“Shopping bots”–short for shopping robots–are a hot commodity as major Internet companies rush to acquire a technology seen as instrumental to the future of on-line commerce.
The more complex a product or service, the more details consumers have to sift through to make a purchase. Such information is more useful on-line than on the printed page because consumers can use the Internet’s power to select the facts and figures that relate to their needs. Done right, it’s a way to shift the balance of power in complex transactions from buyers to sellers.
“It’s an unsettling experience for consumers to go into a store and buy something they don’t understand,” said Derrick Chasan, vice president of marketing with Nth Dimension Corp., publisher of Wireless Dimension, which helps consumers in Chicago and more than two dozen other markets compare wireless carriers and pricing plans. “There is a huge amount of data that a consumer needs to know in each city.”
Shopping bots are likely to reduce prices for many products and services, said Nicole Vanderbilt of Jupiter Communications, a Internet analysis firm. Bots already cover mortgages, automobiles and many household items.
The origins of electronic comparison shopping date back to 1995, when Andersen Consulting created a music-shopping service called BargainFinder. That effort ran into trouble, however, when leading on-line music stores refused to work with the company’s software robots.
The technology remained relatively obscure until recent months, when other companies in the field started to change hands.
Inktomi Corp., a San Mateo, Calif., company that licenses technology to Internet sites, acquired the comparison shopping company C2B Technologies Inc., also of San Mateo. Infoseek Corp., the Sunnyvale, Calif.-based Internet search service, purchased Quando Inc., whose technology is used to create shopping guides and customized directories.
And Amazon.com, the Internet bookseller and music store, purchased Sunnyvale’s Junglee Corp., whose service lets consumers compare products sold by a variety of merchants. The deal that started the trend was last fall’s acquisition of Netbot Inc., creator of the Jango intelligent shopping technology, by Excite Corp. of Redwood City.
Wireless Dimension (wirelessdimension.com) was born out of an Nth Dimension comparison-shopping site called SharpShopper, which debuted in mid-1997 and ran until May. SharpShopper allowed consumers to compare prices and some features on cellular phones, home audio, car audio and home theater systems. But it didn’t let consumers buy the products on-line; it referred them to merchants.
To make the service truly useful to consumers, Chief Executive Officer Court Lorenzini said, Nth Dimension had to provide more information. “To do the job we wanted to do, it meant we had to specialize,” he said.
Lorenzini decided to focus on the wireless telephone industry, the most popular subject at SharpShopper. He concluded that wireless telephones were a perfect subject for comparison shopping because they are costly, hard to understand and profitable for retailers.
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Wireless Dimension cuts through the fog for consumers in much the same way that services such as E-Loan and HomeShark help them shop for home mortgages. After a visitor to Wireless Dimension specifies a city, the site lists all the available plans.
As the user answers five simple questions related to the service and price range desired, the Web site automatically culls the dozens of local plans down to those that match the user’s preferences. The remaining plans then can be compared side by side.
“It really leverages the Internet,” said Matthew Delson, director of the technology practice at Find-SVP, a New York analyst firm unaffiliated with Nth Dimension. “I find it a really exciting and interesting model for other applications.”
Lorenzini called Wireless Dimension an example of “transactional publishing,” which replaces conventional advertising revenue with fees from the sale of products or services. Wireless Dimension hopes to make money in three ways: By collecting a fee from companies it sends customers to, selling research about consumer preferences, and offering mobile-phone companies the ability to present additional information on-line.
There are no flashing banner ads on Wireless Dimension. There don’t seem to be any opinions, either. Neither the site’s editors nor advertisers tout service plans or phones; editors simply provide relevant factual information– monthly charge, number of free minutes and activation fee, for instance–and let the users take it from there.
Advertising, such as it is, is limited to additional factual statements about the features of a particular plan or telephone. In short, advertisers are required to present their messages in a way that’s useful to consumers. Such information is always clearly identified as having come from the company in question, Nth Dimension officials say.
Web sites of this type will live or die according to their reputation for honesty. “Once you’ve lost your credibility, you’re done,” said Dianne Lynch, head of the journalism department at St. Michael’s College in Vermont and a media columnist for the Christian Science Monitor.
The success of any comparison-shopping venture depends on how much cooperation it receives from the companies that actually sell the product. Like the pioneering BargainFinder, a number of sites that help consumers shop for basic household commodities have been denied access by some on-line vendors, preventing them from making comprehensive searches.
Lorenzini, however, said he’s confident that all the major wireless companies will become partners with Wireless Dimension because they can acquire mobile telephone customers far more cheaply on-line than through their conventional retail partners.
But Mike Lozada, the manager of a San Jose Cellular One store, said there are many reasons customers may wish to keep buying in person.
“Obviously, we can provide more detailed personalized service and explain the rate plans,” Lozada said. “Customers seem to like being able to see the phone.”
Lozada also said he asks shoppers questions that Wireless Dimension doesn’t ask, such as whether they’re interested in paging, voice-mail, caller ID or other services that his store can offer as part of a package deal.
Even if most consumers use Wireless Dimension only as an information source, Lorenzini predicts booming growth for his company as long as wireless telephones remain the fastest-growing consumer electronic application. And when the growth stops, Lorenzini said, his company will diversify into one of several other similarly complex fields–computers, consumer electronics or high-end exercise equipment.