The price comparison Web site landscape is heating up in Asia, fuelled by the rising demand for e-commerce services. While first-movers here will have an advantage, they will also need to lay the groundwork in educating consumers and retailers on the business benefits.
The use of price comparison services, which aggregate and allow consumers to compare product prices and reviews in one setting, is relatively more mature in markets such as the United States and Europe. Some established brands there include PriceRunner and PriceGrabber.
Similar services have been popping up in the Asia region though, with Pricepanda launched by Rocket Internet last month in Singapore, Malaysia and Indonesia among the latest to open up shop.
Matti Ronkko, director of global venture development at Germany-based Rocket Internet, said the number of price comparison sites in the region is very limited, or even non-existent in certain markets. But while the concept is relatively new, the timing to enter could not be better, he said.
"During our research, we found many retailers have just gone or ready to go online and we believe it is the perfect time for creating this kind of marketplace for the local merchants and customers to meet up", added Ronkko.
Agreeing, Guyi Shen, director of Save22, which was set up last year, said the demand for price comparison sites has exploded exponentially in recent years. This was driven by a huge shift toward a growing middle-class category of consumers, who want more goods but also value for money, he explained.
Obstacles to growth
Ronkko did note that as a first-mover in the market, the Web site faces challenges such as product matching which has to be done professionally as it wants to give a unique experience for its customers. The Web site focuses on electronic products currently, but would eventually expand to other product categories, he added.
While this meant there were opportunities for first-movers, it also meant they would also be "smoothening the way" for their competition, he said.
Shen also pointed out competition was not as big a problem for most companies in this space, as compared with consumer education and consumer apathy.
"Most consumers don't really understand price comparison sites and how to use it. Our job as price comparison companies in this region is to change consumer behavior so that when purchases happen, consumers will check the price first before buying," he explained.
The retail structure may have been a reason behind the slower adoption of such sites in Asia too, according to Leon Perera, CEO of Spire Research and Consulting.
"The proportion of unorganized retail out of total retail is higher in Asia, especially in the three big emerging economies--China, India and Indonesia. Unorganized retailers may be less willing to pay to be listed and may also offer negotiated rather than fixed prices," Perera explained.
The penetration of parallel imports and counterfeits, which tend to be found in more smaller and less organized retailers, may also be an issue, he elaborated. These products could lead to low prices listed which larger retailers and vendors may then object to, he said.
Despite the relative lack of competition, regional price comparison sites are already looking to differentiate their offerings before overseas players muscle in to the scene. India, for example, has more competition in that there are already 8 to 9 such sites in the market, according to Sulakshan Kumar, co-founder of MySmartPrice.
So before other service providers enter, Kumar said: "We try to differentiate from the competitors by focusing on accuracy of data, number of stores and comprehensiveness of inventory." MySmartPrice currently focuses on two segments--electronics and books--and has plans to expand to include fashion and lifestyle over the next few months.
For Save22, the company believes its advantage will be in its core strategy in leveraging mobile devices, where it allows users to check prices by scanning barcodes using their handsets.
"We compare prices by having our community add pricing, so the categories we focus on are what our users are interested in. Right now, that's electronics and groceries," Shen added.
Perera noted that for such sites, a product focus may be a good place to start so as to create awareness, but it need not end there. He explained the industry was far from mature and there would be economies of scale to be gained once more products are included.