What is the cost (or Value) of comparison companies / websites

What is the cost (or Value) are comparison companies / websites.
So my question is, I do NOT use comparison websites, but rather do my own research for insurance, power etc.
I have found that dealing direct with the supplier the best price I can get is normally the same as if I used a comparison site.
SO, how does the comparison site make its money? It receives a commission from the supplier for the referral to make the sale. And where does that money come from, the same supplier I just purchased from.
Even though I am not using the comparison I am still paying (I don’t get a discount to allow for the cost to the supplier of the comparison), the same price.
This must mean that the comparison site actually gets its monies from the general revenue of the supplier which means that To my way of thinking this means that comparison sites are getting “money for nothing” and are nearly parasites on society.
So can anyone give me a reason why these companies should be allowed to exist. They are costing all consumers money even though we are not all using them.

Comparison websites are basically an advertising platform. They generate revenue either by charging a service provider a subscription or commission on sales directed from the comparison website.

The model used is based on the industry and how ruthless the comparison websites are. Those that dominate can be very ruthless and more likely to want a piece of the revenue pie - thus charging commissions on sales.

Others use subscription models, and the subscription is based on the amount of traffic on the website. More traffic, higher subscription fees can be asked for.

Yes, they cost all consumers money if they are a subscription model, no differently to traditional advertising. The costs are a part of doing business and generating a customer base.

One could argue commission based platforms cost all consumers or cost only those who go through a platform for service. Knowing which one it is will be very difficult to ascertain as it will be commercially sensitive information held within the business.

They are allowed to exist because they are no different to traditional advertising or ‘middle men’ which have existed since the start of consumerism. They succeed because of the convenience even if it costs consumers using the comparison platforms more. One might think it costs the same, but comparison websites often show standard service/product pricing. Better deals can often be negotiated directly with many service providers/sellers. This is the case in the industry our business is in - accommodation.

The other comment to make in addition to comparison platforms not being the cheapest, is they don’t present every service provider/seller to the viewing consumer. They only present a sample, those business which accept and pay for advertising on them. In the past one particular comparison website got in hot water with the ACCC with misleading claims about extent of market coverage.

3 Likes

Are you going to ban every supplier of goods or services that you think is poor value?

I don’t think such web sites are notable for accuracy or transparency but unless you have solid evidence of fraud or other illegal acts banning seems excessive.

Somebody must think that these sites provide a useful service else why are they popular?

As we see daily in the media many people want to be told what is good or bad and are happy to be led around by those who conceive they can make a buck supplying answers. As always the quality of such advice is rather variable. Perhaps we need a site to compare comparators.

2 Likes

True. Of course, if push comes to shove, any commercial website could be called an advertising platform. Some commercial websites are undoubtedly parasitic, recycling information stolen from elsewhere, in the hope of stealling a commission or two. Others, however, provide genuine value, in different ways that suit different audiences.

At the good end of town, especially with regard to technical equipment and services, comparison websites offer expert help to buyers struggling to make informed choices. Some sites, such as, for example, Choice or Alternativeto.net, can be very helpful.

I am unsure what you mean. Business which products/services on comparison websites choose to ‘advertise’ their products/services on these websites. They have agreements in place in relation to payments, displayed information etc for the ‘service’.

A comparison website can’t steal information and commissions/subscription from businesses. The businesses agree to being on these websites and the financial arrangements which are in place.

The only exception is scammer which might masquerade a business to scam potential victims…but these are different to the sites of your original post.

1 Like

I suppose it all comes down to how one wishes to define a “comparison website”. By my definition, this is a website that compares the offerings of different suppliers - including, possibly, their own. Why they might do so, and who, if anyone, gets profit, commission, or other benefit, is entirely a different matter. Do you disagree?

According to my definition, Choice is a comparison website, because it makes comparisons (albeit not of its own products, and also not for profit). Tenbestreviews.com is also a comparison website (likewise not of its own products, but this time for-profit). Finally, I offer winxdvd.com, which provides software comparisons not only of its own products but also (reasonably fairly) those its rivals. Unambiguously, I suggest, Choice is a non-profit site, while the other two are commercial sites. But all are comparison sites.

So what is the difference between those sites that I deem legitimate, and those otherwise (e.g. parasitical)? All three sites mentioned actually (so far as I know for certain) do some homework before they publish their comparisons. That is, they do not ‘just make it up’. The parasite sites (para-sites?) either ‘just make it up’, or steal information from the legitimate sites.

(Some sites, however, such as ProductReview.com.au, sit in a grey zone in which they rely on social feedback… but take the trouble to check - so far as they can - on whether that feedback is ‘real’ or fake.)

2 Likes

Whilst one can compare product (reviews) on the Choice website, it isn’t really a comparison websites pee say. It reviews products on behalf of consumers and provides their assessment of each product/service. Occasionally Choice does more of a comparison style website presentation, such as for private health insurance or NBN RSPs. Choices principle function isn’t to be a comparison website, but to assist consumers in making informed decisions from its product or services review.

A comparison website is different. They provide pricing comparison for the same product or similar product supplied by a number of providers/sellers. The purpose isn’t to review products, but provide comparison pricing for the same product or similar product. Such websites are funded by those who market their products/services on these particular comparison platforms.

Both are legitimate but serve different purposes. One is more advertising (comparison websites) and the others, such as Choice, provides product/service reviews.

1 Like

OK, so we obviously disagree. I think Choice is a comparison website per say precisely because it aims, as you say, “to assist consumers in making informed decisions”. To me, your distinction between ‘comparison versus product/service reviews’ is both splitting straws, and counter-factual. That is to say, any website that that offers reviews of rival products on the one page is ipso facto a comparison webpage - no matter what other arrangements may be going on elsewhere.

So the next question is: do you have any evidence that your definition is any better than mine? An Act of Parliament? United Nations decision? I Googled “comparison website” define and was given a definition from the Oxford Dictionary:

a website giving information that allows people to compare the prices and features of products or services in a particular field.

To me, that is broad enough to cover Choice and all the other sites I mentioned. If you want to narrow the field, by all means do so. But please give me a definition of a type of comparison websites that is tight enough to unambiguously exclude Choice, yet specific enough to clearly indicate the websites about which you wish to talk - preferably with some examples.

Re-reading the original post, it may well be that @Don2 is referring that particular class of comparison websites that I term illegitimate, in that they don’t offer any true value to their readers. In such is indeed the case, then perhaps @Don2 has said it all:that such ‘bad’ comparison sites

1 Like

In my original post, although perhaps not clearly stated, I am really referring about those sites that receive a “kick back” for their “recommendation” and pass through of a customer.
I don’t have an issue at all with reviews or comparisons per se.

My issue is really that I am paying for these sites even though I don’t use them. Whilst they seem to receive their income nominally from their recommendations, surely if I do my own research I should be able to purchase the offering (insurance power etc.) for a price that doesn’t include the cost of the comparison. i.e… my purchase should be cheaper than that through a comparison website as the supplier isn’t paying any commission for my sale. That is why I believe the these parasitic companies are benefiting from my purchase as well as any referral they make.
Surely given the actual cost of the transaction to the supplier for my purchase is (significantly?) lower, that should reflect in my purchase.

Thanks for the clarification.

I don’t think the issue is really about who gets commission for what; it is rather what service, if any, the sites actually provide. Some sites are, as you say, just parasites; they take all of their information from other sites, or sometimes even make it up, and then claim an unearned commission. Others actually work for their money - and in some cases - for example, in the case of some travel sites - actually sell cheaper than the original site!

How does this happen? OK, I draw here from my experience as a somewhat regular traveller. There is some people in NSW who live in a remote country town, who happen to own a town-house in Sydney which they rent out for 10 or 11 months of the year. To get the punters (e.g. me) to rent their place, they have to market it. They do this through one of the comparison travel sites - Wotif, Booking, one of those - who, for whatever reason, sometimes rent the place out cheaper than its owners do. How come? Well, there are a variety of ways this might happen, but one is that the travel site sets the price to achieve a certain annual return, but adjusted month by month to suit current market conditions. Another is that perhaps it knows, or guesses, that I am a cheapskate who only pays bottom dollar. However that might be, the travel sites can end up knowing the market much better than the landlords, and so sometimes offer lower prices.

Anyway, long story short, some sites offer detailed information about the products they sell; some offer serious help for buyers looking to make hard decisions; and some provide serious services not so much to the buyer as to the seller - and all of these look to be paid for their efforts. And in such cases, not unreasonably. The only question is whether they take a ‘commission’ - a share of whatever price is set by the vendor, or cheaper; or whether they ‘load’ the price, selling at the vendor’s price, plus something extra. If they state this up-front, before you read their website, well, fair enough, you were warned, and you agreed. But otherwise, you make your choice where you buy.

BTW, there is no easy way to tell the good sites from the bad. Some of the best-looking websites are as evil as sin; some the best look like rubbish. All I can suggest is: Google a topic you are interested in, every day for a week or two, changing your search term every day. Then, each day, visit 50-100 sites (at least 3-4 pages of Google listings) to get a flavour of what’s on offer. Ideally, take notes, and, most especially, write down or bookmark all the interesting URLs. Gradually, you will begin to recognise the gems amongst the dross.

By that logic all those who say they don’t read ads ought to get a cheaper price for the money wasted on vendors’ advertising.

Most vendors seem to think they must advertise to stay in business.

Those paying for review sites apparently think it worthwhile.

Do you really think that you know how to run any business better than those who are running it?

You have the choice to buy from those who use comparison sites or not, I don’t see how you can demand a discount for doing so just because you would not make the same decision.

I think the best marketing strategy is to have free beer on Saturday.

2 Likes

With any payment to a business you are contributing to the running costs of that business, including advertising. Some of those things are relevant to your transaction and others not.

It is also possible that the use of comparison sites by others might be enabling you to get a cheaper price than you otherwise would. For example, a company makes $1 million in profit from customers coming to them from comparison sites and pay $200,000 of that amount as commission to a comparison site. The company is $800,000 better off, which might enable them to offer a lower price to all customers, including you.

By your definition the websites of most retailers, including Woolworths, are comparison sites.

A more widely accepted definition would refer to website that provides comparison advice about various products or services and refers customers on to the providers of those goods or services. The comparison site earns income by charging for advertising and/or receiving commissions from referred sales. This is the type of site that the OP is questioning.

5 Likes

Absolutely yes, beginning on the day that the Woolworth site lists product prices for Coles, Aldi etc on the same page as its own prices. That is - and this is not just my definition, but, according to the Oxford dictionary, the normal definition in use within the English speaking world - the criteria for a comparision site is that it shows a range of prices and features for a particular class of items - which for most classes of items would come from a variety of sellers. All of the Woollies websites that I have seen offre prices and features from only the one vendor (Woollies), so therefore, while that holds true, Woollies cannot be regarded as a comparison site.

There are, of course, lots of discussion points that one might bring up in an attempt to complicate the issue - such as the absolute number, or percentage, of comparison webpages with a given website, and what a given viewer knows - or doesn’t know - about the size (i.e.number of pages) of a given website, and how - by what technology - each webpage is compiled. Plus there are all manner of complications as to the nature of different markets - consumer, B2B, monoply markets, etc. A decent PhD thesis could be written on such matters. In the end, however, everthing in this forum thread comes down to what @Don2 means by the term ‘comparison website’ in his original enquiry. Beyond that is mere sophistry.

I give you an A+ for your attempts to complicate a relatively simple question.

Your definition appear to be very fluid. The Woolies website might provide details of 167 varieties of tomato sauce from various manufacturers and includes the selling price of a single provider (Woolies). This is no different to Wotif providing details relating to 167 hotels, owned by a variety of entities, but only showing the price from one provider (Wotif). I don’t consider either Woolworths or Wotif to be a comparison site.

Similarly the majority of Choice reviews would fall outside your most recent definition as their main reference points relate to product features and functionality, rather than the prices and other benefits offered by various retailers.

OK, you win. I concede defeat. By all conventional usages of the term, Woolworths website is a comparison site, just like Wotif, only dealing with mainly foodstuffs instead of accommodation packages. (I couldn’t actually find 167 varieties of tomato sauce, but still way more than I expected, each with, as the Oxford Dictionary definition requires, price and feature information about each product item. I take it that your ‘167’ was rhetorical; still, it forced me to check - and hence to concede.)

Thank you. Back in olden times, I wrote a number of papers on, or derived from this subject. This included a rather sketchy history of comparison sites, which actually date back to the mid-Nineteenth Century. (Obviously, I am using the term ‘site’ to include both online and offline, as in bricks-and-mortar sites.)

The first recorded example I could find was a Canadian department store which ran a campaign of posting advertisements and flyers from its rivals in a campaign to demonstrate to its customers just how good its prices are. A similar idea was used in the 1947 movie ‘Miracle on 34th Street’ by way of a department store’s Christmas campaign. During the 1960’s, I saw at least one, but possibly many, supermarkets posting their rival’s advertisements to allow comparison shopping. Later, by now as advertising manager for a department store chain, I ran a number of comparison campaigns in which we provided information to our customers on the products of other vendors. In one such campaign, we provided information in a store’s street-front windows on mostly non-competitive products and services (as part of a PR campaign); and on other occasions, we posted advertisiements of rival stores (to prove how good were at least some of our prices).

Since the dawn of the Internet, I have had an eye for comparison site, mainly because I use them so much. Some are good; some are bad; some are down-right horrible. Between them, they have dozens, possibly hundreds of different motivations. Some live off commissions; some of the advertsiements they run; and some do it, I assume, just for the good karma. Plus many - most probably most, but that is just a guess - have multiple motivations. Given that few if any publish data on their individual set of motivations, a declaration that only sites pursuing an arbitrarily chosen single motivation qualify as ‘comparison sites’ seems highly unsafe. A bit like saying that a ‘real’ doctor has to have a brass plate to prove their credentials.

Anyway, for you, @Don2, I think the message is: don’t pay too much attention to the motivations of a given site, but pay attention rather to whether it is helpful to you personally. A site can be as commercial as all heck, and as money-rubbing as all sin, and yet still give good value - at least to some people. If you are one of those people, then say thank you, and be happy. And don’t begrudge the workman his pay, if he gets any.

4 Likes

No. Just because YOU didn’t get any benefit from one does not mean that others won’t get a useful benefit.