Briefly, what is ChannelAdvisor?
We help companies from large to small manage online sales channels. In particular, we focus on 3 areas: Search, Comparison Shopping Engines, and Marketplaces (eBay Amazon, etc.).

What shopping comparison engine related services do you offer? How long have you been doing this?
We offer two services. They are not mutually exclusive. Most customers have both, but they don’t have to.

The first service is Data Feed Management. We’ve been doing this for 2 years. After talking to our customers, we learned there’s a lot of need from retailers to help them manage data feeds. We were working with them on other things and learned their IT departments were bogged down. We start with a data feed or some internal mechanism to get the data. We can do database to database communication. Once we have the data, we run a series of transformations on that data to make it as optimized as possible for the comparison engines. [An example of this optimization:] we did a lot of research and found that any retailer might have 5-25% of products out of stock, but those products were still showing [on the comparison engines]. We get an inventory level [from our retailers] and if they have less than a certain number of items, we don’t publish. This is also relevant for holidays or very surgical promotions when retailers need to drop prices on certain SKUs. We spend a lot of time getting up-to-date pricing information refreshed as quickly as possible. What if [a product] comes off promotion and the price goes up? If the old price is listed on the comparison engine, it’s a very negative customer experience. We also do a lot of QA.

We’re also a leader in category mapping. The retailers typically have their own taxonomy. However, when you publish to comparison shopping engines, many have recommended categories. We have software that does a first pass at the mapping, but also have a human look at it the first time. This is all foundational work, if you don’t have great data going out, you’re ROI is in trouble.

The second service is Automatic Bid Management . The system was originally developed for PPC clients, but we’ve now implemented the system for BizRate, NexTag, and Smarter.com. We’re working on Shopping.com and a couple others. We’re able to get down to the SKU click and cost data and then run an automation engine. The retailers give us some threshold (CPA, effective % of sales, etc.), and we manage the bidding for you. If products are doing well, we keep them active, if they are not doing well, we’ll change the title or bid, but eventually, we’ll cut it. A good example of the need for bid management is for a merchant selling digital cameras. The CPC for the category is relatively high, but the retailer might have a wide range of cameras selling from $50 to $2000.

What percentage of your business comes from your Shopping Channel Services? What kind of growth are you seeing in this channel?
It’s about 15-20% of our business. There’s clearly a lot of excitement surrounding the area. The data feed is important, but it’s not as sexy as bid management.

What types of relationships do you have with the shopping comparison engines? Do you get paid by the comparison engines for each data feed?
Some of them recommend us, and we’ll do a revenue share. Data feeds are the bane of their existence. A big company will submit a narly data feed, and they have to spend a lot of time and effort to work out the issues. We might also get a referral bonus when we introduce a company to an up and coming shopping comparison engine.

Do you have a dedicated account rep at each of the engines?
Yes.

Even at Froogle?
Yes, we have someone to call up and talk to.

How many data feeds do you manage?
We have 2 sets of customers; really large and really small. We manage 100-120 feeds, 20 -30 are for really large companies (brand name).

Who is your typical Shopping Channel client? (Industry, Size, Revenue, etc.)
On the large retailer side, it’s a company that wants to be on more than 4-5 comparison engines, the data feed has some complexity (products listed in more than one category), and their internal IT resources are stretched thin.

What do merchants need to know about shopping comparison engines? Why can’t they manage this channel themselves?
They can definitely do it themselves, but it takes time, effort, and R&D dollars.
Some people think that a developer can get it done, but data changes, prices change, and a lot of resources are needed to create AND maintain the feed. If search is working, shopping engines are going to work very well. A lot of success, though, depends on the product. You can go and see how well populated your category is; Electronics, Home & Garden do well, but other areas that at aren’t as populated don’t do as well.

The best strategy for paid search is coming up with keywords that are in the tail. What we do [for our clients] is grab the search strings people enter on comparison engines and harvest that for paid search campaigns. We do the same thing on eBay; we’re watching search terms and adding them to a keyword harvester.

How do you think eBay will influence Shopping.com?
It’s hard to say, but it will be really interesting to see the integration. One of the challenges for the current engines is the PPC model. If you’re a retailer with a broad assortment of products, let’s say cameras that cost over $3000 and lens caps, there’s a problem with the taxonomy the comparison engines charge against. Obvisouly it doesn’t make sense for the merchant to bid on all the products and therefore some of those products don’t get out there. Consumers have a misaligned experience. Can the current generation navigate through that?

Froogle is one model. Another model is eBay. They have a listing fee and take a percentage of the sale. This allows retailers to say, for this particular lens cap, we’re willing to pay 10%. This is more aligned with the retailer.

What additional services do you expect the comparison engines to provide?
We see a lot of innovation around local, expansion of categories, some of the engines are appealing more to small merchants (PriceGrabber’s Storefront service), real time discounts, and more of them will get smarter about promotions. International is also a big area and everyone will have more of a global platform.