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October 23, 2000 [The Wall Street Journal Interactive Edition]

No Comparison

Shopping 'bots' were supposed to unleash brutal price wars. Why haven't they?


Only a couple of years after a flurry of Internet comparison-shopping services, or "shopping bots," struck fear in the hearts of retailers, the landscape has changed dramatically. Many of them have folded, are slowly fizzling out, or have been acquired by retailers that co-opt the technology to their own advantage.

Part of the scaling back among bots (Web slang for robots) can be explained by the now-familiar tale of shakeout among Internet ventures. For instance, Brandwise.com, a bot owned by Brandwise LLC, a New York e-commerce concern, said in May it would shut down its consumer operations and is now planning to provide e-commerce services and data to businesses. Another site, Junglee.com, was bought by Seattle-based Amazon.com Inc. for $180 million in 1998.

But analysts say the shopping bots also have been hindered by an intrinsic problem: For all the new price-finding power they offer, people just aren't in the habit of using them in regular commerce.

It's not that they're difficult to use. With a bot, a user simply types in a desired product or service and gets back a list of Web retailers and their prices. Within a matter of seconds or minutes, he or she can see the lowest online prices for almost anything, be it a digital camera, cubic-zirconium ring or rawhide dog treat.

Nonetheless, shoppers have found them simply too unfamiliar, analysts say. "Retailers aren't that worried about them now," says Seema Williams, a senior analyst at Forrester Research Inc., Cambridge, Mass. Bots have been difficult to market, she says, because they are "a tough concept to explain, and there's no offline equivalent. You know, [people ask] 'What's a shopping bot, what is that, and what do they do?' "

Two Sites Pull Ahead

In the past six months, however, two sites have applied themselves to the problem of consumers' unfamiliarity with bots, and seem to be proving that it can be overcome. Israel-based DealTime.com Ltd. and mySimon.com, owned by San Francisco-based CNET Networks Inc., have launched intensive marketing and advertising efforts, both on and off the Web, and watched their visitor numbers rise like helium.

"There is no offline equivalent" of bots, concedes Lance Podell, marketing chief for DealTime. But a comparison-shopping site, he says, is just a way of automating what consumers already do when they compare prices while brick-and-mortar shopping. "It's the embodiment of the way consumers shop anyway," he says.

After driving home that point in advertising campaigns, the two sites began to pull away from two other bots -- BottomDollar.com, owned by Network Commerce Inc., Seattle, and closely held PriceScan.com Inc., of Malvern, Pa. -- that were attracting significant traffic.

In November of last year, each of these four sites had between 609,000 and 803,000 unique (as opposed to repeat) visitors a month, according to Media Metrix Inc., a New York firm that measures traffic to Web sites.

Then, in December, DealTime and mySimon traffic began to jump during the holiday shopping rush. In July of this year, DealTime.com had 3.1 million monthly unique visitors, and mySimon was pulling in 1.9 million. (DealTime helped fortify its industry standing in May when it bought a rival bot, Germany-based Evenbetter.com, from German media giant Bertelsmann AG.)

By contrast, PriceScan's traffic, at just above 450,000 by July, had tapered off from November (although it was still more than double its year-earlier figure of 224,000). BottomDollar's traffic, meanwhile, had dropped by a smaller margin, to 670,000.

Off the Radar

At that same point in July, other sites weren't even hitting the radar of Media Metrix, which uses 200,000 as a minimum measurement. These included PriceGrabber.com Inc., Culver City, Calif.; Clickthebutton.com Inc., New York; and Excite At Home Corp.'s Jango.

Voices Event

Join E-World columnist Tom Weber for his weekly live discussion about the Internet and e-commerce on Monday, Oct. 23 at 2 p.m. EDT at Voices.

Two strategies helped mySimon and DealTime establish their commanding leads. In the short term, the holiday ad campaigns, each totaling around $10 million in spending, raised consumer awareness at a key time for the shopping sites. A longer-term strategy, analysts say, is that both companies have signed deals that give them high-profile placement on various Internet "portals," or Web sites that help direct users around the Internet.

In October 1999, DealTime began a marketing push aimed at increasing consumer awareness of shopping bots in general and DealTime's service in particular. It bought ads in newspapers, on television, on radio and on Web sites. The company rented sightseeing buses in New York to shuttle weary shoppers to major retail destinations. DealTime wrapped the buses in advertising with the slogan: "Let us deal with it." It also rented out a storefront haven next to Bloomingdale's in New York -- a flagship store of Federated Department Stores Inc., Cincinnati -- where it set up rows of computers. There, DealTime staffers passed out complimentary cookies, gloves and bottled water, suggested gift ideas and helped shoppers use the computers to troll for bargains on the Internet.

Making It Real

"It really drove a lot of trial [use] during that period," says DealTime's Mr. Podell. "Our supposition had always been if people use it a few times, they'll be hooked." And the push, he says, helped put the bots in real-world terms that consumers could easily grasp.

MySimon also spent nearly $10 million on a print, radio and television ad campaign for the holiday season, using the slogan "The best in comparison shopping."

Network Commerce has never devoted an ad campaign solely to BottomDollar, says Dwayne Walker, chairman and chief executive of Network Commerce, which owns the comparison-shopping site. In a written comment, Mr. Walker says, "We have been highly focused on licensing BottomDollar to other companies for them to use on their sites. Additionally, most consumers access BottomDollar through the ShopNow.com site [a sister retail site owned by Network Commerce]. While we have not ruled out advertising, this strategy relies significantly less upon paid media than a direct-to-consumer approach does."

PriceScan says it continually buys advertising but has never staged a big TV blitz.

Meanwhile, as part of a push for more presence on Web portals, mySimon in May signed a deal with USAToday.com, owned by media concern Gannett Co. of Arlington, Va. Visitors to USAToday's shopping section who click on "Buyer's Guide" or "Compare Prices" go directly to mySimon's site.

MySimon has other placement deals, including links at the search service run by San Francisco-based LookSmart Ltd. and the information site Britannica.com Inc., owned by Luxembourg-based Encyclopaedia Britannica Holding SA. In addition, New York-based financial-services behemoth Citigroup Inc. is paying mySimon to build and maintain a co-branded shopping site. Nextcard Inc., a San Francisco issuer of credit cards over the Net, has hired mySimon to do the same.

(MySimon, meanwhile, has been hit by an unrelated legal blow. In August, a jury in Indianapolis federal district court found that mySimon's name infringes the trademark of Simon Property Group, an Indianapolis-based real-estate company. The jury awarded Simon Property Group $26.8 million in damages. A judge hasn't ruled yet on the jury's finding, or on whether mySimon will have to change its name. MySimon is planning to appeal.)

DealTime has also managed its own series of Web alliances. This past summer it scored a prize distribution deal with America Online Inc., the Dulles, Va., Internet giant. AOL uses DealTime's search technology -- which retrieves and "cleans" information on products and pricing from retailers and then places it in a database for consumers to tap -- in its shopping section. In return, DealTime gets its name and a link on all the results pages in a user's search. DealTime also has links listed on Web portals LookSmart.com and iWon Inc., Irvington, N.Y., which is majority-owned by Viacom Inc.'s CBS Corp., New York. Epinions.com, owned by Epinions Inc., Brisbane, Calif., a site that offers reviews on a seemingly endless range of products and services -- from books and cars to restaurants and colleges -- also carries a DealTime link.

chart: Emerging From the Pack

Other comparison-shopping services, meanwhile, have made far less of an effort to be ubiquitous. PriceScan.com, for instance, doesn't have any placement alliances. Instead, it relies on banner ads it buys on other Web sites. It also provides the search technology for International Data Group's WebShopper site.

BottomDollar.com has also refrained from placement deals with other companies. Mr. Walker says the network of sites belonging to its owner, Network Commerce, generates enough traffic. The site does, however, license its search technology to more than 2,000 other sites.

Charging for Position

MySimon and DealTime have also been willing to supply a host of bells and whistles to paying retailers.

For a price, mySimon gives merchants ad space on its site, higher position in their retailer listings, and a chance to run a so-called consumer-incentive message ("Buy Two, Get One Free!") next to product listings. And mySimon also recently started a program for manufacturers that lets them pay to have their products listed in a section of certain recommended items.

DealTime also offers incentives to partner retailers, including advertising packages and higher placement in listings.

Other bots don't go as far.

PriceScan does offer to sell some special treatment to retailers. For instance, after a shopper selects a retailer, that merchant can pay extra to arrange for a link that navigates the shopper to the specific page for the desired product, rather than the retailer's home page.

But PriceScan won't accept payment from merchants for a higher ranking in the search results. In fact, PriceScan plays up its policy of not doing that.

It also points out that, unlike some shopping bots -- most notably Amazon.com's Junglee -- it's not beholden to a retail parent company.

"We're not owned by somebody who's trying to sell you something who might restrict the products to make their own look cheaper," says Jeffrey Trester, co-chief executive officer and co-founder of PriceScan. (After the 1998 purchase by Amazon.com, visitors to Junglee, by March 1999, could no longer search the site for books or music -- two of the most frequently purchased product lines on Amazon. Instead, people looking for those items were immediately switched to Amazon's own "Shop the Web" section.)

A spokesman for Amazon dismisses the idea that the change limits consumers' choice. Junglee doesn't exist as a separate entity, he says; instead, it has been completely absorbed into Amazon. And by combining the search technology with Amazon's retail offerings, "we're using it to help them find what they want in the first place."

Technical Strength

In striking deals, such as the one it has with AOL, DealTime has also been helped by its head start on technology.

Many shopping services began by sending real-time queries -- or bots -- to retail sites in response to each customer request for pricing information. DealTime didn't do that. Unlike many of its competitors, DealTime started out three years ago as a developer of the database-search technology that it now uses on its shopping site, which launched in June of last year.

Not only do real-time queries bring back more buggy information, they often take longer to perform than database searches. Today, many services have either converted to a mostly database system or a combination of real-time and database.

"It's pretty clear now to everyone," says Dan Ciporin, DealTime's president and chief executive, "that this [database system] is the way it needs to be done."

-- Ms. White is a staff reporter in The Wall Street Journal's New York bureau.

Write to Erin White at erin.white@wsj.com

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