Build your Branding with Search Engine Marketing
Abstract: Comparison shopping sites are becoming increasingly popular amongst online retailers. Small retailers have the tendency to feel as though they cannot survive in such a competitive environment where prices are being driven down by larger retailers, which have the business models to support themselves on slimmer margins. However, small retailers can gain and retain market share without lowering their prices and by building their brands.
The online market place is rapidly growing. Recently, Forrester Research released an online retail study projecting that the Internet will bring in $269 billion in retail sales in 2005, while influencing $378 billion in offline sales, over half a trillion dollars all together. With e-commerce continuing to increase its impact on retail sales, online retailers have begun piling into comparison shopping sites. According to an October 2004 study done by Forrester Research, while only 18 percent of online consumers use comparison shopping sites, that segment spends 24 percent more than average online consumers do. It is certainly a desirable method of generating sales leads; however, as more online retailers use comparison shopping sites, bid prices will escalate. Some online retailers argue that customers who visit these sites seek the lowest prices and for that reason will just drive their margins down. So what is the key to long term success for these businesses? Brand building.
The comparison shopping industry is extremely crowded with a number of different services that only demonstrate marginal points of differentiation. The leading shopping engines are AOL Shopping, Froogle, MSN Shopping, NexTag, PriceGrabber, Shopping.com, Shopzilla, and Yahoo Shopping. The comparison shopping space was once solely occupied by small retailers with slim marketing budgets. Now that numerous big players like J.C. Penney and Nordstrom have entered the arena, smaller retailers have withdrawn their businesses from comparison shopping sites. As a result, other retailers are hesitant about allocating advertising money to such sites. However, what they do not realize is that comparison shopping sites provide the best turf in which a small company could build its brand because of their exposure. According to comScore Media Matrix, Shopping.com was ranked the 20th most visited website in April 2005 and alone had approximately 22.6 million unique visitors that month.
Especially when placed in a comparison shopping site, it is important for a small online retailer to provide an incentive for shoppers to choose it over one of its competitors. Consumers are generally becoming more comfortable with giving their credit card information online and with that they have turned to shopping online because it’s faster, more convenient, and most importantly, they can find what they are looking for at the best prices. However, the overall online shopping experience still fails to deliver many customers with a feeling of security. This is why customers usually value brand security over the cheapest products when shopping online. Today, virtually all comparison shopping sites allow shoppers to rate online retailers. User feedback and ratings systems can help to instill buyer and seller trust. Effective systems have the power to influence a customers’ online and offline purchasing decisions.
In the long run, online retailers need to develop a brand as a destination site through the facilitation of excellent product and store reviews instead of matching their prices with those of Wal-Mart’s. A mass of positive ratings is highly persuasive to shoppers and will ultimately lead to higher sales conversions for online retailers. To achieve this, online retailers can begin by diligently managing their data feeds. Failing to do so will cause their businesses to fall to the bottom of the product search results or even worse, upset their customers who were reliant on the incorrect information. It is extremely important to keep information such as availability, pricing, product descriptions, and photographs up-to-date and accurate.
Although it can be challenging for a small retailer to match the wide selection of products and lower prices that bigger retailers have to offer, it can still maintain a competitive edge by implementing a solid strategy for customer relationship management. Consider Zappos.com, for example, against one of its larger competitors TJ Maxx:
Zappos has high rankings at BizRate which are driven by more than 50,000 customers who have rated the store to be outstanding across all four areas: Would Shop Here Again, On Time Delivery, Customer Support, and Products Met Expectations. Moreover, Zappos is “Customer Certified” which signals to new customers that the company cares about their satisfaction with its products. In contrast, TJ Maxx has yet to be rated. It is not difficult to assume that a typical online shopper would feel more comfortable spending a couple more dollars to purchase a product from Zappos that TJ Maxx also offers. If customers have favorable associations and perceive an online retailer to be a quality company, brand loyalty will follow.