AP New York Times, September 22, 2003
Shopping.com Resurrected for Another Run
| SAN FRANCISCO - Shopping.com, a once-prized Web address dumped into the Internet's bargain bin two years ago, is being dusted off for another audacious business plan.
|DealTime Inc., a profitable survivor of the dot-com shakeout, is adopting Shopping.com as its new identity Monday in hopes of establishing its product comparison site as an e-commerce cornerstone.
"We want to be mentioned in the same breath as Amazon.com and eBay," said Nirav Tolia, chief operating officer for Brisbane, Calif.-based Shopping.com Inc.
The lofty goal — and name change — reflects the gains that product comparison sites have made as more consumers and merchants discover how useful the services can be.
Consumers have been flocking to Web sites like DealTime, NexTag, PriceGrabber and BizRate because they all provide potentially valuable information about a potpourri of products.
The sites typically include free side-by-side comparisons of the same products made by different manufacturers, as well as the prices offered by different merchants and consumer reviews.
Meanwhile, merchants have embraced the product comparison sites as an inexpensive way to attract customers. The sites don't sell the products displayed on their sites; they generate most of their revenue from sales commissions paid by merchants who benefit from the referrals.
The approach has turned into a money maker. Privately held DealTime says it has been profitable since late last year. So is its San Mateo-based rival, NexTag.
Their success has attracted the attention of Internet powerhouse Yahoo! Inc (NasdaqNM:YHOO - news)., which is expected to unveil improvements to its shopping comparison site Tuesday in a bid to increase its market share.
The 4-year-old DealTime is trying upstage Yahoo by retooling its site and taking on the new domain name. It picked up Shopping.com for less than $500,000 two years ago from online search engine AltaVista, which was shrinking during the high-tech meltdown.
Since then, DealTime had been using Shopping.com as a bare-bones search engine site focused on retailers. In its overhaul, DealTime is uniting all its services, including product reviews from Epinion, under the Shopping.com label.
With a name that promotes spending, Shopping.com was viewed as a potential gold mine near the peak of Internet mania.
In January 1999, Compaq Computer — AltaVista's former owner — paid $257 million for Shopping.com, which at the time was a struggling company that lost $56.6 million on revenue of $9 million during its first two years in business.
AltaVista wasn't able to do much with Shopping.com either, but DealTime is convinced the name will thrive this time, with e-commerce growing steadily.
About 25 million more U.S. households will begin shopping online during the next five years, increasing the country's e-commerce audience to 63 million by 2008, according to a July analysis by Forrester Research.
Online shopping will generate sales of $230 billion in 2008, up from $95.7 billion this year, Forrester projects.
The growth bodes well for online comparison sites if they can raise more consumer awareness, said Forrester analyst Carrie Johnson.
As it is, Johnson said most consumers still find e-commerce information through the search engines provided at Yahoo and the Web's other most popular destinations — MSN, AOL and Google.
The product comparison services "are all in a mad dash" to attract more traffic, Johnson said. "While there are certainly a large number of consumers who would find the services extremely valuable, the trouble is, most people still don't even know the sites exist."
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