Do cooperative business models really work?
Online comparison portals: how does the business model actually work?
- Published: Friday 03 June 2016 8:53 am
- Written by Dagmar Recklies
Numerous comparison portals and meta search engines have firmly established themselves on the Internet. On these web portals, end customers can compare a wide variety of goods and services with one another. In contrast to the classic online marketplaces, where the products can be purchased directly, the comparison portals act as intermediaries. It is well known that the business of these comparison portals is essentially based on agency commissions. But how do the business models work in detail?
This article describes the business models of online comparison portals and meta search engines using the example of Netzsieger.de and Netzshopping.de.
The business model of comparison portals and meta search engines
Comparison portals and meta search engines have in common that they aggregate the products and services available in numerous different web shops and other offer pages and present them in a comparable manner for the end customer.
They usually represent a multi-sided business or a multi-sided platform. Thorsten Faltings writes:
“Two or more customer groups meet on a multi-sided platform and are brought together by the platform operator on a marketplace. For all customer groups - whether paying or not - the platform operator must offer a convincing value proposition so that sufficient numbers of customers can come together and the necessary network effect is created. "
Alex Osterwalder and Yves Pigneur explain in Business Model Generation that such platforms are only beneficial for each customer group if the other customer group is also active on the platform in sufficient numbers. The platform creates added value for both customer groups by supporting the interaction (here buying and selling processes).
In the case of comparison portals and meta search engines, these are customer groups
- End customers with a specific purchase or information interest
- Online retailer, online supplier of products and services
For the end customer, the use of such a platform is only beneficial if there are enough different offers available. Participation in a platform of this type is only lucrative for dealers and other providers if the platform can have a sufficiently large number of customers or high numbers of visitors.
Business model analysis with the Business Model Canvas
In the following examples, two specific business models are examined in more detail with the help of the Business Model Canvas developed by Alex Osterwalder and Yves Pigneur.
This model was developed to describe in a systematic and comparable way how a company creates value. It can be used to develop new business models as well as to analyze existing ones. The business models are described according to the following elements:
- Customer segments
- Value Proposition
- Customer relationships
- Income streams
- Essential resources
- Essential activities
- Important partnerships
- Cost structures
In the cases of multi-sided platforms described here, the dealers and providers - depending on the specific business model - can be classified as a customer segment or as important partners.
The visitors to the platform as end customers always represent a customer segment. Use of the platform is usually free of charge for them.
Streams of income arise from brokerage commissions from providers and dealers. These are determined either by existing affiliate programs or by individual agreements between the platform and the retailer.
Since comparable platforms usually work with the same important retailers and providers, they can only differentiate themselves from the competition to a limited extent through their content. Starting points here are:
- Particular breadth and depth of the offers included
- User guidance, clarity and similar usability aspects
- Usefulness and individuality of the descriptions and tests carried out
- Trust, promise of neutrality
The main activities are the aggregation and presentation of the individual offers as well as the technical operation of the platform. In addition to the operator's personnel and other operating costs, this also represents an important cost category.
Practical examples: business models of an online comparison portal and a meta search engine
The online comparison portal Netzsieger.de and the meta search engine Netzsopping.de serve as practical examples. We asked the operator FoundersLink GmbH for a description of the business models and then presented them in the Business Model Canvas.
Network winner - Transparency and independence as a corporate philosophy
Description of the operator:
Network winner is an independent online comparison portal that has been established since 2012 and tests both services and individual products. Transparency and openness come first and form the basis for the consumer-oriented business model.
Thorough research and detailed investigations of the current market situation are the basis of the company's detailed comparative analyzes. These take place exclusively from a qualitative point of view and are not based on the price of the respective articles and services. In addition to security software, online pharmacies and PC games, network winners' repertoire also includes dating agencies and financial products. New developments and revised products determine the rapid dynamics of the market and are also reflected in the portal's test reports. Trained editors continuously add changes, improvements and new features to the product and service comparisons and thus develop new ranking positions.
The comparison portal is available to its users completely free of charge and allows all interested parties to benefit from the wide range of analyzes, comparisons and recommendations.
The business model follows the principle of commission-based affiliate marketing. For some products, Netzsieger receives a commission fee for forwarding the consumer to the provider or when purchasing an item. Since the respective manufacturers offer comparable contractual conditions, affiliate marketing does not pose a threat to transparency and credibility.
When it comes to achieving its goals, the company uses the Business Model Canvas as a basis and thus implements all the key factors of a successful comparison portal: target group orientation, value proposition and strategic partnerships go hand in hand with careful thinking and forward-looking corporate planning.
Interdisciplinary expertise combined with consumer-oriented and free test reports sets Netzsieger apart from other portals.
Representation as a business model canvas
Web shopping - Well-known partners, huge product variety and great usability
Description of the operator:
Web shopping is a meta search engine that has been available to consumers since 2014 and is currently in a strong expansion phase. In the virtual shopping world, users will find more than three million products from various online providers - clearly listed and presented in an appealing way. In addition to articles from the lifestyle and fashion sector, the main goods include jewelry, shoes, furniture and garden objects. The constant expansion of the range has special priority, which is why the scope of the articles is growing daily.
Numerous filter functions enable visitors to sort the diverse selection of items according to color, size, material and manufacturer. Prospective buyers have the opportunity to examine the products of different providers and then be forwarded to the respective shop.
Above all, consumers save time in this way: Instead of researching in a multitude of tabs to find the best product, they can find various providers gathered here in one portal.
High-quality traffic reaches the partner shops of Netzshopping quickly and without lengthy check-out processes. The integration of the product data takes place in an uncomplicated way via a CSV file.
The company's remuneration system works largely on a CPC (Cost Per Click) basis, which in turn enables quick and easy billing.
The cooperation partners of Netzshopping increase their sales thanks to the meta search engine and win new customers every day. In addition, the portal has excellent data processing and works closely with the respective partner shops in order to optimally integrate the products on the site. In this way, online shopping clearly distinguishes itself from the competition and can steadily increase the number of its cooperating partners.
Representation as a business model canvas:
By the way, there is an interesting infographic about the average buying behavior of customers on netzshopping.de.
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