Online shopping has undergone a major transformation in recent years. Between 2015 and 2019 we saw a first big shift in how consumers shop: increasingly mobile-first, with a growing number of online stores within reach and more payment and delivery options available.
In 2020, with the arrival of the pandemic and the temporary closure of physical stores, the digitalization of many retailers accelerated. But that’s not all: users were pushed to start buying products online that they had always bought in physical stores, which changed the profile of the online consumer. Now, back to “normal,” consumers value many other aspects when buying a product, such as sustainability and supporting local businesses.
From the online store’s point of view, there’s no doubt that competition has increased in most sectors and that many marketing channels have become so expensive that they’re no longer an option for many. At this point, selling in new markets through marketplaces has become a great way to boost sales. They’re a powerful tool for reaching a very broad audience, both for stores taking their first steps online and for those with a long eCommerce track record. But it’s worth looking at why:
- They have strong market penetration, which translates into brand recognition and consumer trust on the one hand, and organic traffic volume on the other.
- They help save costs, since in most cases they handle logistics, after-sales service and customer support.
- With a very large catalog from many sellers, there are lots of synergies between products, which increases the likelihood of a higher average basket value.
The main limitation? Competition is very high, and many stores are trying to carve out a place on a marketplace. Organic ranking within the big marketplaces is increasingly difficult for small and medium-sized retailers and, besides paying commissions on every sale, you often need to run marketing campaigns within the marketplace to gain visibility, which significantly cuts into profit margins.
So it’s no surprise that many stores, small and large, look for other complementary options to keep growing, such as price comparison sites. The main difference? They’re not direct sales channels but work as a marketing channel. In other words, they send qualified traffic to stores, which then handle both the sale and after-sales directly. These are the main advantages of listing your catalog on a comparison site:
- High volume of qualified traffic. Price comparison sites that do SEO well rank high organically, so they get a good volume of traffic. The main difference from marketplaces is that comparison sites act as a funnel, filtering out users who haven’t found what they wanted and sending those with high purchase intent to the store. This translates into an above-average conversion rate.
- Objectivity and transparency. The top spot can’t be bought: each store’s visibility depends solely on the price it offers. So, to compete with other players, what matters isn’t how big our budget is but the service we offer. Product price, availability and delivery time, and accepted payment methods are the key factors that make a user choose your business over a competitor’s.
- Branding effect. Since both the sale and after-sales are handled directly by the store, the brand the user remembers, and will probably return to when they need another product, is the store’s. Over time, this grows the store’s base of direct customers.
So are comparison sites and marketplaces competitors, and do you have to choose one or the other? No. They’re two tools with different goals that complement each other perfectly, so much so that even marketplaces choose to list their catalogs on price comparison sites like idealo.
When planning its strategy, the key for an online store is to identify both its target market niche and the channels where its competitors operate, and from there start testing which platforms best position its product and brand in the market.
