become the most popular of all apps, and lifestyle apps have grown up to 81% in popularity over the last few years, the mobile issue is most certainly a significant one for shopping aggregators.
Increased prices for the consumer
Shopping aggregator sites are pitched as a win-win for consumers, but some studies have proved otherwise.
David Ronayne, economist at Warwick University, demonstrated that in some cases, retailers were essentially passing on aggregator fees to consumers, by way of charging them more, therefore consumers were not actually saving any money by using an aggregator in the first place.
Despite its significance, though, Ronayne’s study has not been widely publicized and so has not led to any wholesale changes in consumer behaviour.
Retailers and consumers could miss out
Where aggregators use a pay-per-list model, or where their technology doesn’t accurately pick up all listings on the internet, retailers and consumers alike stand to miss out.
Research into the efficacy of online travel aggregators showed that for many flight paths using the site Orbitz, customers were only moderately more likely to find a cheaper deal, and in some cases, could find a better deal by not using the site at all. As such, the study recommended the consumers use sites as a starting point, but not the ultimate go-to for shopping.
WHERE ARE THEY GOING?
A bright future?
Despite the issues that have plagued shopping aggregators to date, there’s little doubt that a bright future awaits them.
Although there were some rumblings that the popularity of shopping aggregators would decrease given the rise of Google Shopping and Amazon, no evidence to date has supported that claim. In fact, reports show that profits of some aggregators, such as hotels.com, have jumped by 67%.
Shopping aggregators are also continuing to enjoy success in the startup space, with startup thefashion.com recently raising $1.7 million to expand into Europe. It appears that if consumers really were worried they were missing out using a shopping aggregator, their concerns were certainly not widespread.
And as for at least some of the technology issues, many earlier data-calling problems are in the process of (or have been) solved by advances in AI.
But the mobile issue?
The one bugbear that continues to plague aggregator sites is the issue of mobile shopping.
With mobile conversions rates hovering around 1.5%, (less than half of their desktop counterparts), shopping aggregator sites need to do more than ever to service their mobile customers.
A proven way to address this lies in ground-breaking new autofill technology. As most shopping aggregators have their own app, they need to utilise in-app browser technology. Using this technology, no autofill service existed – until now.
There is now an intelligent mobile autofill created specifically for in-app browsers. When integrated into any app, the technology enables users to complete the checkout stage of the shopping process through the end retailer site up to 536 times faster than if they had to type directly onto their mobile.
Autofill, then, has the power to counteract the mobile problem that many – if not all – shopping aggregators currently face.
Shopping aggregators have been around for the best part of two decades, and there’s no indication that they’re going anywhere, anytime soon. However, to properly address the growing mobile-shopping market, they’re going to need to invest more – and invest quickly – in technologies like intelligent autofill, so they can continue to satisfy consumers and retailers alike.
Fillr has built the world’s most intelligent and accurate autofill that will seamlessly integrate into your app. Contact us today to find out how our technology can help your customers to transact faster and more effectively, boosting your conversions and revenue.