Price Comparison Sites: Is the Party Over?

Written by
Lassi Eronen
Published
September 21st 2020
Reading time
10 minutes

In the last couple of decades, price comparison sites have come to occupy a significant role in online shopping behavior all over the world. In the UK, where it almost feels like every other TV ad is for a price comparison site, it is estimated that 85% of all internet users have used such a website before.

It is not hard to understand how price comparison sites have come to play such a key role in online shopping. In an age where people do a large portion of their shopping activities online, a sense of feeling overwhelmed by the sheer volume of webshops and differences in price is a real problem for many.

With so many web shops jostling for your attention, the ability to have one site bring together every product offer you are looking for in one place is a luxury. Price comparison sites shut down the background noise of competing advertisers, and they are viewed as a trusted tool that older consumers could have never have dreamed of having at their disposal in the not-too-distant past.

Unfortunately for price comparison sites, the golden age could well be coming to an end. Faced with significant threats to their business model from several different angles, price comparison sites will have to adapt and evolve if the next twenty years are to prove as successful as the first part of the 21st century.

The usual suspects

A massive threat to price comparison sites is the rise in popularity of Google Shopping. This is particularly true for comparison sites whose focus is on goods rather than services.

If consumers come to see a Google search as being more convenient and equally as effective as navigating to a price comparison site, the majority will choose to take the simplest option.

Google Shopping is a stripped-down version of the service many price comparison sites offer. Still, its sense of familiarity, trust, and ease of use is quickly seeing it make rapid inroads into the price comparison sphere.

An increasing amount of advertising spend is also being directed towards Google Shopping, an issue that affects publishers across the board. A problem that price comparison sites are not exempt from.

Another of the FAANG super-tech bullies poses an existential threat to comparison sites. With Amazon’s rise to complete market dominance seemingly unstoppable, its ability to branch out into new verticals also signals trouble for price comparison sites.

With massive incomes from its own line of already discounted items and the fact that it is many people’s first and only port of call when buying electronic goods, Amazon’s unchecked rise leaves many product comparison sites looking a little redundant.

On top of this, Amazon recently cut down the commission for its affiliate program, making it even more unattractive to establish a business model based on affiliate commissions. 

Not only this, but Amazon is rumored to be working on launching its own comparison in the UK that would focus on the insurance services that drive so much revenue for the biggest comparison sites in that country.

Changing times and regulations

Another harsh reality for price comparison sites to face is that they are now being left behind by more impatient, tech-savvy consumers whose desire is to buy products and services at the point of inspiration seamlessly.

Aggregating products and services into one place and showing the cheapest place to buy them is still price comparison sites’ trump card, but in 2020, that alone is not enough. Consumers do not appreciate having to click through numerous times to buy the product or service that they had already decided is the best for them.

The issues here are the same as those facing the affiliate marketing industry. This business model is one that consumers are turning away from. Everything needs to be immediate. If it isn’t, the process is increasingly likely to be abandoned.

Amazon has such great success for many reasons, but one is the way it allows shoppers to buy so quickly and with zero fuss. A tendency that Instagram is now looking to capitalize on via its own Instagram Checkout.

Besides the fact that consumers are increasingly demanding when it comes to fast, no-fuss checkouts, external regulations also hang a heavy sword over the business model of price comparison sites.

Apple and Google’s decision to remove 3rd party cookies from Safari and Chrome in the light of GDPR means that the reliable tracking of data between merchants and publishers employing CPC or CPA models has become even more fraught.

In a nutshell, this combination of converging forces means the future landscape is one that looks bleak for the price comparison sites that fail to act on these red flags and take control of their own destinies.

A model example

At Tipser, we have the first-hand experience of working closely with a price comparison site that realized it was in its best interests to get ahead of the curve.

PriceRunner is Sweden’s largest price comparison site and one that Tipser is helping it evolve the entire business model by adding a direct checkout to its site.

By allowing consumers to instantly buy the desired product for the best price at the point of inspiration, PriceRunner’s super smooth transaction flow has upgraded the consumer experience and seen a significant upturn in conversion rates as a result.

The value proposition has changed, but PriceRunner, the merchants, and the consumers benefit from this evolution. Increased conversion rates are clearly positive for both PriceRunner and the merchants. And this attractiveness for merchants is increased further by the switch from a CPC to a risk-free CPO commission model. The modern, more demanding consumer is also much happier now that they are not redirected to an external site and forced to spend more time and clicks to action a buy that they were already sold on.

In terms of data collection, implementing a direct checkout is also highly beneficial for both the consumer and the price comparison site. Without the need to redirect the consumer, the price comparison site now directly collects data that will help it understand its consumers’ profile better. A fact that will allow the site to improve the consumer experience by giving it the tools to help drive more personalized buying decisions in the future and establish a lasting customer relationship.

These positive developments serve to engender trust and strengthen the brand, as the business model moves from merely a price comparison to a marketplace, where thousands of products from all kinds of categories can be directly purchased at the lowest price of the market. 

The truth is that many price comparison sites continue to prosper today, but the future threats outlined here are very real ones. In times gone by, Kodak invented the world’s first digital camera but held onto their photo film, chemical, and paper business due to its market-leading power. They believed they could convince the world to ignore digital photography too. We all know what happened next.

Identifying the threats and implementing change before they disrupt is one way to future-proof success. For price comparison sites, embedded e-commerce is undoubtedly one very promising route to making that a viable reality. Tipser is here to facilitate that brighter future.