Despite a 24% increase in sales, Amazon.com
Another e-commerce company reported this week: Shopping.com
Shopping.com, which went public last year, is an online comparison shopping service. Basically, the company generates revenues from merchants that list their products. In March, Shopping.com attracted roughly 24 million unique visitors, which was a 30% increase from the same period in 2004. By this metric, Shopping.com is the Web's most popular comparison shopping site.
A big part of the growth strategy is international expansion, and to that end, the company recently launched in France. This is certainly attractive to existing Shopping.com merchants, who now have more prospective consumers to sell to.
But just like Amazon.com, Shopping.com needs to continue spending on maintaining its website to keep customers interested. This means pressure on profitability.
Speaking of customers, Shopping.com does not have the brand name that Amazon.com does. Thus, Shopping.com needs to spend heavily on online advertising to get unique users to the site -- with a big amount from Google
As for the outlook, Shopping.com announced that it expects revenues of $28 million to $29 million in the second quarter, with profits between $0.07 to $0.09 per share. The Street, however, was pegging $0.10 per share.
While Shopping.com appears to be making the necessary expenditures to enhance its market position, investors want short-term growth. And at least for this year, that will probably not be the case.
Fool contributor Tom Taulli does not own shares mentioned in this article.