Customer Acquisition: Feed Your Need to Sell

The rise of the search engine as a marketing tool has brought with it a bevy of other online-selling opportunities.

Not least among these are the shopping feeds, Web sites that act as online aggregators of merchandise and that allow consumers to compare similar products online, then choose merchants to supply the items. Often shopping feeds are referred to as comparison shopping engines or Web co-ops. Notable examples include Google’s Froogle and Amazon (see “Five Feeds Examined,” below).

While few catalogers are claiming that shopping feeds are bringing in huge amounts of money, many in the e-commerce world do admit that they’re an up-and-coming sales channel — and certainly worthy of attention in these, the channel’s formative years.

Cam Balzer, director of search strategy at Performics, an online marketing company specializing in pay-for-performance media, told attendees at the Search Engine Strategies 2005 conference held earlier this year in New York that shopping feeds just might be the next big thing in online marketing.

Bruce Sellers, president of Shop.com, the new face of shopping feed CatalogCity.com, agrees with Balzer’s assertion, adding that if used properly, such services act as searchable extensions of your print and online catalogs. The feeds capture interest from consumers who have a specific product need but who don’t necessarily know where to get the item.

If you’re a novice in this online marketing space, here’s how shopping feeds work: Either they drive customers directly to your site to make a purchase, or they capture orders on your behalf and reconcile those orders with you on a daily basis. In the latter case, the feed generally will process the customer’s payment and place the money into an account accessible by the merchant, less the shopping feed’s commission, of course.

As Sellers explains: “We create a clone store for merchants on our own site, so the [merchants] become searchable within our marketplace, along with hundreds of other merchants. Consumers can go to Shop.com and with one search see the offerings of multiple merchants at one location.”

For example, take shoes. In standard search engine marketing, you as a cataloger would bid on a keyword at a search engine like Google or Yahoo. If a consumer searches using that keyword, an ad would appear on his or her screen.

But as an online merchant you know you can’t bid too broadly, for example, on the keyword “shoes” because you probably don’t sell all types of shoes, just specific shoes. Shop.com, on the other hand, can bid on those broader keywords within other search engines, pull customers interested in buying shoes, then allow them to search for specific types of shoes once they’re at the site.

Catalogers have viewed this added searchability in different ways. “Many catalogers view us as a customer-acquisition tool,” says Sellers. That’s how Liz Plotnick-Snay, chief operating officer at home accessories and cookbook cataloger Gooseberry Patch, views them. “The idea of using CatalogCity.com to get out there to new customers who wouldn’t necessarily find GooseberryPatch.com appealed to us,” she notes, adding that close to 95 percent of her customers garnered through the shopping feeds were new customers to Gooseberry Patch.

Other catalogers view the feeds as more than just customer-acquisitions tools. For example, Karen Stern, director of e-retail operations at FootSmart, a cataloger of foot health products, says the feeds add another ordering channel.

It’s important to note that with this new ordering channel comes the risk of being seen on screen right next to your competitors. Matt Kennedy, online marketing manager for FootSmart, surmises that catalogers selling well-known branded items may have a tough time competing for customers on the shopping feeds, because consumers who know those brands head directly to the branded Web sites. “Products that are a little unknown are doing best [on the shopping feeds], because they don’t have a natural known outlet,” says Kennedy.

Catalogers’ Results

Results from the shopping feeds vary among catalogers. Stern says FootSmart, which uses several feeds, including Shopping.com and Froogle, gets 3 to 4 percent of its online sales from the feeds. However, Kennedy notes, there’s a lot of anticipated growth for this sales channel as more and more consumers are expected to use the sites in the future.

And while regular search engines still drive more traffic to FootSmart’s site, the feeds are worth the cataloger’s effort. “If you compare the shopping feeds to paid and organic search, we actually convert at a higher rate through the shopping feeds,” says Kennedy.

Other merchants have been less pleased with their results. Eileen Schlagenhaft, catalog marketing director at Cushman’s, a fruit cataloger, says only 1.5 percent of Cushman’s total online sales come from these sites. But, she admits not much time is devoted to their upkeep.

Which brings up an important point: If you’re going to use several shopping feeds, be prepared to dedicate time and resources to them. Says Stern, “To really get ranked properly requires individual attention to each feed. That was probably our biggest surprise when we got into it.”

Implementation

That said, Schlagenhaft notes that getting the feeds up and running is the hardest part of the process for Cushman’s.

While each feed is slightly different, there are similarities. Each site typically has a merchant sign-up page featured prominently on its homepage. Often it’s simply a matter of letting the feed know you’d like to set up a store on its site. Sellers explains, “The cataloger provides us with a data feed of its products that we normalize into our category taxonomy.” That is, each feed has to ensure each of your product categories match an existing category on its site.

What form the data feed takes can vary. “It can be something as simple as a spreadsheet or as complex as an XML feed,” notes Sellers. In its simplest form, a data feed is just a comma-delimited text file with headings for each product name, price, image, product description, etc. The files can be created manually as spreadsheets, text files, or, if you have the resources, you can create a program to generate the files for you.

In order for each feed to provide the proper data to the consumer browsing its site, you have to regularly update that site with product information, such as price and availability. FootSmart updates all of its data feeds daily to reflect sales or changes in inventory, says Stern.

Kennedy handles the day-to-day operation of the feeds at FootSmart. “It’s really important to make sure that what’s up on those sites can be fulfilled on our end. The last thing you want to do is promote some product that you can’t fulfill or no longer carry. We stay on top of those on a pretty much daily basis,” he notes.

The cataloger maintains a central repository that Kennedy updates daily before an automated program, created specifically for the company, pulls new data.

Gooseberry Patch’s Plotnick-Snay handles her data feeds to Shop.com manually. “I just go to its FTP site and do my data feeds in an Excel spreadsheet. I drag and drop the file into the FTP site. In about five minutes, I can do an update and change an item that’s been backordered or put on sale.”

Processing orders placed by the shopping feeds works in one of two ways. If the feed sends customers to your Web site (as in the case of Shopzilla or Froogle), then it’s just another order for you. If the shopping feed uses a shopping cart, like Amazon or Shop.com, it’s only as complicated as the system you use to upload. For FootSmart, Kennedy uses an automated process that grabs the daily sale file from Amazon’s FTP site and imports it straight to the catalog’s back-end systems just like any other order.

As far as content is concerned, catalogers have control over what’s displayed on the feeds, but not necessarily how it’s displayed. Stern says the feeds generally have basic templates and character restrictions for each field. Catalogers can provide images and text, but the orientation of those elements is fixed.

Cost

Costs for shopping feeds varies slightly from site to site, but there are two basic models: the cost per click or conversion model (similar to paid-search models), and the percentage-commission model. Shop.com and Amazon, for instance, charge commissions on each sale made through their sites. The commission level is determined at the outset of your partnership with the shopping feed.

Beyond the cost charged by these sites, though, is the startup and maintenance costs to the cataloger. Sally Rue, former director of consumer business for personal care products cataloger Caswell-Massey, notes there were implementation costs involved in creating an automated system to work with Amazon.

“We had to invest in that technical infrastructure to be able to become a merchant,” says Rue. While Caswell-Massey worked with a third party to set up its data feeds, a cataloger can manage the programs on its own, but the investment here is in time.

Says Plotnick-Snay, “The biggest thing I learned is that I need someone to pay attention to the feeds. We probably won’t expand greatly until I dedicate someone to it, at least on a part-time basis.”

While it’s difficult to say how successful these shopping feeds will be in the long run, FootSmart’s Kennedy notes, “We’re trying to maximize our efforts now, so we can benefit from it in the future.”

Five Feeds Examined

* Froogle: (http://www.froogle.com) A service of Google, this site’s spiders search the Internet for matches to shoppers’ queries. Merchants can submit data feeds to allow the spiders to access them directly.

Cost: Free

Benefits: It’s accessible from Google’s homepage.

Caveats: Still in the beta stage, it’s thought that Froogle may begin charging, notes Matt Kennedy, online marketing manager at FootSmart catalog.

* Amazon: (http://www.amazon.com) Amazon offers one of the more competitive shopping feeds.

Cost: Cost per order is determined in the contract-negotiation phase.

Benefits: You get exposure to millions of Amazon users.

Caveats: Amazon’s marketing muscle is so tremendous, it may start to outrank you in your organic search results, says Sally Rue, formerly of Caswell-Massey catalog. Additionally, Amazon has a complicated set of rules detailing how you can market to customers acquired through its site.

* Shop.com: (http://www.shop.com ) Formerly known as CatalogCity.com, this is one of oldest shopping feeds, having been in business since 1997.

Cost: Cost per order is determined in the contract-negotiation phase.

Benefits: CatalogCity.com continues to drive traffic, even though Shop.com is the main focus.

Caveats: Shop.com may not have the brand recognition among consumers that Froogle and Amazon have.

* Shopzilla: (http://www.shopzilla.com) Formerly known as BizRate, this feed relies as much on consumer reviews of products and businesses as on its merchandise selection.

Cost: Cost-per-click. Much like paid search, merchants are charged for every customer who clicks through from the Shopzilla site.

Benefits: Customer reviews place emphasis on the relationship with the merchant, not just the lowest price.

Caveats: Similar to paid search, merchants who pay more per click often are ranked higher than other merchants who match a searcher’s criteria.

* Shopping.com: (http://www.shopping.com) This was formed by the merger of Dealtime, a comparison shopping engine, and Epinions, an online consumer ratings site.

Cost: Merchants bid on the cost per click for specific keywords.

Benefits: If you’ve got the lowest price on an item and have been with Shopping.com for more than three months with good customer reviews, your product is set apart as a “Smart Buy.”

Caveats: The site requires that you set up a debit account from which it deducts the cost-per-click. If your account balance reaches zero, your items are removed from the site until you add money to the account.