CompareNet. Part 1

Friday, July 1, 2011 6:40

Price-comparison service
San Francisco
Edge: Accurate price-comparison shopping; allows customers to generate feature-by-feature comparison sheets.
Challenge: Convincing manufacturers to buy into the site. Attracting consumer eyeballs and trust.
Offline competitors running scared: Consumers Digest, Consumer Reports

Trevor Traina’s Internet business idea flashed before him during a frustrating trip to the electronics store to buy a cordless phone, when no one could explain the baffling permutations in prices and features.

“The salesmen were useless,” recalls the 30-year-old, who was then a graduate student at the University of California at Berkeley’s Haas School of Business. That was 1995. A year later, with there’s-gotta-be-a-better-way vengeance, Traina launched CompareNet, a comparison-shopping Website that not only educates consumers about some 60,000 models of VCRs, stereos, TVs, appliances, cars, garden equipment, and other products, but also lets them generate their own handy feature-by-feature comparison sheets.

“Our mission is to change the way people shop,” Traina says. “No more going to the mall and wandering around and bringing your kids because you don’t have anyone to look after them.”

Call it the Yellow Pages meets Consumer Reports online. Forget letting your fingers do the walking — with CompareNet, they sprint. It is difficult to identify a physical-world counterpart, because there are few publications or services that provide buyers-guide information across such a sweep of product categories. CompareNet even provides consumers with links to certain vendors’ purchasing pages — if the vendor agrees to pay a fee to CompareNet. Still, the fledgling company has its marketing work cut out for it to make itself known and to convince consumers to use its site, when they might otherwise buy print versions of vertical industry consumer guides or visit those guides’ Websites. Its revenue model is also unproven.

How does it work? The service is free to the consumer, who doesn’t even have to register to use the site. The beauty of the system is that it allows shoppers — like 31-year old San Francisco architect Nic Bini — to gather hype-free information, and to slice-and-dice comparison charts on the fly. Bini tapped CompareNet to gather specifications about compact disc players before driving to retailer The Good Guys! and buying one. Rather than wade through various vendors’ sites in hopes of finding information, Bini beat a path directly to CompareNet’s Web door because “I wanted to go somewhere where I wouldn’t get all the jive from the manufacturers.”

“There are few industries as confusing as consumer electronics,” says Michael Harmon, manager of interactive marketing for Thomson Consumer Electronics, which manufactures and markets RCA, General Electric, and ProScan television sets as part of the consumer electronics industry, and whose projected 1998 annual sales are expected to reach $165 billion. “It moves fast and the features are changing all the time. CompareNet clarifies the complexity.”

While the straight-no-chaser approach is a boon to consumers power, it can cause wariness among manufacturers. Traina notes: “Suddenly, their features are separated from their branding message — and they spend a lot of money on branding.”

That’s where CompareNet’s revenue model kicks in. Traina, himself a former brand manager for Seagram’s $250 million line of Coolers alcoholic drink, sells the manufacturers a chance to attach their marketing message. For a fee, manufacturers can post informational blurbs about their products on the CompareNet sight, an easy click away from the straight fact sheet. Traina says these “advertorials” represent half of his revenue stream, which he declines to reveal. The fees vary by product category, and range from around $2,000 per month for low-traffic items to $20,000 for a line of products in a frequently visited product category, like cars.

Thomson, the Indianapolis-based subsidiary of Thomson Multimedia in Boulogne, France, is one company that has bought into the plan. “CompareNet’s going to profile a product regardless of vendor participation, so we thought it would be to our benefit to augment our branding message,” says Harmon, who declines to say how much he pays for the service.

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