Tuesday, June 07, 2005

Online Shopping Engines vs. Local Businesses

EBay’s recent $620M purchase of Shopping.com and Scripps purchase today of Shopzilla (AKA BizRate) are a testament to the fact that consumers are increasingly using the Internet as a bargain-hunting tool. People are using the Internet to “spend time to save money”. Studies have also shown that online content drives 4 offline sales for every 1 online sale. Based upon this, the next wave of activity will be solutions, like the price comparison engines that enable people to save money offline as well.

There is ShopLocal, but they repurpose the circulars that are sent out in the mail. They ship them off to India where the data is input into a database that powers the site. In other words it is a very manual process and doesn’t rely on self-service by the companies. For this reason, they only provide sale information for the large chains…for now.

I believe that the next wave of bargain-hunter tools on the Internet will provide offline shopping information that leverages a self-service interface, enabling local companies to enter and manage their own inventory and pricing information. This sort of “local deals” website will enable local businesses to capture online bargain hunters, instead of sitting idly by while the shopping engines (Shopping.com, PriceGrabber, Froogle, NexTag and Shopzilla, et. al) funnel these consumers to online stores.