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  January 31 , 2007
DO CSE's AND MARKETPLACES WORK FOR ONLINE MERCHANTS?
by Chip Arndt
10 Comparison Shopping Engines Unedited Responses to 10 Most Asked QuestionsMiami, FL (January 31, 2007)—The simple answer to the question above is a categorical yes! Retail e-commerce, or e-tail, continues to grow at a rapid rate. You can download a complementary copy of 10 Comparison Shopping Engines Unedited Responses to 10 Most Asked Questions, where leading CSE's like Yahoo Shopping, Pronto, and PriceRunner among others unveil their strengths and secrets.
Here are some year-end 2006 statistics that show more and more consumers are shopping online:
Growth in online visits per month December 2006 compared to December 2005:
  • NextTag up 46% to 17.1 million
  • eBay Inc. up 16% to 66.2 million
  • Yahoo! Shopping up 13% to 16.7 million
  • Amazon.com up 5% to 50.6 million
  • Shopzilla.com Network of sites up 2% to 22.8 million
Source Nielson/Net Ratings Inc.
If you are an e-tailer, that's good news. But how can you take advantage of this growth and capture your share of the marketplace?
CSEs (Comparison Shopping Engines) and newer forms of e-marketplaces have proven to be very popular with consumers. And as e-tailers you need to know how they work and how you can make them work for you.
In this newsletter we answer the headline question for you in greater detail. In an appendix we provide summaries that come directly from CSEs themselves on how these sites can work for you by helping increase brand awareness, site traffic, sales and profitability.
Consumers are Shopping Online
E-commerce changes and evolves quickly. It didn't take long for CSEs to prove themselves in the marketplace. Now, a new phenomenon has arisen in the e-commerce world: Social Shopping Sites.

  • Save time and money organizing, configuring and scheduling feeds.
  • View Up to the Minute Performance of Your Channels, Storefronts, Categories, and Products with Chanalytics(sm)!
  • Send your catalog feed to ANY shopping comparison site or marketplace immediately.
  • Adjust catalog feeds and product updates across your marketing channels in minutes, and
  • Analyze how your marketing campaigns are performing on a daily basis.

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As written in February's issue of Inc. Magazine, the use of Social Shopping Sites is catching on fast by leveraging consumers' growing demand to shop online and their appetite to find the next "cool" brand or product.
Sites such as Crowdstorm.com, Kaboodle.com, Stylehive.com, Shoposhere and ThisNext.com are among the participants pioneering in the Social Shopping space. As the economic benefit of shopping online becomes more compelling for both the merchant and consumer, MerchantAdvantage wants you to benefit from the latest trends as early as possible.
The real question for you to ask is how CSEs, marketplaces and these new "Social Shopping Sites" can work for you?
Competing in The Retail, Online Marketplace
The CSEs or marketplaces listed above support businesses large and small. MerchantAdvantage has found that any business can compete and make money through these marketing channels, but it has become much harder for small to mid-sized businesses to compete against companies with huge marketing budgets and in-house IT and marketing teams.
The playing field is much more competitive as names like Circuit City, Best Buy, LL Bean, J.C. Penny, Wal-Mart and many other very large companies virtually dump their products into these channels at highly competitive prices. These retailing stalwarts drive pay-per-click costs and placement fees higher as they compete to get their company name onto the top two pages of a marketing channel. That's the bad news.
The good news is that small to mid-sized businesses can certainly ride the online shopping's still growing wave and benefit from being on many of these marketing channels. They just have to do it more intelligently and proactively.
Intelligently means balancing existing resources and marketing budgets with revenues and "other" value-add benefits that come with using marketing channels. And it means being able to make quick decisions as to the best channels to market products—in other words, managing your "return on investment."
Proactively means working your channels, ensuring that your data feed specs are 100% accurate for each unique feed, changing your feeds on a daily basis, and offering potential clients unique product offerings, specials and services related to those products. Being small enables you to make decisions quickly. This is your advantage over bigger companies; especially as new business models mean opportunities for smaller, nimble online merchants.
Let's be frank, many companies, both large and small, are very effective at selling products online through these channels. The immediate benefits are increased sales, brand recognition, traffic, and, in most cases, the consumer being redirected to your storefront to make a purchase.
Now that you have the consumer on your site he or she is within your circle of friends, and, if you captured their URL correctly, you have a new client to market to directly. The question that nags all CEO's and Marketing Directors is whether or not their marketing campaigns are effective and generate a high enough rate of return on their marketing investment to justify working with CSEs, Marketplaces and "Social Shopping Sites."
The Answer
Many "experts" and research companies have written about what businesses should do and should not do to compete on CSEs and marketplaces. MerchantAdvantage realizes that you probably don't have the time, or the money, to follow the bouncing ball, so we boiled it down to these basics concepts:
  1. Know your marketing channels
    a. There are a lot of them!
  2. Know what products sell into these channels
    a. Each channel markets their brand in their unique way to attract certain consumers
  3. Make sure your date feeds are configured/optimized correctly
    a. You are dead in the water if your data is not accurate
  4. Experiment with many channels
    a. Each channel appeals to different types of consumers
    b. Some channels you think work don't!
    c. Some channels you think would never work do!
  5. Analyze how your products are selling
    a. Be proactive--use the Chanalytics(sm) tool available to you FREE with Channel Management
  6. Pick and choose those strategies that work
    a. Be proactive = feed -> analyze -> strategize -> feed -> repeat process!
  7. Work intelligently and proactively
    a. "What works today changes tomorrow."
The next issue of eTail dTail will help you get the most from your online marketing efforts by breaking each of these points down. Stay tuned!

5 REASONS WHY YOU SHOULD UPDATE YOUR CSE's MARKETING EFFORTS EVEN IF YOUR PRODUCT CATALOG DOESN'T CHANGE
by Michael Lambert
Miami, FL (January 31, 2007)—In our sales efforts, and our technical support efforts as well, we are often asked a question to which the answer may seem obvious. But "Nay" I say, it’s not so obvious. The "question" in question is "Why should I bother changing all my (CSE) marketing efforts if my product catalog doesn’t change very often?" This article is being written to provide a few thoughts, and maybe some answers, on this question. These thoughts have been acquired, in part, from our merchant feedback; we feel this information in its generic form will be very helpful to our Channel Management users.
So, following are 5 basic reasons that a Comparison Shopping Engine feed might be adjusted, even if the merchant’s product catalog remains constant.
  1. Seasonal:
    It is much more likely that a merchant will sell pool toys before and during summer than during the winter months. Likewise, it is more likely that jewelry will move during the Valentine's Day season. Although neither of these assertions are absolute, their point is clear and undisputable: Product sales performance is often seasonal. Add to this knowledge that our goal is cost effective marketing, defined as Return On Investment- or "Click To Purchase" ratios. It would then make sense for us to market the products which are more likely to sell within each season, regardless of whether our catalog has changed or not. - Change CSE Marketing Seasonally.
  2. Logistics:
    Opportunities arise in business all the time and those who take advantage of those opportunities are often more successful. If a merchant has an abundance of unwanted inventory or inventory in transit, it would make sense that marketing should be adjusted to take advantage of the situation. The two departments working together can make a bad situation (overstocked inventory) into a good one – additional sales. So, when inventory counts rise, marketing should respond as well. - Change CSE Marketing based on logistical issues.
  3. Merchandising:
    When sourcing products, special incentives are often extended by suppliers to retailers to increase sales, solidify supplier/retailer relationships, or other various reasons. When an opportunity like special low prices, or other incentives are extended to retailers, they can react and take advantage, or not react and lose these opportunities in the future. By increasing marketing efforts based on supplier incentives, it makes additional revenue now, and leaves the door open to such opportunities in the future. - Change CSE marketing based on supplier incentives.
  4. Performance:
    Honestly, performance is the most understood, and most used reason for changes in CSE Marketing, but it still shouldn’t go unspoken. When analyzing Return On Investment, products which perform well should stay in marketing efforts, but for those which do not perform, why spend those marketing resources? But let’s be just a bit more descriptive about which products should be "pulled". I would say that there are three categories of products to be ascertained, not two.
    A. Products with an acceptable click to purchase ratio which are successfully generating revenues
    B. Products which are generating many clicks, but insignificant revenues
    C.Products which are neither generating clicks nor revenues
    I would suggest that the third category of performance contains products which should be maintained within the marketing schema. There are not significant costs to be saved, and therefore the products in this category can go from insignificant to successful with a very small number of sales. So, removing products which are expensive to market, but which do not produce revenues, is likely to positively affect marketing efforts. There isn't really a need to pull products from a CSE if there are not any significant costs to leaving them there. Furthermore, pulling a product from marketing should be seen as a last effort.
    When a product is not performing on a channel, the first reaction should be towards finding out why. Perhaps the price is not competitive, or the description or product name is not effective, there are bad or no keywords, or maybe the image is unattractive. These things should be repaired anyway, if they are a problem. If they get the ROI up, then all is well. If not, then MAYBE it's time to pull that particular product from that particular feed.
  5. Testing:
    Brick and Mortar retailers have always "tested" markets before following up with a larger scale marketing effort. This same methodology works for online retailers as well. If an online retailer wishes to try a new marketing channel, they may select a subset of their product catalog, and see how it does. Conversely, if a marketing channel is not working too well, selected products or categories could be removed, allowing an overall unsuccessful marketing channel to become successful, rather than closing that channel. But all or nothing can be a terrible way to handle marketing, and turns such efforts into hit and miss, rather than a controlled and cumulative learning endeavor.
All of these reasons need to be worked and practiced on each individual channel to be effective. It is not reasonable to expect that if one product or category of products performs poorly on CSE #1, that the same could be expected of CSE #2, or vice versa. It may seem difficult to make all of the assessments and changes indicated within this article, but this difficulty is specifically addressed within the Channel Management application. So, if your current feed methodologies do not address such issues, then they may be less cost effective than you thought.

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"MerchantAdvantage is here to be your partner in growing your business in the multi billion dollar and complex world of online shopping. We are here because you are online.sm"

Michael Lambert, CEO


• MerchantAdvantage Partners With National Retail Federation to Create
E-Commerce Standards
MerchantAdvantage, LLC announced its partnership and support of the National Retail Federation's ("NFR") 96th Annual Convention and Expo. MerchantAdvantage is one of the first partners, adopters, and promoters of the Association for Retail and Technology Standards ("ARTS") in the world of e-commerce. Other partners include industry experts IBM, Microsoft, Oracle, and SAP. Full Release>>

• Online shopping continues at same rate of dramatic growth.
Online spending is reported to have topped $100 billion in 2006. This would be a nearly 25% increase over 2005. Among other records, the first of several $600 million dollar shopping days were recorded starting with November 27th. The online shopping season also seems to be widening. The average shopper began holiday shopping on October 1st , and continued until just a few days before December 25th. Looking ahead to the 2007 holiday season, 66% of holiday shoppers expect to spend more money online next year.

• iMadness
iPod continues to dominate in electronic related keyword searches on Shopping.com, listing 3 times in the top 10 searches:

1. dvd recorder
2. ipod
3. digital camera
4. nintendo wii
5. wii
6. gps
7. ipod nano
8. tv
9. psp
10. ipods

• Service, service, service.
Yes, price is important, but don’t forget to keep your customers happy after the purchase. Recent studies show 89% of online shoppers say a negative experience will keep them from going back to a website and 58% say a negative experience at a brand’s site will affect their overall image of the brand.
 


For information on how MerchantAdvantage may help your business grow, please contact us:
Chip Arndt
Executive Vice President
Business Development and Strategy
305.895.9466 x113
partnerships@merchantadvantage.com