While Shopping.com (SDC) execs blatantly denied my claims that there were any problems on their end going into the holiday shopping season of 2007, it seems that the company has since modified it’s position.

First, Josh Silverman, SDC’s outgoing CEO said in the February Merchant Support Newsletter, “As our traffic increased in the past quarter, it placed some unexpected strains on our systems.” That’s a far cry from what I was told when SDC cut off new advertisers.

And now after taking down the Merchant Account Center (MAC) 2 times for a total of 14hrs in the last week (according to the notifications), SDC has launched a public Help Center.

The full announcement is here. This is an excerpt:

Previously, our help tab was integrated into the Merchant Account Center and only provided access to solutions in our database. Now, you can search the knowledge Base as well as interact with other merchants under our supervision in our new Beta Merchant Support Forums! There, you can post optimization information, bidding statistics or tips, discuss your marketplace, or troubleshoot a technical issue in a public space so others can take advantage of your experience.

We’ve also changed the process of how to submit a case. All cases will be submitted through the knowledge base page. Additionally, once you detail your issue, keywords in your inquiry’s subject and body will be used to find solutions related to your issue in case you couldn’t manually find what you were looking for! With this feature, our Account Managers hope to provide you faster, more detailed responses to questions about your performance rather than focusing on How-To’s or other technical issues.

With this announcement, we are pleased to redefine our services to you as well as decrease our current advertised response time from 7 days to 3!

It’s nice to see Shopping.com making the effort to help it’s merchants. The Help Center is public and can be accessed here.

Seems that Shopping.com is now making use of SalesForce’s web-to-case management system which allows merchants to log their own cases, get suggested solutions, and have the cases be routed directly to an account manager. Coincidentally, SingleFeed is implementing the exact same system this week, although I’d say the parallels end there.

My #1 suggested resolution for the shopping engines for 2008 was to provide more transparency. While I meant this in a number of ways (and left it open to interpretation), one way was to open up a bit and tell merchants what’s going on. At SingleFeed we screw up every once in a while, but our account managers are transparent about the process. That openness doesn’t solve everything, but it goes a long way in building trust.

Shopping.com is going the right direction with this Help Center. I was shocked (in a good way) to see that they had opened up public forums. While the threads will be under ‘[SDC’s] supervision’, the initial three four posts have been negative and SDC hasn’t removed them:

“I am being charged hundreds of dollars per month although the product has been removed a while ago!!! Please look into this matter and provide contact informations! This is an urgent matter.”

“We too are being billed for products that have been removed OVER 5 months ago. I contacted support before this new support area was setup with no resolution.

We tracked down two sites offering the outdated feeds www.racecarpartysupplies.com and www.napkinholders.net both run by the same company. There are more but I’m unable to locate them.

Our frustration of not getting any support on this matter is also likely to drive us to abandon Shopping.com as well.”

I’ve been pulling my hair out for 3 days now trying to get my products to map properly and it is IMPOSSIBLE to get any help. No contact email or phone number. I’m ready to pull the account.

Anyone else notice that for many weeks now the Bidding Tool not only fails to display all the bids? Instead, for example, the bidding tool truncates the bid list (see Health and Beauty for example) so that it lists only about 43 bids from 1-43. The list is missing more than 600 bidders and bids. It is not particularly useful as it is.

So far, so good. Look forward to see more of these improvements.

According to the press release, current Shopping.com CEO, Josh Silverman, is moving to sister company Skype, where he’ll be CEO.

Andre Haddad, currently a SVP at eBay, will become Shopping.com’s new CEO. Haddad joined eBay in 2001 after eBay acquired iBazar, a European online marketplace he co-founded.

I believe Haddad will be the 4th Shopping.com (after Dan Ciporin, Lorrie Norrington, and Josh Silverman) since starting I started covering the shopping industry less than 3 years ago.

I first started talking about recession worries in September during my session at Shop.org. While the many blank stares in the room didn’t get it, stocks have been butchered of late because of recession fears.

One of the worst hit in the ecommerce/online marketing group has been eBay, which hit a new 52wk low today of 27.13 and is down almost 15% Year To Date (YTD). GSIC, down almost 20% YTD is the only other ecommerce related stock that I follow which has fared worse than eBay.

While Scot Wingo, the eBay pundit, points to Bob Peck’s ‘swing for the fences‘ analysis, I’m more keen on Jeetil Patel/Herman Leung’s (Deutsche Bank) analysis:

“We maintain our SELL investment rating on shares of eBay. In our opinion, challenging buyer demand, escalating seller economics, lack of reinvestment (to position for future growth), near declines in transaction volumes and potential operating margin pressures all represent key challenges at eBay. Upcoming fee changes may place additional pressure on operating margins and growth, while consumer spending is likely to be lackluster.”

I also think Jordan Rohan’s (RBC Capital) comments about spin-offs/sales are interesting:

“It may be early to call for a bottom on EBAY shares, in our view. The company may soon lower expectations for 2008 and could be pondering a significant change in business strategy. We view the potential retirement of Meg Whitman as a slight positive, as the pace of strategic change could accelerate after her departure. What would make us more positive: 1) management change, 2) resetting of financial expectations, 3) strategic refocus to reflect current reality, possibly including a PayPal spin-off, Skype sale, and layoffs, and 4) further correction in analyst sentiment. We have reduced our 2008 estimates to reflect the uncertain near-term outlook.

Meg Whitman announced yesterday that she’s leaving. eBay’s earnings call is on tap for tomorrow after the market close. If you’re in the ecommerce industry, pay attention to the call.

Last weekend Shopping.com encouraged its users to click on AdSense ads.

Here are examples for a couple searches. Notice the big SEE SITE buttons next to the ads:

According to my read of the Google’s AdSense Policy, Shopping.com’s actions are in violation of that policy:

In order to ensure a good experience for users and advertisers, publishers may not request that users click the ads on their sites or rely on deceptive implementation methods to obtain clicks. Publishers participating in the AdSense program:

* May not encourage users to click the Google ads by using phrases such as “click the ads,” “support us,” “visit these links,” or other similar language
* May not direct user attention to the ads via arrows or other graphical gimmicks
* May not place misleading images alongside individual ads
* May not promote sites displaying ads through unsolicited mass emails or unwanted advertisements on third-party websites
* May not compensate users for viewing ads or performing searches, or promise compensation to a third party for such behavior
* May not place misleading labels above Google ad units - for instance, ads may be labeled “Sponsored Links” but not “Favorite Sites”

When I asked Shopping.com about this, they said that their “relationship with AdSense is confidential.”

Does this mean that Google AdSense sanctioned this test? I figured that this was just a programmer error, but that’s obviously not the response that I got.

So I’ll put it to my readers:
1. Is this a violation of Google’s AdSense Policies?
2. Is this a good user experience or is this just tricking the users into clicking on a link. The SEE SITE buttons Shopping.com posted next to the AdSense ads are the same ones they use for product listing results:

In a search for Ugg boots, I found the following ad:

I thought I was clicking on a Shopping.com ad. Instead, I arrived at Shogging.com, which is owned by the Pepperjam Network. So what is Shogging.com? From the about us page:

The Shogging.com Comparison Shopping Blog embraces our dynamic e-commerce tradition and is powered by the most cutting-edge tools available, including applications such as AJAX and Python, which afford an integrated e-commerce, search, and blogging experience. Imagine that - the ability to shop and blog (SHOG) within the same user experience - it’s never been done before and Pepperjam is proud to have pioneered the technology that allows you, the user, to experience the ultimate in shopping and blogging!

Shogging.com has been around for a while, but I just noticed it because of the PPC ad. Just goes to show that there’s still potential for arbitragers. It’ll be interesting to see if Pepperjam can pull this off. Conventional wisdom would say no. Shogging.com has to pay the PPC fee and then has to rely on the merchant to convert. With high PPC fees (for all the reasons the shopping engines have high PPC fees), it’s going to be hard to make this a profitable venture. However, one industry insider did point out to me that Shogging.com gets well above even ‘Super-Affiliate’ rates because it actually manages the affiliate programs for many merchants.

A look at potential numbers:
Average CPC for Shogging.com on Google Adwords: $0.35
# of clicks: 100
Cost: $35.00
Click-through Rate to Merchant: 40%
Click-throughs to Merchant: 40
Conversion Rate on Merchant’s Site: 3%
Total Conversions: 1.2
Average Order Value: $75
Total Revenue: $90.00
Commission rate for Shogging.com: 17.5% (being generous, I think)
Commission for Shogging.com: $15.75
Profit (Loss): ($19.25)

Now there are a lot of guesstimates here, and I’m not taking into consideration clicks on Google AdSense ads and potential organic traffic, but play around with the numbers, and you’ll see that it’s going to be hard to make this work.

As I said last Friday, Shopping.com is no longer not accepting new merchants until January 1, 2008.

I appreciate Shopping.com explaining their side of the story to me earlier this week. I’m not always the easiest person to work with and the openness Shopping.com executives have demonstrated over the last couple months has been a breath of fresh air compared to my previous dealings with the company.

According to Shopping.com, the company is investing its resources into its existing merchant base and into customer service. They are prepared for the holiday shopping season and doing a lot of things to help their merchants like providing a monthly email, conducting webinars, and even launching live chat (coming soon). Shopping.com wants the most productive relationship possible with its current merchants.

The reason I felt sick hearing the news that Shopping.com is no longer accepting new merchants is because I see another side to the story. I’m not saying that my side of the story is correct. In fact, I could be completely wrong, but it’s what makes most sense to me.

So here’s my view, which Shopping.com flat out rejected:

Shopping.com dropped the ball. Plain and simple. Could you imagine Google Adwords telling people tomorrow that it can’t accept any new advertisers? NO. It’s unimaginable. That would mean that Google was not prepared technologically or otherwise.

Shopping.com should have been prepared for a holiday rush and it wasn’t. I applaud the company for taking care of its current merchant base, but cutting off new merchants just says that it (systems? technology? manpower?) can barely handle its current merchants (and thus the support emails that say to expect a reply in 5-7 days).

Just as the company has made recent strides to improve the quality/cost effectiveness of leads its merchants receive, the merchant management process (sign up, data feed management, account management, etc.) will also be addressed. Still, this is an embarrassing setback.

As for the financial impact, because Shopping.com is such a tiny part of eBay, cutting off new merchants isn’t going to really do anything. Furthermore, Shopping.com makes a significant percentage of its revenue from advertising sales and Google AdSense and that revenue is not going to dry up overnight - in fact, I’m sure ad sales is booming.

As for raising its initial deposit to $700, I feel that Shopping.com doesn’t care about the smaller merchants. This is also a theory that Shopping.com flat out rejected. Now I’m a bit more practical here, there’s sometimes significant cost involved with getting a smaller merchant up and running. I understand this because we deal with it at SingleFeed every day. But if you lower the barrier to entry in terms of cost, the potential upside is huge.

My favorite phrase is metrics oriented marketing, what the web enables you to do: run tests, track and make decisions based on actual data. By increasing the minimum initial deposit to $700 (from $50), you cut off tens of thousands of merchants from ever considering running a test with you. If the service is good, you should offer merchants a trial at little or no cost because the proof will be in the results.

But what do I know? I’m just a blogger. I’d rather take into consideration what the other shopping engines have for initial deposit requirements:

Google Product Search - Free
Become - $25
Yahoo! Shopping - $50
Shopzilla - $50
Pronto - $50
PriceGrabber (Soft Goods) - $50
Smarter.com - $100
NexTag - $150
Shopping.com - $700

And then there’s Google Adwords @ $5 and Yahoo Search Marketing @ $30. While these guys don’t have to worry about the dreaded data feed, it’s important to note that PPC advertising on Adwords and YSM is the standard. That’s what everyone knows and loves. So the shopping engines should be somewhat in line with these minimum required deposits in order to effectively convert potential advertisers into paying clients.

I’ve learned not to post in depth when I’m mad.
Well, I’m extending that to not posting in depth when I’m feeling sick.

As SingleFeed friend, Miguel Salcido writes out on the eVisibility blog, Shopping.com is no longer accepting new merchants:

It just boggles my mind when merchants are not prepared for their busiest times of the year. But for one of the most established and well backed CSE in the world it is just disgusting. They will lose out on so much money this season because of this. Although they have been making many efforts to improve their program lately, this is pretty terrible. Honestly, the traffic from Shopping.com has not been performing too well for the handful of shopping data feeds that I run and submit. And I also hear that they are now requiring a $700 minimum deposit to get started with them, that is ridiculous! I remember last year they could not accept one of the credit cards, can’t remember if it was Visa or MasterCard, but it was a big pain in the but since the merchant I was submitting did not have another card to put it on.

Add to this the fact that Shopping.com increased their minimum required initial deposit to $700, automated emails from customer support say to expect a response within 7 days (thanks for the tip, L!), and the company is giving away the farm in the UK to try to get customers back, and I actually feel sick to my stomach.

I’ll just stick to the facts for now and hold off on commenting until I’ve talked with SDC directly. I really feel sick. I love this industry. What’s going on?

It’s that time of year again. Many of the shopping engines have raised their cost per click (CPC) rates for the holidays. The shopping engines do this to counter increased rates on Google Adwords and Yahoo! Search Marketing and justify the move by saying that conversion rates increase during the holidays. In effect, the shopping engines are saying that merchants still made out like bandits and they have to cover their collective asses.

Shopzilla will increase its CPC rates by 25%. The change takes effect on November 12 and goes through December 31, 2007. Ok, at least Shopzilla moved the increase out to the 12th as opposed to starting November 1.

PriceGrabber increased its CPC rates by 25%. The change took effect on November 1 and goes through January 15, 2008. Ahhh…January 15? Excuse me?

NexTag increased its CPC rates by 25%. The change took effect on November 1 and goes through January 2, 2008. A 25% increase never feels good, but this is the one increase I don’t think merchants are worried about. NexTag continues to drive incredibly qualified traffic.

And then there’s Shopping.com. Not only did they they move the rate increase out to November 15 (as opposed to November 1), but they aren’t doing a blanket increase of 25% across all categories. Incredible. Someone listened!

In some random course in college, I had a professor give a class about generalizations…how dangerous and wrong they often were.

NexTag, Shopzilla, and PriceGrabber are saying that conversion rates increase during the holiday shopping season. But I’m not so sure that this Forklift seller is going to see a huge spike in conversion. Or that people will be adding projection mounts to their holiday wish lists.

NexTag, Shopzilla, and PriceGrabber are saying that CPC rates increase for them during the holiday shopping season. Again, I don’t think that argument holds for across all product categories. Do bids for textbooks on Adwords or YSM really increase 25%?

In other words, while Shopping.com didn’t get it perfect this time around, they get an A for effort, moving forward with a variable rate increase of 10-25% as opposed to a flat increase of 25%. Office equipment rates will only increase 10%. Media (books, movies, videos) rates will only increase 10%. Here’s the complete rundown:

Categories % Increase
Cars 10%
Clothing and Accessories 10%
Computers 10%
Electronics 20%
Event Tickets 10%
Flowers and Gifts 25%
Health and Beauty 15%
Home and Garden 20%
Jewelry and Watches 20%
Kids and Family 25%
Magazine and Subscriptions 10%
Media 10%
Miscellaneous 10%
Musical Instruments & Accessories 25%
Office 10%
Sports and Outdoors 25%
Video Games 25%

As for how SDC decided on the % increases, Alisa and Tomer explained to me: “We’ve done some analysis looking at previous years, looking at deltas in different categories in rate cards from our search partners. As opposed to one size fits all, we’ve done the analysis to figure out what’s needed to cover our costs. And we’ve moved the [rate increase] from November 1 to November 15 to better reflect when that increase kicks in. What we’re trying to do this year is be more sensitive to reflect what we’ve seen in the past. In some categories the keywords [cpc rates] increase more, in some categories the keywords [cpc rates] increase less.”

Sounds so simple. Makes perfect sense. Shopping.com is saying that the rates from their search partners (Google Adwords, YSM, etc.) don’t increase for all categories at a flat rate and therefore they aren’t going to pass along a flat rate increase to their merchants. Because…well…that would be wrong.

Shopping.com is good at buying keywords. The other shopping engines are also good at buying keywords. Some, like NexTag, might even be more efficient. Well, if that’s the case, why are we seeing a flat rate increase on NexTag, PriceGrabber, and Shopzilla?

Shopping.com has admitted that costs don’t increase 25% across the board (based on past data). If that’s true, then the other shopping engines are basically saying ’screw you’ to the merchants.

Ok, there might be a little more to it. Shopping.com in general seems to have a lower conversion rates then the other shopping engines because of poor partner traffic, so maybe they’re making up for that with lower CPC rate increases.

But that still doesn’t excuse the other shopping engines’ actions. They should immediately reconsider their increases for a number of categories. It’s the right thing to do.

I really hope sweeping changes are in the works. Right now the site is down.

I’d like to think that all my nagging had something to do with it, but I have a feeling the new management team at Shopping.com recognized early this year that not all was right for merchants submitting products to the shopping engine. Because of this, Shopping.com is announcing a slew of programs for Q4 to help merchants sell more effectively on Shopping.com.

The press release highlights:
-Value Based Pricing - addressing some concerns over its syndication partners, Shopping.com seems to realize that not all clicks are created equal. Merchants will be charged different CPC rates based on a number of factors including the quality of the leads they are being sent. I have some concerns about the transparency of the program and the inability for merchants to opt out of the ‘content’ network, but I’m encouraged by this step. Here’s what Shopping.com is sharing with its partners

-SKU Level Bidding - FINALLY. After getting the party line for the last 2 years that merchants aren’t ready for SKU Level Bidding or that it’s on ‘the list’, Shopping.com is moving forward with this program. Merchants will actually be able to move beyond the category level and optimize individual SKUs. After harping on this point for about 2.5yrs, it’s odd to think that this is actually going to happen. Thank you, Shopping.com.

There are a number of details about these programs which I discussed with Alisa, Tomer, and Dariana last night, but I’m actually not sure what was on or off the record, so I’m going to hold off for now discussing specifics.

I think these moves show that Shopping.com actually wants to improve its relationship with its merchants. I can’t remember the last time I associated such a thought with Shopping.com. Have we reached a detente in this chilly relationship which started years ago?

There were two other ‘innovations’ highlighted in the press release:
-shopping cart program - now connected with eBay Express
-distributed commerce program - monetize the 99% of your traffic that doesn’t convert

I’ve covered both of these programs before to some extent, so I’ll let eTail dTail or CSE Strategies pick up my slack…will probably re-visit soon.

Previous Posts
-SKU Level Bidding - June 5, 2006
-JP Werlin’s comments on SKU Level Bidding - June 6, 2006
-Impending Ecommerce Doom - September 4, 2007
-Shopping Engines, Beware of Google Checkout - July 6, 2007

Out with the old management team, in with the eBay…er…um…I mean, in with the new management team.

The following people have left or will soon leave Shopping.com:
CMO, Mike Aufricht
VP Internet Marketing & Business Intelligence, Rob Goldman
CTO and co-founder, Amir Ashkenazi
Vice President, Global Operations and U.S. Merchant Operations, Deana Bergquist
CFO, Rob Krolik sorry about that, I think Rob is still there, just not on the management team page.

Read more about the old kids on the block.

The following people have joined Shopping.com:
Jason Brown has joined as the GM of distributed commerce.
Alisa Weiner has joined as the GM of comparison shopping.
Pehr Luedtke (aka Perh) has joined as the GM of Epinions. He’s been a member of the Epinions community since October 26, 2006 and wrote his first review on January 4, 2007.

Read more about the new kids on the block.

There has also been plenty of turnover in the director/mid-manager/support roles. Director, US Sales & Client Services, Trent Scoffield is leaving soon, not many ‘key’ account managers around, etc.

Huh? As one merchant put it: The biggest shopping engine in the WORLD cannot take one of the most recognized forms of payment in the WORLD!!! What is the WORLD coming to?

The official response from Shopping.com: We are experiencing some difficulty with updating MasterCard credit and debit card information. As a result we removed MasterCard as a payment option.

Look, there are always issues with credit card processing companies. Unfortunately, this has been a problem for over a week and it’s the busiest time of year for Shopping. Ouch.

Updated: See below for more on Shopping.com and PayPal UK.

Since I’m not sure everyone who reads the blog checks out comments, I wanted to point out that an ad for Shopping.com is now showing up on eBay searches. Right now it’s pretty hidden (at the bottom of the page), and clicking through on the ad brings you to the Shopping.com homepage as opposed to being contextually relevant to an eBay search, but it’s a start. Thanks, Scot, for pointing this out!

This screenshot is from a search for halloween costumes:

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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?

At Shop.org, I sat down with Iggy Fanlo, Shopping.com’s President of Worldwide Field Operations. Thanks to Lindsay @ AccessPR for setting up the meeting. Here’s what Iggy had to say…

On eBay & Shopping.com (SDC)…
“eBay’s beginnings were about bringing together community and efficiencies where there weren’t efficiencies - buyers couldn’t find sellers and vice versa. The marketplace flourished, but eBay realized that with PPC services from MSN, Google, and Yahoo!, that the world was not necessarily a closed space. eBay dominates ecommerce – they have a very strong hold on used goods, collectibles, and refurbished products. Anytime there’s scarcity, they do well. However, they weren’t dominating the new and seasoned market. Shopping.com adds a piece of ecommerce that wasn’t their sweet spot. [With Shopping.com], they can make a quick, bold entry and take it to a new level.”

As a merchant [Home Security & Microscopes] on Shopping.com, one thing that concerns me is that I might suddenly find 4 additional merchants selling my products at ridiculously low prices on Shopping.com with big ‘Buy it Now’ graphic next to the listings…
“At the end of the day, the consumer has to be treated as the North Star. The only way to serve the merchants is to thrill the customers. How we implement is to be determined. Consumers want to see it all. They want it in an orderly digestible fashion. They want everything in one place, but they want it differentiated. Give users choice, the most choice. Buy it new for $100 or buy it used in condition Z for $60. On the site, this may take the form of different tabs. We won’t do anything that confuses the user. We’ll try to give people choice. There’s a way of doing it intelligible so you serve merchants and sellers and consumers.”
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