One major issue for portals is how to handle shopping agents, or "bots" as they're also called. Most sites now feature the technology as an added service that searches the Internet for the lowest-priced item in a particular category.
BOTS THREATEN RELATIONSHIPS
Excite owns NetBot, the company behind the Jango shopping bot used on Excite and Web-Crawler under the name Product Finder. Yahoo! recently replaced Junglee (a shopping agent bought by Amazon.com in '98) with software developed in-house through Viaweb, an e-commerce software company it acquired last year. Lycos licenses shopping agent software from InfoSpace.com.
However, the shopping agents threaten to aggravate retailers, many of which have paid several million apiece for portal real estate only to see consumers lured away from a site by a bot that shows users where they can find lower-priced merchandise elsewhere.
Samantha Saturn, director of marketing for N2K's Music Boulevard, which has deals with Excite, HotBot, Infoseek and Web-Crawler (and is about to merge with CDnow), thinks an agent sends the wrong message to consumers. "It trains the customer [to think] that pricing is foremost important, not value and brand," she said.
"It also conflicts with the fact we're the exclusive provider," she added, referring to sites N2K has exclusive deals with.
Overall, she said she's been happy with N2K's portal contracts.
"Our experience has been overwhelmingly positive in helping put us on the map" for consumers, she said. But as far as the agents are concerned, the technology sometimes doesn't factor in consumer experiences. "If [the shopping agent] offers real comparison shopping technology, that's another story; then it becomes something that can really be powerful for electronic commerce. Until then, there are things that need to be ironed out," she said.
Even the search and directory sites admit the shopping bots are flawed and need to be transformed into more comprehensive tools that not only search for price but also provide comparative information about retail brands, shipping information, availability and product reviews.
According to a holiday e-commerce report from Jupiter Communications and NFO Worldwide, the No. 1 complaint from consumers was merchandise availability (15%), followed by added costs of shipping and handling (14%), two factors shopping agents are often unable to determine.
"Bots or agents, as we move forward, will be much more thorough," said Andy Halliday, VP-commerce for Excite. Currently, Excite features its Product Finder as a tool separate from a directory of shopping categories.
BUILDING A BETTER BOT
He also alluded to a future version of Excite's shopping area that would integrate its Product Finder into product categories. So a search for a product within a category would bring up prices, brand information, product reviews and relevant advertising. Currently, Product Finder pulls up prices and product reviews separately from around the Net on searched merchandise.
Excite also offers a link to CompareNet, a site that offers product comparisons. Mr. Halliday said Excite would either build such a comparative service in-house or partner with another site for it. "I think there's a lot of value Excite can add on behalf of merchants," he said.
Yahoo! took a stab at the enhanced shopping experience in November when it launched a revamped Yahoo! Shopping site.
"We took a 180-degree turn away from the bot," said John Briggs, director of production at Yahoo!. "We wanted to create a more Yahoo!-like experience. With bots you get comparison features. We wanted to take that a step further."
To do that, Yahoo! built out Yahoo! Shopping to more than 3,400 hand-picked merchants, including Crate & Barrel, FAO Schwarz and Tower Records.
The Yahoo! shopping agent first searches Yahoo! Shopping, then gives users the chance to search the Web for a particular product. However, on Web searches, it gives shoppers the caveat that the site they select won't necessarily use Yahoo!'s shopping cart, a centralized checkout system developed to help users tally and pay for items on the Yahoo! site. Mr. Briggs also said Yahoo! only sells advertising in the Yahoo! Shopping area to merchants on the site, so as not to confuse users.
"It's kind of like what the bots do-on steroids, all in one place," Mr. Briggs said. "We're targeting convenience shoppers. The other people who are using this are the newbies." New users can use the site to get educated about trusted merchants online, Mr. Briggs said.
Similarly, Lycos feels obliged to offer the bot technology to its consumers but doesn't want to alienate its retail partners. "We're not deeply integrating the bot into the buying process," said Jeff Bennett, VP of e-commerce at Lycos. "We don't think that's a good proposition for us or our merchant partners."
BUILDING CONSUMER LOYALTY
On the other hand, he added, if someone is set on using the technology, the search engine won't deny them the experience. Lycos' strategy is to take advantage of its community and network sites-such as Angelfire, Tripod and Wired Digital-to build consumer loyalty programs. It's also opened up Lycos Store, where it acts as a merchant, selling items via commerce technology from OrderTrust and with wares supplied by partner merchants like SkyMall.
"It's a way to extend our relationship with consumers and give them access to as many products as possible," Mr. Bennett said. Promoting loyalty to and a sense of destination for the site, he added, creates cross-selling opportunities between merchants that would have been impossible without Lycos acting as a central retail broker.
But even the enhanced shopping services aren't foolproof ways of pleasing advertisers and retailers. For instance, Cliff Sharples, president-CEO of Garden Escape (www.garden.com), said his company spent heavily in Yahoo!'s holiday promotional package for advertisers only to see the portal emphasize Yahoo! Shopping over the advertiser holiday area.
"It definitely ruffled a lot of feathers," Mr. Sharples said. But he added, "It's a two-way street. You have to know what you're buying. I'm buying this banner while my competitor might be buying a button" on the same page. Since then, Garden Escape has also decided to build a store in Yahoo! Store and will be represented in the Yahoo! Shopping area so it now can reap the benefits of being in that area.
SOME CATEGORIES UNAFFECTED
However, bots don't affect all categories. Karen Askey, senior VP-consumer marketing at Preview Travel, said it's a non-issue with its portal partners because airline ticket prices fluctuate so frequently.
"Not everything is price-based," added Evan Neufeld, senior analyst at Jupiter. "You don't build a long-term relationship from underselling the other guy by $10." Certain products lend themselves to price searches, he added. For "consumer electronics, yes," he said, he'd seek the lowest price; "for pacemakers, no."
"The inherent problem is about this customer ownership issue," added Marc Johnson, senior analyst at Jupiter. Both portals and merchants want to be destinations and own customers. And when you have that tension, "you're