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Re: Yahoo buys Kelkoo – so what?

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Subject:  Re: Yahoo buys Kelkoo – so what?
Author:   Alex Chudnovsky:   view profile | all posts by this author | add to favourites
Date:   19:12:59 28 March 2004
 
'll start this particularly long post by congratulating Kelkoo people in selling their company for a very serious amount of money in _CASH_. You survived the Big One (.com crash) and you got reward at the end - well done. I hope that most people there (not just founders and VCs) will get a nice reward for being through very tough times, in fact I must admit that I did not think you will make it at all. Well done to prove me wrong.

I will now continue on a much less optimistic note. I think there is a fundamental problem between Kelkoo-style operation (I will refer to these as Price Comparison Sites - PCS) and Etailers.

Inherently Price Comparison Site rely on cooperation with Etailers who supply it with product data, which allows to compare products. The main objective for these PCS site is to provide end use the _cheapest_ options. So, we are talking here about competing on price, something that not every Etailer wants or even can do. Some tried to forcibly retrieve data from etailer web sites, but this is a very hostile approach and it can easily be defeated.

Of course Dell's of this world will benefit, but what about other (perhaps majority) companies? Will we arrive to situation of desperate price cutting in order to be on "top" of PCS listings? The listings themselves do not provide all information that helps differentiate one supplier from the other. In fact I think these price comparison sites are flawed in a way that they may not show the best deal to customer. Indeed all these price comparison engines fail to take into account extra discounts on bundles, or even loyalty points that could offer reduced price to a loyal customer. Hence my view is that simple price comparison that these sites offer is not taking into account all variables, and therefore not in the best interest of consumers.

When Jungle.com made a deal with ShopSmart (then leading price comparison service) I voiced concern that by cooperating with these sites we will help them reach critical mass and force consumers to go to THEIR site first, and only then pass to our site (if we are lucky). Also conversion tracking that we developed shown that (as expected) only low margin (loss leaders even) products received traffic, and as the result the whole affair was not particularly attractive from financial point of view. As more and more etailers start to better understand real value (profit) of different traffic streams, there will be more of them who would come to conclusion that being part of that game is not a good thing.

Talking of Google, Yahoo and MSN - I think that these companies are slowly but surely becoming a threat to everyone else as they wish to be THE first place of call for customers, they want to be in comfortable position where they make decision who gets the share of views. It is good for them (can't blame them in fact!) but its not good for everyone else (apart select few with huge budgets).

It is because of that consideration (or so I believe) Amazon refrained from joining these sites (or at least it was the case last time I checked). This is a strategically right thing to do - lack of Amazon there will sure force people to go and check Amazon _as_ _well_, something that in a way defeats the objective of Price Comparison Sites.
 
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