For Shopping Sites, Buyer Be Wary

Web services that offer price comparisons for popular items may accept pay for prime placement in the results rundown
by Catherine Holahan

Online shopping offers the prospect of tracking down a great gift without the hassle of crazy crowds, pushy sales staff, and assorted mall madness. Nearly half of American consumers plan to make at least one holiday purchase online this year, according to the National Retail Foundation. That's up from 36% three years ago.

But for all its hassle-free potential, online shopping has its share of confusions. Aside from the sheer number of online stores, there are many Internet-only shops run by untested merchants offering unbelievable—and sometimes unclear—deals. What's more, the online comparison tools that purport to show you the best products for the lowest price are often fueled by pay-per-click advertising.

How can a consumer know which sites and shopping tools to trust? One way is to follow the money and determine whether ads or customer purchases are funding the site. The online arms of many brick-and-mortar stores exist primarily to increase sales and move their merchandise, says Scott Silverman, executive director of Shop.org, a division of the National Retail Foundation. For example, Gap (GPS) wants you to buy Gap clothing when you visit its site. It doesn't want to direct you to clothing from Abercrombie & Fitch (ANF), or promote one designer or product over another (though it may highlight that certain items are on sale).

Dollar Determinations
As a result, such merchants have no incentive to accept advertising dollars. "Their sites are strictly about the merchandise that they're selling," says Silverman. "They recognize that people are going on their site to buy products that they sell, and retailers take that to heart."

On the other hand, comparison shopping sites, product search tools, and online department stores often have advertiser relationships and sell a variety of brands (see 12/08/04, "Easier Shopping Around—Online"). As a result, the ways products are shown or ranked to consumers are often influenced by advertisers—if not determined outright by an advertiser bidding process. The extent to which advertisers influence results on such sites varies according to the company and its business model.



Take Guidester, for example. The company provides free comparison shopping and search tools for online retailers such as Circuit City Stores (CC) and CompUSA. When a consumer is looking for a product, say a digital camera, Guidester has a "need help deciding" button offering to help consumers choose from among all the store's offerings. Clicking on digital cameras brings up a short, multiple-choice questionnaire to help the customer narrow the selections by such features as price, size, and megapixels.

Marked Results
When the consumer submits the results of the questionnaire, Guidester retrieves all such cameras. However, the order it displays them is decided by how much manufacturers with matching products have bid to be listed. Those bidding the most are listed first. Guidester CEO and co-founder Joe Chin says the company is enticing for advertisers because they can pitch their product at the moment when the consumer is actually looking to buy just such an item. "We're really providing the most targeted marketing available, because customers are right there at the point of purchase," Chin says.

That doesn't mean Guidester's results can't be trusted. Though it may make its money from advertisers, Guidester also has an interest in ensuring that customers and stores receive a benefit from its tools. Otherwise, customers won't use them, and the stores won't allow them on the site.

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