Meg Whitman, President and CEO of eBay, said a couple strange things in regards to Shopping.com in last week’s eBay earnings call.

First, she said “Shopping.com remains the number one shopping comparison site covering all kinds of products from shoes and iPods to hotels and mortgages.”

I have to question this statement, and I’m really surprised that all the analysts let it slide. What does ‘number one’ mean?

#1 in revenue? I don’t think so. Shopzilla now has had better revenue the last 2 quarters.
#1 in mortgages? No. I think NexTag probably kicks Shopping.com’s tail here.
#1 in hotels? Ahhh…are you communicating with the Shopping.com team? Iggy Fanlo said in an interview with me that “Our hotels category got a little bit clouded because of our talks with eBay. It’s something that we’re still exploring.” Meg, maybe you should sign up for my blog - email newletter and RSS feeds can be found to the right.
#1 in traffic? Hmmm. That’s a distinct possiblity. But if that’s what you mean, then be specific!

In fact, traffic is exactly what Meg meant. According to a representative from Shopping.com, “based on unique visitor numbers from ComScore, we’re number one.”

The problem I have here is that #1 in traffic does not necessarily translate to #1 in revenue or earnings. This should be a major concern, not something to be proud of. The real question here is why Shopping.com is not able to monetize its traffic as well as Shopzilla does. If I had to guess, I’d say that it has something to do with the sources of traffic for Shopping.com. While Shopping.com and Shopzilla both get a ton of traffic from the PPC engines, Shopping.com also gets some traffic from Adware providers where the quality of traffic is often questionable.

Second, Meg said:
“Shopping.com, which we acquired on August 30, had revenues of $29 million, $10 million of which is included in our Q3 results” AND
“Considering these factors, we now expect full-year 2005 net revenues to approximate $4.5 billion, including approximately $45 million from shopping.com, and up to $20 million from Skype”
WHICH TAKEN TOGETHER MEAN that eBay is expecting Shopping.com to have revenue of $35 million for Q4.

Just $35m for Q4? Seriously? What happened to the growth? In Q4 of 2004, Shopping.com had revenue of $31.7m which means that Shopping.com is only expecting year over year growth of 10%. This is abysmal considering that most online retailers expect 15-20% sales growth and everyone talks about the incredible growth within the comparison shopping space. With eBay backing Shopping.com, I’d expect to see an acceleration of growth…like you see at Shopzilla.

Shopzilla has seen their revenues climb consistently the last 3 quarters, bucking the seasonal trends at Shopping.com.

Take a look at the chart to compare Shopzilla’s revenue growth to Shopping.com’s stagnation? seasonal drift? [insert clever phrase]?

Q4 2005 revenue numbers are obviously estimates. Since eBay gave guidance for Shopping.com of $35 million which equals 20% quarter to quarter growth, I applied the same growth rate to Shopzilla which would produce revenue of approximately $42 million.

So who do you think is #1?