e-business strategy - price comparison websites
An interesting business model that had arisen in eBusiness is that of price comparison. One of the best-known examples is Kelkoo, which allows consumers to search for a range of suppliers of a given product, and to select from the best price amongst those suppliers.
Price comparison not only exists for products, but also for services such as gas, electricity, insurance and telephone services.
This is an example of a quaternary business, which doesn’t really supply a product or service itself, but which adds value to other firms’ services by helping them to market their products, and by offering something extra to consumers.
The key aspects of a price comparison business model are:
- A search engine that allows consumers to find a range of suppliers and the prices for a given product.
- The price comparison service will earn revenues from ‘click-throughs’, every time a potential customer opts to view a firm’s listing.
- Further revenues from commission on purchases made via the price comparison website.
- User reviews – both of the product and of the retailer partners.
- Shipping or other additional costs (where applicable) are usually shown for comparison.
- Placement on other websites such as Google – clearly, Kelkoo promotes itself through Google, because searching for a given product tends to see Kelkoo ranked quite highly on the search results page.
- May offer added value or related services, such as Lastminute.com, which offers many travel related services.
Limitations
- Obviously, the prices shown will only include those retailers that have a partnership with the comparison website, so it may be that there are other firms offering better prices.
- There is a cost to the retailers of selling through a price comparison website.
- The price comparison website may not ‘own’ any customers.
- The retailer may suffer if the price comparison website makes mistakes or does not represent it favourably.
Some price comparison websites in the UK
Kelkoo
Froogle
Pricerunner
Lastminute.com
Ciao
Amazon
uswitch
Author: Steve Whiteley, January 2007
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