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January 25, 2005

Is comparison shopping bad for Amazon.com?

That is the question being asked by the Internet Stock Blog.

Answer: yes, but not necessarily for the reason mentioned in this post.

I could be wrong, but my feeling is that many (most?) of the people who are super-concerned with price differences have already found a favorite price comparison engine or two.

Similar to the fear among advertisers that sooner or later everyone would get ad-blocking software. It could happen, but only if it came enabled by default on new computers (i.e. Norton). Growth rates cannot be extrapolated from the early adopters, if the rest of the market might not know enough or care enough to go down the same path. The mass market will need more hand-holding. For price comparison, this could happen if Froogle and Yahoo! Shopping get increased exposure on their parent search engines.

Okay, now let's talk about the real threat.

Background: I talk to a lot of people about their online shopping experiences. From the tech elite at industry conferences to Joe and Jane Surfer in middle America, I'm always asking some variation of the same question, "what is your process to search online for fuzzy blue widgets?"

Not surprisingly, a decent percent of people start their search for books, music, videos, electronics, and other common consumer goods at Amazon.com. But not once has anyone cited lowest-price as their primary motivation. What keeps them coming back to Amazon?

Reviews.

Amazon.com is an irresistible "honeypot" to online shoppers because they have a critical mass of trusted reviews. In the words of Joe Shopper, "Where am I most likely to find enough good reviews on my product (any product) to get comfortable with my decision?"

In the past, Amazon.com’s main competitor in this area was Epinions, now Shopping.com.

These days, there is a new threat that casts a long shadow: Froogle. Last year, Google put the web on notice of a new philosophical direction when it unveiled aggregated product reviews. I was more than a little surprised at the ho-hum response to this development, when everyone is so gaga over Google. Maybe it is because Froogle still needs an extreme usability makeover. Nevertheless, this is a few tweaks away from being ground-breaking stuff. If Froogle goes on to become a shopping comparison powerhouse, we'll be able to look back and identify merchant reviews & product reviews as the turning point.

Will this be the year that Google finally throws some resources at Froogle?


p.s. - Internet Stock Blog - Ticker: SHOP is one for the bookmarks.

Is comparison shopping bad for Amazon.com? comments(0) trackbacks(0)
Posted by Sean O'Rourke on January 25, 2005 at 8:26 AM
Archived at Amazon.com | Price Comparison | Product Reviews

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