How the Heck Do Comparison websites make their Money ???


It has been the season of Christmas and now is moving onto the new year. I have been using many online shopping sites for purchasing stuff online. Mostly I have bought books online and now in the recent past I have moved onto buying Clothes and Sunglasses.
Now this is what I used to do, whenever I wanted to buy a book. I would log onto http://www.indiabookstore.net/ and key in the title of the book I want to buy and lo presto!!! it would pump out the book and the site that would have the least cost for the book. This site would account for flipkart, amazon, indiatimes, crossword.

There was this extensive media campaign a few months ago by PolicyBazaar.com that told us, we could compare insurance policies and just needed very little data from us to get us our quote

As Apple Computers released their new iPad Air, I was hooked and wanted to buy my first iPad, I hoped to find a site like the one mentioned above that could compare the prices of the iPad Air across all online shopping sites. Presto I happened to chance upon http://compare.buyhatke.com/ and yes let me say the search worked fine.

Most price comparison sites do not sell any items themselves, Upon receipt of a n user query, these sites go and query multiple sites for the product. This has got me thinking........

 "How the Heck Do Comparison websites make their Money ???"

If this was your question, here are some answers that I have tried to think of and find some soothing balm to the worm in my mind

Option#1: Revenue via advertisements

Using this option comparison sites make money by offering ad's of online eCommerce sites, they go ahead and market themselves to the eComm site by quoting figures of how many unique visitors they have per day and how many unique queries were run per day.

Option#2: Revenue via data insights

Most online comparison sites have options to get linked onto your social network site and by this get access to a lot of data that is stored on your profile, your product wishlists, your preferences, your age range, stage of life that you are in. Then there is targeted marketing that happens which allows the site to make money via your data insights.

Option#3: Revenue via Surveys and Feedback

Some online comparison sites prompt you to take an impromptu survey and based on the number of survey's done, get money from a company that wanted them to do the survey and get them real user data.

Option#4: Pay Per Click

Using this option various eCommerce sites do not pay the online comparison site money upfront, Instead they pay only when there is a click on the online comparison site that results in a page of the eCommerce shopping site opening up. (carefully keep looking at the address bar and you will see action happening)

Option#5: Revenue via FlatFee

In this option popular online shopping sites pay the comparison site a one-time flat fee (mostly on a year on year basis) for getting included in the site. This business model is the one that is changing the fastest as opposed to the others listed in this blog. 

Option#6: Selling User Data

In this option, comparison sites sell data of user's to marketing companies, data typically sold are email-id's, phone numbers, age(policybazaar), address, occupation and other such stuff. Now do you know how you started getting a lot of email in your email Inbox......

Option#7: Commission on a per product sold basis

Using this option, comparison sites get a cut from every product that is sold by an online store, which was redirected from a comparison site.
The rate of commission varies on the product that is sold.

Option#8: Sponsored Listings

Online shopping sites pay money to have their products showcased as sponsored listing. This is a derivative of how Google makes their money

Option#9: Festival based listing

Its Diwali time, its Navratri time, its X'Mas having sponsored listings in the comparison site by the online shopping site is one more way of revenue generation. Payment terms are one time fee, commission based as well as pay per click.

Option#10: Promotion based Revenue

An author or a product is about the hit the market, pre-ordering is allowed on the comparison site. This results in revenue generation. Payment terms are one time fee, commission based as well as pay per click.


Hope this blog post has helped, and in case there are other ways of Monetization that I have missed, do let me know.

Inthi,
Manuswath






References


Comments

Guru said…
Intresting Manu. 99% of business model is covered.

Only thing that I feel is missing is some sites/ users are only building their online image.
December 27, 2013 at 6:07 PM
Manuswath said…
Aah yes Guru, that angle is also to be counted
January 3, 2014 at 12:01 PM
krishna said…
manuswath can you explain the above comment .
April 9, 2014 at 9:31 PM
Anonymous said…
100% Business models covered, we have covered almost all for your portal www.mobikart.com , a price comparison and product discovery portal for mobiles only
May 23, 2016 at 6:49 PM
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