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28.Jul.2021 Amadeusz Bathelt - eCommerce
The Internet is probably the best tool for purchasing electronics right now. Compared to stationery stores, the competition between sellers is much stronger. It is much easier to compare offers from different shops there and there are not as strong regional boundaries (if you buy online, you don’t care if the shipment is from your city or a city located on the other side of the country).
Thanks to the lack of regional boundaries, the prices in online stores can sometimes be much lower than in traditional shops. This is especially true while discussing e-commerce platforms, where all the offers are already compared with each other. If one looks for a particular item, he can easily sort by price and there is a high possibility that he will choose offers from the top 3 cheapest ones. Additionally, many people who previously did not see the need to use the Internet to shop had to move online during the pandemic. This significantly increased the number of potential customers in e-commerce. Increasing demand means that stores also want to appear in the new medium, both in their online store and on sales platforms (e.g. Amazon) and price comparison websites (e.g. Google Shopping).
As you may know, price comparison websites outdo each other in the services offered. With the aid of Dealavo tools, over 1 100 products from the “electronics” category were examined. We analyzed data from three platforms: Google Shopping, Amazon, and Idealo. Our main goal was to answer a few following questions which can help both buyers and sellers.
First of all, to help buyers to choose the best place to find the cheapest electronics, we wanted to check which platform has the mildest competition. However, the cheapest prices are not always the most important factor. If the platform has the cheapest prices, but the majority of products are unavailable, then there is not much sense to check prices thereafter a few unsuccessful attempts of finding a product, buyers simply won’t check prices there again.
It is crucial to have a reliable platform where one will find the majority of searched products. The percentage of available products was the second factor we took into account. But this factor is important not only from the buyer’s perspective but also from the sellers. If you are a distributor, you can look for a platform where there are no competitors to your products, still using the high popularity of the platform. In such a case there is no need to fight with prices, one can just set reasonable prices and control the situation.
Last but not least is the question of which of the analyzed platforms has the biggest amount of products. It is quite a similar case to the second question, however, customers need to have at least some choice between offers. Then one has a possibility of choice, even if not by the lowest price, then by additional products, shipping options, or return policies.
Amazon is one of the dominant sites in the e-commerce market. In the USA, the company covers about 43% of online sales and is visited by over 2.7 billion visitors per month, making it the biggest e-commerce platform in the U.S. Furthermore, it holds approximately 44% of all products that American customers were searching for online. The great popularity of this website makes it possible to offer products to millions of users. It is a website that also allows you to sell non-standard and atypical products.
Despite that, Amazon offers two logistics models that can be extremely helpful in leading your shop: FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant). In the first case, the entire sales and logistics process depends on Amazon. The seller only delivers the product and takes care of promotions. In FBM the entire sales and logistics process is on the seller side. The choice of method is related to the type of product offered. The use of FBA is a better solution for small and light products. But concerning the oversized items, you should choose FBM.
The specific feature for the portal is a “buy box”. Only verified sellers with attractive offers can work with this function. The buy box is on the right side of the selected items through which you can purchase the product.
Idealo is a very popular price comparison website in Western Europe mainly in Great Britain, Italy, France, and Spain. It is based on price differences between countries and permits sorting product offers by the lowest cost. These differences are related to the amount of taxes in the country and marketing expenses. Internet users can order products from foreign sellers which attracts buyers from all over the world.
In the case of Amazon, customers buy either from external sellers or from the platform. Idealo is based on the offers of external sellers. Moreover, the platform allows the customer to quickly monitor prices and select the best offer. On Google Shopping the customer can only buy from the external site of the seller.
Google Shopping is based on ads that appear immediately after entering a phrase in google just above the search results. Another element is the results that appear after clicking on the “shopping” tab. With Google Shopping, customers can find the best offer without leaving a search engine. It is a very convenient solution.
Google Shopping reaches out directly to customers, even before they want to check prices. This is often the first offer of a product that customers see, which can be a significant aspect of sales. The customers can go directly to the store and complete the purchase.
The largest market from all analyzed platforms coverage was recorded on the Google Shopping platform. It was as high as 84%, which means that just as many of the products found by customers could be found on this comparison website. Idealo had a slightly lower result of 73%, while Amazon offered only 67% of analyzed products.
Google Shopping won this category as well. However, as it is a price comparison platform, which gathers plenty of products also from Amazon and Idealo, it is very hard to compete with. This platform offered the most advantageous offer for the client in 67% of cases. Idealo got second place, with the lower prices for 8% of analyzed products. Amazon customers could expect a lower price only in 5% of cases. For around 20% of products, the price was the same on 2 or 3 platforms.
The next step was to analyze the average prices on the platforms. Surprisingly, the average price on Idealo was lower than the average price on Google Shopping and Amazon in 43% of cases. Based on the analysis, the number of products for which the average price was the lowest on Google Shopping is still not much different from the results of Idealo, as we found them for around 42% of products. Only 15% of items on Amazon are sold at the lowest average price.
At first, we checked where the most offers for one product are. In this aspect, Google Shopping won again offering on average 18,6 offers per product. Amazon and Idealo offered the same number of offers- 7.4 per product. Consequently, the consumer can compare more offers on Google Shopping.
The next step was the determination of the price variability on the analyzed website. Taking into account the standard deviation (which means the differentiation of prices from the average price) for Google Shopping the average standard deviation was 9.7%. In other words, the competition wasn’t the fiercest. In the case of Amazon the standard deviation was equal to 7,8% and for Idealo 7,3%.
Based on data, it can be concluded that competition on Idealo is the fiercest. It should be noted that the higher standard deviation on Google Shopping can be linked to the bigger amount of offers.
If you are a customer, it will be best to use the platform with many sellers. According to the data, the cheapest offer customers could find on Google Shopping concerns 67% of electronics products.
However, if you are a seller you have to consider the question: Where to offer your products? That depends on many factors.
If you’re aiming for a high-profit margin, you should seek platforms with low competition, where you can be the only distributor of a certain product. According to the data, for this purpose, you may consider Idealo or Amazon. Google Shopping is characterized by a high number of offers of a single product and the cheapest offer. However, if the primary objective is to maximize sales, at the expense of margins, you should consider Google Shopping. This platform can attract the most customers thanks to popularity and market coverage.
Furthermore, Google Shopping has the advantage over Amazon because it is a comparison site, and as a result, the customers were transferred to the service provider’s website. Providing the opportunity to entice further purchases. This strategy is an effective way to tempt the customer thanks to well-known brands with a low margin and get paid for additional sales when the customer goes to the site.
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