I've been stung by a jellyfish once, and it wasn't fun. Now, online retailers will have to make sure they don't get stung by Jellyfish.com. The new comparison shopping site launched yesterday.
In a sea of "me too" comparison shopping sites like CNET Networks'
Jellyfish is throwing a new wrinkle into the mix. Sure, it scours brand-name stores for competitive prices, but Jellyfish is taking things one step further by sharing at least half of the advertising or referral fees with its customers.
Loyalty programs aren't new. United Online's
The crux of the revolution
Let's say there's a digital camera that you've been eyeing at BestBuy.com. Best Buy
This isn't good news for companies like Amazon.com
Jellyfish's arrival is only going to make things harder, since consumers will now expect discounts. Yes, Amazon has its A9 search engine where regular users get a 1.57% pricing break. It also has its Prime membership club to foster customer loyalty. Amazon has done a good job of fortifying its business. It's just that it may not be enough in a new age in which consumers are encouraged to shop around -- and now even financially rewarded for doing so.
There are no slam dunks on Wall Street
Giving patrons a shot at prizes or legal kickbacks is not necessarily a blueprint for success. Remember iWon.com? It figured it would trump larger search engines by entering its users in beefy lotteries. It's still around, but now living a rather quiet life as an appendage of IAC/InterActive
Over the holidays, MSN.com pondered the move to a rewards-based engine. Microsoft
In short, no one is going to anoint Jellyfish a disruptor. It's going to have to earn it. The key here is if Amazon and more established players react accordingly. It won't be easy. Just diving into the Jellyfish network with a generous payout opens the door to losing direct customers, but avoiding the new comparison site opens the door for rivals to make the sale.
Catch-22? Not really. Amazon is blessed to have built a portfolio of attractive secondary sites. The company owns the IMDB.com celluloid database, the Alexa.com website popularity-ranking site, and the A9.com search engine. That's above and beyond the e-commerce-related purchases of entities like Shopbob and China's Joyo.
Those properties matter. We're clearly entering an age in which paid search is leveling e-commerce barriers to marketing. Amazon has to beef up its stand-alone traffic magnets as a way to lock organic growth in to its namesake retail site.
Jellyfish repellant, uncorked
I'm not bold enough to go out on a limb and predict that Amazon will trounce Jellyfish and every other moat invader. The distractions are plenty. Market researcher ComScore pegged online sales growth over the 2005 holiday season at 24%. For the quarter, Amazon's North American sales grew at a mere 21% clip.
That's troublesome. Decelerating sales growth is expected as growth companies mature, but is Amazon no longer growing faster than the e-tail market, despite tacking on new storefront categories?
Google's paid search advertising is growing several times faster than Amazon's top line. Isn't it really just a matter of time before many of its third-party Amazon Marketplace vendors turn to that cost-effective outlet? If it happens at the same time that the consumer is being tempted to go through comparison sites to not only get the best price but also a cash-back bonus, isn't Amazon going to get hit at both ends?
Remember how potent the travel portals like Travelocity, Orbitz, and Expedia were until more travel providers offered bargains directly? The rules of Internet leveling that served Amazon so well as it was taking on bookstore superstore behemoths have come full circle. There's a big ocean out there in e-commerce, and it's loaded with more than just jellyfish stingers.
The cure? Beach sand, vinegar, and a lot of luck in landing the content necessary to circumvent the noise and virtual detours that are wooing Internet shoppers to new beaches.
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Longtime Fool contributor Rick Munarriz is a fan of Amazon. He just happens to be a concerned one these days. He does not own stock in any of the companies mentioned in this story. T he Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.