Price Comparison Websites Are Shaking Up Online Retail

It has long been an article of faith among retailers that more choice is always better. Customers want options, and providing them with as wide a range as possible is the goal of most retail outlets. After all, the more alternatives a shopper has to choose from, the better the odds they can find the right product they are looking for

The Internet has drawn this logic into question. As more and more retailers leverage the power of e-commerce to sell their products online, many consumers are finding the sheer number of options overwhelming. In a phenomenon described by the American psychologist Barry Schwartz as the “paradox of choice,” an overabundance of options can actually lead to worse outcomes for people who simply don’t have time to evaluate every individual course of action properly, and choose based on random or irrational criteria instead.

For example, while a shopper faced with the choice between five different jackets might be able to weigh the pros and cons of each product based on style, cut, and quality before settling on the option that best suits their needs, when confronted with five hundred different jackets, that same shopper might simply choose the inexpensive one, or the one that caught their eye first. In the face of so many alternatives, and with a finite capacity for information processing, humans come up with other strategies for managing the situation. Unfortunately, these strategies don’t always result in the best decisions.

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The paradox of choice poses a real problem for consumers who want to get the most out of online shopping. With thousands of retailers and millions of product options available, choosing the right brand and finding the right price has become an extremely time-consuming affair. Many are simply opting to settle for a single go-to retailer for all their needs, which often means not getting the best available price simply because comparing prices between dozens of websites takes too long. Instead of creating more satisfied consumers, a glut of choice can actually lead to fewer sales.

Perhaps it is not surprising, then, that enterprising companies are seeing in this crisis an opportunity to create bridges between consumers and retailers. In recent years, a number of online price comparison websites and apps have come into prominence as time-saving tools for smart shoppers who want to find the most efficient way to find the best price.

While price comparison websites exist to connect shoppers with products, they are not retailers and they offer a set of services distinct from e-commerce outlets. Where e-commerce sites operate like digital wholesalers, purchasing inventory and selling it to customers, price comparison sites provide shoppers with an easy way of seeing which products are being offered at which prices by a variety of online retailers, thereby facilitating informed shopping.

A smart shopper who wants a deal on a juicer, for example, might opt to compare prices at Yroo which aggregates millions of products from across the Internet to find the lowest prices. He or she can then click through to the retailer with the best price and make their purchase directly from the retailer’s site. Increasingly, price comparison sites are also augmenting their core services with specialized tools to help shoppers track price fluctuations and buy at the best time. While a shopper who isn’t particular about which juicer they buy may simply use the comparison site to find the best deal, a consumer who prefers certain products or brands can opt to “follow” a product and wait for it to go on sale.

Customers will always prize choice, just as they will always look for the best possible deal. But when so many options are available, the imperative to make a fully informed decision between such a vast number of alternatives can become quite stressful, to the extent that shoppers end up making poorer decisions and buying less than they might do if they had access to a more carefully curated range of options. A growing number of shoppers are looking for ways of filtering the range of choices down to a handful of the most competitive ones, and price comparison websites are increasingly their tool of choice.

Melissa Thompson writes about a wide range of topics, revealing interesting things we didn’t know before. She is a freelance USA Today producer, and a Technorati contributor.